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LETTERS TO THE TIMES

Oil Prices Go Up, Gasoline Goes Down

August 28, 2004

Re "Oil Cost, Anxiety Are Both Rising," Aug. 21: The U.S. has 4.5% of the world population, has about 2% of the world crude oil reserves and is responsible for 25% of the entire world oil consumption. The oil reserves of our planet are nonrenewable, and the world population and oil consumption are increasing asymptotically, resulting in a catastrophic depletion of the world oil reserves. Statistics predict that oil reserves will be depleted in about 40 years. We need alternative, and renewable, sources of energy, more efficient utilization of our current energy sources and a concerted effort of population control by means of birth control. Unfortunately we are saddled with a president who is not blessed with the vision thing.

Reno S. Zack

San Dimas

Your article lacks an important point: How are daily crude oil prices established? In any product, the cost to the user is the cost to manufacture plus the markups added as a function of supply and demand. Daily costs of bringing the oil from its origin and daily supply and demands are reasonably stable. How can the cost of crude oil fluctuate 2% to 5% daily? The cost of crude oil is established daily by the highly volatile and manipulative futures markets of the stock exchanges and is highly speculative and politically driven. It makes one wonder what role the sworn political enemies of the president, billionaire manipulators of hedge funds and derivatives, have in pushing up crude oil prices a few months before the election.

Peter B. Korda

Los Angeles

People don't care about the price of oil; they care about how much they have to pay for gasoline. Am I the only one puzzled by the apparent contradiction between the record high price of crude oil and the falling price of gasoline at the pump? According to the U.S. Department of Energy, nationwide gasoline prices have steadily declined by about 10% since June, while crude oil is up 20% in the same period. In my memory, oil companies have always reacted to rising oil costs with immediate gas price hikes despite the fact that the production time from crude oil to retail product ought to delay gasoline price increases by weeks or months.

What's behind the oil companies' production decisions? Could it be that oil companies recognize that they have a vested interest in the reelection of the most oil-friendly administration in recent U.S. history?

David Calhoun

Aliso Viejo

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