The elite are manipulating petrol prices
by Tim Worstall | 19th, May 2013
AFTER the inquiry into the crud oil prices is announced we’ve got the AA leaping in and insisting that there’s another group conspiring and manipulating to make the petrol made from crude more expensive.
Few of the traders’ names – including Glencore, Cargill, Gunvor and Trafigura – are known to consumers outside the oil industry, but their effect on Britain’s 33million motorists and the wider economy is profound.
They buy huge quantities of petroleum on the open market and store it until the price goes high enough to make them a handsome profit, at which point they sell.
Hmm.
There’s a slight problem with this sort of story. It assumes that these manipulators know that the price is going to rise in advance. That’s why they buy and store of course, because they know. And it’s not really possible to know that prices are going to rise: so there’s got to be something odd about the story itself.
So let’s think about what that might be. There’s a group of people out there who buy up lots of petrol from the refineries. They hang on to it for some amount of time and then they ship it on, in smaller amounts per sale but of course the same total amount, off to the petrol stations. They make a profit doing this.
What might we call these people? Possibly they’re wholesalers?
And that is indeed the business that those named companies are in. They might be speculating a little on the side, sure, but their main business is in transferring the very large amounts the refineries sell into the much smaller amounts that the petrol stations actually want to buy. Just like there are food wholesalers who buy shiploads of bananas and split them up into the truck loads that the supermarkets want.
We might even think that the AA has got the wrong end of the stick here….
Posted: 19th, May 2013 | In: Money Comment | TrackBack | Permalink
