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Posted on 22 April 2011 | 6,256 views

$7 Dollar Gas This Summer Will Crash Stock Market

With gas prices jumping an average of 30 cents per gallon over the past month, maybe you thought the oil companies were just being greedy or gas prices went up because the crisis in Libya was affecting supplies of oil but professional oil traders say that you’re wrong on both counts.

A CNBC report is out that says gas prices are rising because the dollar is still plummeting (thanks to the “Fed Printing Dollars” like there’s no tomorrow), which certainly lends a credible argument for what’s driving the price of fuel and if “The Perfect Storm” hits the trading pits in oil — that could drive “Gas Prices” through the roof this summer.

Some of the very same financial institutions like Goldman Sachs (Stock Symbol: GS) and Morgan Stanley (Stock Symbol: MS) — that participated in the financial crisis and housing market crash of 2008 (when credit default swaps were the rage), are now directly making billions in profit an the backs of the American public — the last “Stock Market Crash” occurred when gasoline reached over $4.00 per gallon.

Back in 2004, Goldman Sachs was making $1.5 billion a year trading oil and now the investment banking firm is making well over $4.5 billion in oil trading profits by simply naming a spread of buy and sell prices from which they can eke out tiny but regular profits, without risk.

Even with no real shortage of oil reserves, unregulated speculators are cashing in with just the shear volume of participation in the oil markets.

Price has nothing to do with supply and demand for oil — it’s the financial market for oil, filled with both professional speculators and amateur investors betting on poorly understood “Oil Exchange-Traded Funds“, who have ratcheted up the price of gas to such sky high levels — there is no supply issue going on here.

There is the perception of a oil supply issue where investors are pouring money into an oil market trying to take advantage of what they perceive to be a real risk in supply. If regulations were imposed on only the oil commodity market, the price of a barrel could fall by 50% overnight.

Electronic trading of oil futures in 2006 streamlined the process by requiring only a few keystrokes on Chicago Mercantile Exchange’s Globex computer platform to execute a trade within seconds. Traders now process millions of trades an hour by computer — 15 times greater than the amount of actual oil being traded.

With many states like Oregon trying to balance budgets, Oregon lawmakers want to get the state inline with what other states on the West Coast states are now charging in “Gas Taxes” — California pays nearly 68-cents per gallon, Washington pays 56-cents per gallon and Oregon now pays nearly 50-cents per gallon after the tax increase. Other states should be mindful of what’s going on in Oregon — many states are dealing with budget problems, and low gasoline taxes are a prime target for revenue hungry states.

If we get a couple of hurricanes in the wrong geographical places later this year, we will see oil close to $7.00 per gallon.

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