Like most readers of The Columbian, I am concerned about spiking oil prices. Yet beyond the sound bites are a complex set of forces that are hurting not only consumers, but also businesses like mine—local suppliers of petroleum products to commercial business, small and large.
For example, when I purchase fuel from my suppliers, they take payment electronically between 3 and 10 days after we pick it up. With prices the way they are, many of my customers don’t pay me for 30 days and sometimes much longer. This affects my business, my employees, my family and me. So as a small business, I feel the pinch as much as or even more than my customers.
So what’s going on? Ask Wall Street. Speculators spend their days trading oil contracts with no plans of ever taking delivery of a single drop of the product. As a result, oil is no longer oil. It’s a pseudo-currency instead. This is true for lubricants, gasoline, diesel and other petroleum-related products. The frustrating part is that the Commodities Futures Trading Commission (CFTC) has the tools and the authority from Congress to fix the problem, yet is months late on their January 2011 deadline to take action.
Artificial costs
I have no doubt that prices will come back down; supply and demand will eventually prevail over the technical analysts. In the meantime, local suppliers continue to buy and sell their product on the most favorable basis they can in order to provide their customers—some of whom they’ve served for decades—with a stable supply that is priced as effectively as possible.
