What's Behind High Oil Prices?

This week the price of oil hit a record, briefly topping $80 a barrel. But why?

Oil traders were watching as Hurricane Humberto roared through the Gulf of Mexico, fearing that hundreds of off-shore drilling rigs and coastline refinery facilities might be forced to shut down. But few analysts are blaming the weather for what happened to the price of crude.

As CBS News correspondent Randall Pinkston reports, the reason for the price spike depends on who you ask. One analyst places the blame on low supplies of gasoline.

"Gasoline inventories have been running at 20-year lows," said energy trader Eric Bolling. "I've been trading 22 years and I don't think I've ever seen a situation where gasoline inventories are at this level."

But others argue gasoline inventories alone don't explain the hike in crude oil prices, pointing out that crude oil inventories - the source of gas - are about normal for this time of year.

"We have seen some decreases in U.S. crude oil inventories, but that is what we see on a seasonal basis," said Bill O'Grady of A.G. Edwards.

O'Grady believes the price of oil is going up not because of demand or global crises but because of the Federal Reserve and inflation fears.

Next week, the Fed is expected to cut interest rates.

"The financial markets are clamoring for a large cut of one half percent so the fear is - among investors - is that to ease this aggressively, without some evidence that inflation is under control, could spark higher inflation down the road," O'Grady said. "And to protect themselves from that, they're going to traditional inflation hedges which are oil and gold."

So far higher crude prices have not hit consumers at the pump. With the summer driving season over, the price of gas appears to be holding steady. But it's a good bet that the price of crude will find a way to your wallet sooner or later.

[mypatch]

Get ready for the domino effect. High oil prices lead to high food prices and everything else that we purchase. I was in the recession in the 70''s and this is following the same path. Pretty soon we will be rationed on gas and our paychecks. We depended on the arabs for the oil then and we still do. WAKE UP America.

[eccentric506]

Come on, lets get real-- the reason the prices of fuel are so high is because the dealers realize that with the dependance of oil they have us by the short and curlies and can do whatever they care to do and there isnt a dang thing we can do about it. It isnt the shortage of inventories or the shortage of oil-- its that some special interest groups do not want us to be competetive in the oil market so they devise ways to block the construction of new facilities and also attempt to block the technology to create that independance-- its purely the arrogance of wealth

[mh4cbs1]

veteran71:

You must be kidding. Zionists? Try good old WASPY skull and bones corporate fascist-wanna-bes.

[mh4cbs1]

Did CBS News mention that one reason for high prices at the pump night be the

$$ FORTY BILLION DOLLARS in PROFITS by Exxon Mobile??

(probably not, since Exxon sponsors CBS News. Gee, I wonder why Exxon sponsors the News???)

Corporations own and effectively run our government, write the laws. If you haven''t figured that out, you need to get more informed. We need a CITIZENS revolution to take back our nation. (FBI, who is data mining all these sites - I mean a non-violent revolution, OK?)

[omega39-2009]

What''s Behind High Oil Prices?

Speculators

[daenku32]

Umm. Chernobyl was a huge accident because they used graphite as a moderator and the plant design didn''t include containment building (a shell that surrounds the reactor and associated equipment). The 3-mile island as well had design problems.

Nuclear has its problems, especially the waste, and also the high technical requirements of the workers that operate the plants, but Chernobyl and 3-mile are poor excuses.

[socrates392]

Posted by MyIDonCBS at 12:15 PM : Sep 16, 2007

I wouldn''t want a nuke plant at my doorstep, by I wouldn''t mind a huge wind mill!

[myidoncbs]

Nuclear power is not "clean"! The by-product is tons of radioactive sludge that can''t be stored, can''t be transported, and can never, ever, ever be cleaned up. It''s just not worth the risk.

Furthermore, since the nuclear power plants are owned and operated by lazy, greedy corporations, their primary motivation is ALWAYS to cut costs by cutting corners-- safety is just not sufficiently high on their list of priorities. Short-term profit is their enduring goal.

Have you people forgotten Three-mile Island? Have you forgotten Chernobyl? Explosions at the Chernobyl power plant and the resulting fire sent a plume of radioactively contaminated fallout into the atmosphere and over an extensive geographical area. The plume drifted over parts of the Western Soviet Union, Eastern Europe, Western Europe, Northern Europe, and Eastern North America. Large areas of the Ukraine, Belarus, and Russia were horribly contaminated. Nobody knows how many people were killed because the Soviet cover-up made it difficult to track down victims. Lists were incomplete, and Soviet authorities later forbade doctors to cite "radiation" on death certificates.

Do you want a nuclear plant next door to your family? I don''t think so!

[fizzal-2009]

Just oil? Has anyone felt the high prices of peaches, at the store 5.00 a pound, this is supposed too be a non taxable item but when a truckload gets too the bridge they want to weigh or count the wheels or axiles and pay just too get across, tax the storage, display and tax the checkout clerk while they help you of your money.

[my2centss]

After Iraq invaded Kuwait, gas went down, after we invaded Iraq, gas tripled. What went wrong?