March 9th, 2012
01:48 PM ET

Zakaria: Why oil prices keep rising

Hundreds of you have submitted very thoughtful questions for me through FacebookTwitter and my blog. Over the next few days, I am going to post my text and video responses to some of the most common questions and a few others that caught my eye.

The rising price of oil is the single most serious threat to the global economic recovery, the U.S. economy and President Obama's reelection prospects. Right now, we are beginning to move into a pretty broad-based recovery. Manufacturing is rising for the first time in 25 years. Technology firms are doing very well. Retail is picking up.  The green shoots of the housing recovery are emerging and that's very important because housing has led almost every recovery since World War II. .

But all the while that you have this economic good news, you are beginning to see oil prices rise quite substantially.  They're up about 15 percent over the last few months. And that could put a damper on all this good news. Why is the price of oil rising?

Zakaria: Iran is a "rational actor"

It's happening for one reason, principally and that is geopolitical risk.  There are fears of a war with Iran and  fears that crippling sanctions on Iran would cut down Iranian oil exports almost entirely.

If you look at demand for oil, it's just not that strong.  Much of the world is in slower economic times than before.  In January 2007, oil was $50 a barrel. It's now $110 a barrel. This doesn't make any economic sense unless you factor in geopolitical risk. So for oil prices to decline, there must be some resolution to the tensions with Iran.

But there is a broader problem, which is that there just isn't that much oil on the market and demand is going to begin to rise again as many countries come out of their recessions and into recoveries.

Zakaria: Another war in the Middle East?

There isn't that much of what's called "spare capacity" - the ability to increase production quickly.  The only ones who have it are Saudi Arabia and they are operating at their limits in some ways.

So there are economic fundamentals that explain why oil prices are high - but not why they are so high.  The reason they are so high is really Iran, Iran and Iran.

Post by:
Topics: Economy • Iran • Oil

soundoff (440 Responses)
  1. Harry

    Wall Street has made oil it's new bubble, now that the last thing they destroyed (Housing) is in the dumps. I can buy oil that has not been pumpt out of the ground yet. WALL STREET – WALL STREET IS GOING TO DESTROY THIS COUNTRY.

    March 9, 2012 at 2:58 pm |
    • j. von hettlingen

      Oil is not traded in the Wall Street, but in London and Geneva. Yes, the nuclear crisis and Iran's sabre rattling are mainly responsible for the surge in oil prices lately. But Israel and the GOP hopefuls have also helped beat the drums of war. Iran might be facing tighter sanctions soon, momentarily it benefits from the high prices. All these oil exporters stuff their coffers as much as they can, before the prices fall again. They need the revenus to finance the welfare transfers to keep their people quiet. .

      March 9, 2012 at 6:32 pm |
      • Jason Glugla

        Those who have all the wealth using that wealth to speculate on oil and gain more wealth is responsible for as much as 1/3 of the current price of oil.

        March 9, 2012 at 7:37 pm |
      • Mike Brown

        But oil IS traded on the ICE down in Atlanta. I suggest you learn about the ICE. Before the introduction of ICE in 2000, Americans spent 7% if their incomes on food and fuel. After the introduction of ICE and all of the deregulation forced through by extremely corrupt politicians in Washington in 1999 and 2000 and also due to the extremely lax oversight by the CFTC, Americans now spend over 20% of their disposable incomes on food and fuel.

        March 10, 2012 at 5:08 pm |
      • Phil Hansen

        It was a mistake taking out Saddam Hussein, he was Iran's worst nightmare. He kept them in a box, just like Donald Rumsfeld taught him to in the '80's. "W" did Iran a huge favor.

        March 11, 2012 at 2:10 pm |
      • Advocatusdiaboli

        @Phil Hansen: good insight. GE Bush was a flop in more than one way. He was an amateur riding his daddy's coattails and had little clue who to make a good president. He is one of the worst in the last two centuries.

        March 11, 2012 at 10:49 pm |
    • Mike

      Jesus Christ declared speculation as judgement over man, therfore any man who speculates goes against God's will. Therefore Holy and Unholy men, are at constant war for control over middle earth.

      Gandalf where are you! O well at least we have arogan... Grab your swords if you worship God, or you worship Satan fight. Be ye luke warm and ye will be spit out.

      March 9, 2012 at 9:27 pm |
      • Leif

        Put down the weed.

        March 10, 2012 at 3:43 am |
      • fahad

        loco weed

        March 10, 2012 at 4:03 pm |
      • augustghost

        Good grief...get a life

        March 10, 2012 at 4:03 pm |
      • Rob

        That's not weed... Were talking heavy stuff here... Get help.

