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A Brief History of OTEA Energy Pricing
The sources to the left are an eye opener into what's happening in the volatile energy market. We read these sources every day,
as well as consult with our suppliers. One of the biggest problems in the last few years has been the presence of major commodity
speculators who drive the price up and down on a moment's notice without regard to basic supply and demand. Trading by
speculators added as much as $50.00 per barrel of oil to its real fundamental price in recent years, producing price jumps
on just rumors of supply problems.
Since 1999 we've achieved discounts of up to 50 cents a gallon on oil and kerosene, and from 50 cents to $1.00 on propane
with the exception of 2006 where again we offered excellent discounts on propane, but for the first time since 1999 our oil savings
were much less significant due to the El Nino.
In 2007-2008, our lowest price for oil, $2.38/gallon was $2.50 below the high cash/market price in February, 2008. Our lowest
propane price, $1.74/gallon was over $2.50 below market prices.
In 2008-2009, our nine years of experience in the energy market led us to predict in early Spring that speculators had overheated
the market and that prices would have to fall after strong gains. We decided not to carry out any pre-buys in oil until the market bubble
crashed. Instead, we developed the "rack plus" program for residents. Prices haves been below $2.00/gallon for oil since mid
December with a low of $1.74 with our most competitive dealer. on December 30th. We did carry out pre-buys with two of our
four dealers once prices had dropped over $1.50/gallon from their peak, recommending that members "hedge" with a partial
amount for what we expected to be higher prices in deep winter and then go back to rack plus in Spring. Sadly, those who ignored
our warnings, including many schools, were locked in with $4.59 and $4.94 pre-buys.
Energy Predictions: What's Ahead for 2009-'10??
The tragedy of 2008 was that the briefly high energy prices due to Wall Street speculation exposed the soft financial underbelly
of corruption, or probably more accurately sheer stupidity, in worldwide financial markets. Greed on Wall Street and lack of regulation
produced the largest recession since the Great Depression in just the last seven years.
$30 trillion dollars of the average US citizens savings disappeared from the stock market in a few months. Banks so large they
"couldn't fail", were bankrupt, after the shrinkage in assets. The S&P 500 plunged 38 percent last year, the most since 1937, after the
economy entered a recession and the biggest financial firms lost more than $1 trillion on subprime-related loans and securities.
Unemployment rose to 7%, the highest since 1993, and still rising.
Oil demand dropped from a forecasted 2% global increase to a net worldwide decrease in demand for 2008 and 2009. OPEC
has slashed production by 3.5 million barrels a day since Nov 1, in an attempt to stop the bleeding.
Read more on ....
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