Yesterday I was able to post a little bit of good news about gas prices projected to drop by 50 cents this summer though I admit I am skeptical we'll be seeing prices drop that far. I just don't see the money-loving cockroach investors allowing it. And it is they more than any other factor, which has caused oil to spike per barrel.
Needless intervention in Libya- sure.. Overall turbulence in Middle East & North Africa- it never helps things.. Devalued dollar- definite contributor... But it is the Investor working in pack mentality with other Investors, who rushed into oil futures at the first sign of turbulence was the reason prices were going up, up at the pace of 3-4 cents per barrel per Day.
Remember, the dramatic surge in oil prices recently, just like back in early-mid 2008 was due to investors seeking an avenue to quickly maximize their profits when stocks and treasuries looked flat. And with the commonness of a herd mentality, investors have been pushing the price of oil up to close to $120/barrel at one point due to real or imagined conditions they believe will put them in the best position to expand their portfolios.
One day last week, the price of oil per barrel dropped by 8% on the commodities board (of course you didn't see an 8% reduction in your gas expense did you?). Now the cockroaches are slowly leaving oil and finding another avenue for quick profit. If oil drops too low too quickly, the cockroaches will comeback for another "bull run" on oil. Otherwise, we should see gas prices drop slow and gradual though probably not to what it was in the wintertime.
Remember folks, if you are own 100 shares in Disney or Coke, have a 401k, or are sitting at the computer and doing nothing but daytrading while your spouse is teaching, drilling teeth or a million other real jobs, you are Not a true Investor.
They have real power and financial means to alter the prices of stocks or commodities-- You don't. But on the plus side, it means you are not a cockroach either.
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