        March 10, 2012 at 4:10 pm |
      • Gertrude

        Man, you're high.Or just one of those creationist, Evangelist who listen to Rush Limbaugh.

        March 11, 2012 at 12:02 pm |
      • Boes73

        I think that he is just being sarcastic - at least I hope so.

        March 12, 2012 at 12:54 am |
      • buck

        greed. Not Iran. Iran is simply another in a long line of excuses. Greed ,pure and simple. I predict that desperate people will resort to violence against big oil companies and politicians as it may be the only way to make this b.s. stop. Sad but true. When the mega greed rich reach into peoples pockets for their last bit of change some one some where is going to snap....

        March 12, 2012 at 9:13 am |
    • Matt

      Stop being upset and do something. There is an alternative is called the chevy Volt, why do you think the right is trying to tarnish its reputation. Its an OIL liberator. You pay a little extra but no more worries about OIL prices.

      A hotdog at a gas stations 1 dollar

      A fillup at the gas station 60 dollar

      Driving your Volt passed a Gas Station saying 4.59 a gallon PRICELESS

      Btw the volt is not expensive, you can lease the Volt for 349. You save 100 on gas a month so for a small fee of 249 a month you can stick it to Wallstreet and OIL Barrons

      March 10, 2012 at 12:13 am |
      • Tom

        Too many people (and politicians), say the answer is new fuel efficient cars. I’d love one, but people like myself, or anyone else in my family could never afford one. We’re forced to keep are old cars running as long as we can, so we can keep driving to our jobs, and spend all our money on rising gas prices.

        March 10, 2012 at 8:19 am |
      • grvol

        You sound like sound like a young liberal OWS punk who has no idea what it is like to pay an electric bill... You think electricity is free from daddy. Think again kid. And do you have 60,000 dollars lying around to pay for a Volt piece of crap? Most people who work to feed your lazy Azz don't either.

        March 10, 2012 at 9:15 am |
      • sccl

        I think you are on drugs. The volt cost 40k and can go @35miles on electric, the rest of the trip is on gas. The avg car cost 25k with 25-35mpg, so how much gas it that cheaper car buying on the price differential. As the cars switch to electric (obama mandate), doesn't it occur to you that electricity prices will skyrocket, second electric is very inefficent per input/output btu compared to gas. Lastly population increases are going to wipe out any gains from renewables. So there are still big problems brewing for the future. How much energy is going to be required to make and install all the wiring in parking lots, street parking stalls, etc for the electric world. Problem is liberals only look at a small data set to determine their agenda.

        March 10, 2012 at 10:32 am |
      • charles

        Chevy Volt won't be around much longer, GM just terminated a very large contract with Hitachi where several of the control systems for the battery on it are built. That was a good 300 people that just lost their jobs at a single factory because the Volt is failing.

        March 10, 2012 at 11:52 am |
      • Steve

        SCCL.. You do realize that a gallon of gasoline contains 115,000BTU's, and that 1kwh of electricity is equivelent to 3420BTU's. In your worst case scenario of "only" getting 35 miles out of that charge you are doing it on approximately 36,000BTU's of energy vs 115,000 in a gas car. That means for equivelant energy in a Volt you can go over 100 miles on the same amount of energy. Not to mention when "idling" in traffic even for hours at a time I only use 0.25kwh per hour. Personally I could care less what other people drive. I don't have to pay for it, and they do. Perfectly happy spending $27 a month to go 1000 miles.

        March 10, 2012 at 12:14 pm |
      • SDN

        scci: Did finally manage to squeeze in 'liberals', well done. Do you suppose it's 'liberals' that are doing the speculating, that which is driving up the price of oil worldwide. These 'fears' – what fears? What percentage of the worlds oil demand does Iran really meet – 5%? The rantings of, and the reaction to a 5% player raises the price 100%? The price was doubled by speculators that provide 0% of the oil production on the planet.

        March 10, 2012 at 12:44 pm |
      • Dave

        @Steve: Your analysis is missing an additional step. How many BTUs of feedstock are consumed at the plant to produce the 3420 BTUs you cite in 1 kWh of electricity? Electricity is not mined from the ground, it must be created from natural resources, and there are inefficiencies in production. In the US, coal is the largest feedstock used in creating electricity, and coal plants are about 33% efficient – implying it really requires 109,000 (36,000 / .33) BTUs of coal to move a Chevy Volt 35 miles, as opposed to 115,000 BTUs of gasoline for a car that gets 35 mpg. Electric cars hold promise for the future but wild-eyed euphoria based in false analysis helps noone.

        March 10, 2012 at 1:21 pm |
      • sccl

        Sdn – you never really answered my liberal rant but as usual deflected the discussion to something else. As a moderate Republican, I think anyone buying in the commodities markets; need to take possession of their purchases. This will mostly eliminate speculators that are wreaking havoc on our capitalism system. I am not a big fan of the current WS and commodities trading regulations. But then again dodd & frank just passed new rules that have done nothing to date. Both parties currently blow and both are only there to help their friends & campaign donors. We are more like Greece then people realize

        March 10, 2012 at 3:15 pm |
      • SDN

        sccl: 'as usual'? I don't recall ever replying to any of your posts. And I've never accused anyone I've never met of 'being on drugs'. Untruths and insulting accusations may be convenient in promoting an agenda, but, in fact, put paid to serious consideration of any subsequent commentary. I don't use the terms 'liberal' or 'conservative' in my posts for the simple reason they are irrelevant and clearly, if unintentionally, illustrate a lack of fundamental objectivity. I'm a mechanical engineer by profession, and am perfectly aware of the laws of conservation of energy, hysteresis, and system losses.

        March 10, 2012 at 4:02 pm |
      • Neko

        The point Matt is making is that if we use our collective intelligence, we can rid ourselves of a dependence on fossil fuel. Yes it might be expensive at first but within 50 years, one of our rewardswould be saying asta la vista baby to the blackmailing oil dealers.

        March 10, 2012 at 4:11 pm |
      • sccl

        SDN – If you are politically neutral, then why did you respond with a defense of the term “liberal”? You certainly leave the impression that your viewpoints or opinions fall into the classification of aligning with liberal ideology. There is a word to classify or describe every action & everything living & nonliving thing on this planet. It is a shame you did not use your engineering degree to politely inform matt about energy input vs outputs which I have know doubt that you fully understand

        Factor in that instead of using an existing empty GM building, they made one from scratch. I call that a huge waste of energy that has to be calculated into matt’s calculations. I am for all other forms of energy but unlike gas, non of them are a one size fits all with the possible exception of hydro since it is powered by gravity. But our politicians have put all their eggs in one basket – the car and yet the housing consumes more energy. There are so many things that can be done to save energy here it is crazy. The problem is all the zoning codes that no one at present seems to want to tackle. So back to the car we go.

        I ask GM how is it that a 1992 Geo Metro that I owned, got 48mph on a carburetor 1 litter engine and today it takes a sophisticated, complicated, expensive piece of machinery to get the same results of 20yrs ago. I really do that car had very low emissions. I am old enough to have been jerked around the last 30yrs and that is why I get a little derogatory with my posts.

        March 10, 2012 at 4:46 pm |
      • SDN

        sscl: I agree wholeheartedly with all the energy and conservation related comments you've made. I believe them to be well founded and defensible in a rational discussion. Your insistence in attributing comments, impressions, degrees, defenses etc that I simply have not included, suggested or implied in my comments is something I won't tolerate. You don't have the option of restating, translating, making assumptions, drawing conclusions about my statements or attributing your 'impressions' to something I haven't even peripherally suggested. This simply becomes a farce – you interpret what I've said – to your imagined advantage – and then your response to what you've decided I've said. Like I said – a farce.

        March 10, 2012 at 6:52 pm |
      • g

        the leaf is way better

        March 10, 2012 at 7:22 pm |
      • dmat

        @ Matt, Then what we need are cars that run on hot dogs. But of course then people will invest in hot dog futures, drive the price up, yada, yada, yada.

        March 10, 2012 at 7:30 pm |
      • Rigel54

        @grvol

        1. The Volt is not crap.
        2. The Volt is not $60,000.
        3. The cost of automotive energy via electricity is far less than via gasoline.
        4. grvol's greatest skill is being pointlessly obnoxious. To society at large he is, well, a drag.

        March 10, 2012 at 11:26 pm |
      • Andrew

        $40k for the Volt. I'm constantly amazed at the lengths to which Americans will go to own automobiles.
        Andrew
        Bicycle Commuter

        March 11, 2012 at 8:50 am |
      • minnesota vick

        Yeah, biking to work really would only work for about 6 months a year here.

        March 11, 2012 at 11:48 am |
      • Gertrude

        We need to do more than just have electric cars. If half the people in the U.S. had electric cars, it would overload the national power grid. We need to update it. Also, we need to fix our infrastructure. Most of it is complex and old. We need to use more public transportation (like buses, railroads, trams, etc). Public transportation is more efficient than individual cars. and just because we switch to electric cars means cheaper fuel prices. We also need to think about how we produce our electricity.

        March 11, 2012 at 12:00 pm |
      • Uniema

        @Bikers
        Yeah... I cant feed and provide for my family with a bike. Next.

        March 11, 2012 at 3:40 pm |
      • Josh

        @ Tom: I believe the smart car is only 10,000 bucks =)

        March 11, 2012 at 4:40 pm |
      • Dean

        And with a range of 25 to 50 miles per charge how long will it take me to get from Georgia to Oregon?

        March 11, 2012 at 5:04 pm |
      • Joe

        Matt, how many of us have$40,000 to buy a Volt? Why can't Obama open up some drilling? That would create the expectation that prices would go down, and they would. Yes, we need alternative, but in the meantime, we need relief. We cannot destroy the economy while waiting for alternatives fuels to be developed at prices the majority of the country can afford

        March 11, 2012 at 8:50 pm |
      • cobra129

        Sorry Matt, it was the Free Market and free enterprise that made this country great, not the government mandating what people have to buy or drive. The Volt IS a massive failure, has lost billions of taxpayer money and people who travel any distance at all have soundly rejected it. Just because the Feds are pushing it doesn't make it viable.....heck look at Amtrak, USPS and a whole host of other government failures.

        March 12, 2012 at 6:26 am |
      • Ron

        @Dave If you are going to add the BTUs required to make electricity then to be fair you also need to add the BTUs to refine gasoline.

        March 12, 2012 at 8:26 am |
    • Gino

      When speculators have to front oil futures purchases 100% instead of buying on margin, the cost of oil will recede accordingly. There's much more, read this for starters: http://finance.fortune.cnn.com/2012/03/08/oil-prices/

      March 10, 2012 at 10:14 am |
    • Ted

      Whatever the pretext for high oil, war with Iran for example, the issue is we don't have a realistic energy policy and our own energy supply. Step 1 should be the construction of pipelines for Canadian oil, step 2 should be drilling for more of our own, step 3 should be aggressive development of nuclear energy, and step 4 should be robust long term development of energy supplementation using solar and wind. We tried suppressing steps 1-3 and focusing on step 4 which didn't work.

      March 10, 2012 at 11:50 am |
    • JustLiberty

      You can also buy corn that has not been grown yet. Is 1/3 of the price of corn necessarily due to wall street speculation?

      Let them eat grass. Squeeze teats. Milk. About $4/gallon
      Let them pay royalties to governments, do seismic surveys, analyze seismic surveys, drill in 2 miles of rock under 2 miles of water, produce with world-scale expensive equipment, refine at very little margin, distribute at little margin, finance the whole lot, take on all the risk, and make < 10% returns. Those damn integrated oil companies. Gasoline.

      Of course dairy farmers have to do more than the above. but I hope you get the point.

      Does anyone want to count up the government loopholes and subsidies to the dairy industry and compare them to oil?

      March 10, 2012 at 7:12 pm |
    • William R. Hill

      We've heard all the excuses, but there is only one reason the price of oil keeps going up: The greed of the oild industry, including speculators, is boundless. They continue to use any excuse to jack up prices, as they have for years. No profit margin is big enough for them, and they don't care what they do to the world economy. Until we decide it's worth another "Manhatten Project" to get serious about making America energy-independent, we are at the mercy of the oil barons. A major problem is that a gutless, money-hungry Congress loves the oil lobby and its money at least as much as they love the "Big Pharma" lobbyists.

      March 11, 2012 at 7:40 am |
    • jay105

      It is funny how people here come to complain about high rising prices nobody complains for example about high pricing Ipads.

      In terms of oil I don't know how many times Americans are going to be caught in this endless game of oil going up and down. If you don't want to be caught or minimize the effects of the oil pendule just try to buy a more efficient car. The good thing about this is the higher and more painful the prices get more people will start to make a concience effort to save, downsise the huge cars they already had and disminish their addiction to oil.

      Costs is not an excuse there are plenty of cheap options around there non hybrids cars that gives you 40 MPG and actually are priced very well, those new efficient cars are a safe as any and if you ditch your old big car get somehting in rerturn and give that has a down payment you will be better off in the immediate future.

      Keeping you gas guzzler is not an option in a always increasing oil prices scenario.

      We can't wait for a definitive solution we can start doing something right now like asking your congressman or lobby for a mass transportation system but I guess it is easier just to seat and complain.

      I got my toyota Prius in 2004 and it has already saved me more than the premium I already paid then in 2004 to get an Hybrid. I have to say that it gives me some kind of pleassure to see how I paid $35 for a tank of gas that last me around 2 weeks and I see people paying $120 to fill those huge trucks and it will last a week if they are lucky.

      Didn't you see this picture before?, didn't you learn the lesson? Well I guess no.

      March 11, 2012 at 11:22 am |
      • Jim

        Well said

        March 11, 2012 at 11:43 am |
      • Steve

        But men love to prove how masculine they are by driving a Ford F350 or Dodge Ram. They would rather pay $100 at the pump then drive some sissy-boy Prius. What would that say about their "manhood"?

        March 11, 2012 at 7:53 pm |
      • our country is controlled by thiefs and religious fanatics

        you sir are an idiot, many of this people are construction professionals, delivery people, movers, transporters, people that has big families,etc.
        do you think everyone chooses to drive big trucks, the root of all our current problems is derived from dishonest people that controls the energy supplies.just like the "Enron" CEO's.
        besides not everyone can afford to drive hybrids, there is people that can only afford to drive the two thousand dollar old car.
        your utopia exists only in your head.

        March 11, 2012 at 9:09 pm |
      • Pappawtom

        Your idea is good on paper but in reality it doesn't work. There are too many people who work in jobs making under $10 per hour to make it feasible for them to afford a new car and the only choices they have are those inefficient vehicles. Now I suppose you would tell them they need to get a new job that pays more so where do they look?

        March 13, 2012 at 10:10 am |
    • don

      you should have seen the size of the skid marks in her pantys

      March 11, 2012 at 4:42 pm |
    • memo2

      I agree the Buyers and Wall Street it's all the same game.

      March 11, 2012 at 8:17 pm |
    • memo2

      Welcome to the scam world.

      March 11, 2012 at 8:24 pm |
    • our country is controlled by thiefs and religious fanatics

      Very true indeed. it is already happening.

      March 11, 2012 at 8:59 pm |
    • doug

      I personally do not believe all that crap about Iran as the U.S. only bought about 3% of it's usage from Iran and with the current sanctions I do not believe we are even buying from them right now...And to top that off 2yrs ago I was working on Western Refinery's communication system and struck up a conversation with some of the administrative people there concerning GAS PRICES,they came back at me and stated that the reason that the OIL from our own soil is not sold to the American people AT A LOWER COST is BECAUSE THE U.S.CONGRESS SIGNED A TRADE AGREEMENT WITH OPEC THAT WE WOULD NOT UNDER-CUT THEIR PRICE PER BARREL LET ALONE PRICE COMPETE...IF THIS IS TRUE ,THEN OUR OWN GOVERNMENT IS INTENTIONALLY LYING TO US AND THIS IS WHY OUR COMPLAINTS TO THEM GO NOWHERE...!

      March 12, 2012 at 12:19 am |
    • Ralph Ostrander

      I can fix the price a global law if you bid on oil you must take delivery.
      up to one year out.
      But you must take delivery or you lose your money.

      March 12, 2012 at 8:54 pm |
  2. Harry

    imagine if I could buy the supply and future supply of the drug "Plavix". Without it many would die, But I bought every pill Merick makes for the next year. It's my way or the highway so I tipple the price. You pay what I tell you or you die.
    I price it like a bag of ice after a hurricane.

    March 9, 2012 at 3:02 pm |
    • The Mad Zak

      Where we really screwed up is our dependence on oil. We should have foreseen this and taken oil off the commodities market. With other commodities you have options. If coffee goes to $100 a lb. a consumer can buy tea. As consumers, we can't do a dang thing about oil. We can't have our cars run on water until the price of oil comes down.

      Yea, yea, yea, I know you can modify a car to run on ethanol or make a diesel car run on used cooking oil. But you can't really to that on a nationwide scale to force oil speculators to sit on their investment and lost money.

      March 9, 2012 at 5:29 pm |
      • Jay

        For the most part oil speculation did not ramp up until the passing of the Commodity Futures Modernization Act of 2000. This bill also gave us the Enron Scandal and the Great Recession. Look it up, you will be shocked...

        March 10, 2012 at 11:20 am |
  3. Mike

    Fears? Fears are what speculators thrive on. Anything to use as an excuse to up their bets and the oil prices.

    March 9, 2012 at 3:04 pm |
  4. Harry

    Oil has become a commodity in the stock market.

    March 9, 2012 at 3:04 pm |
  5. Brian fr Langley BC

    Being a Canadian I don't typically comment, but saying the reason is the Iranian problem misses another rather significant reason???? Oil is sold in U.S. dollars. You folks are printing them by the trillions??? You keep changing the basket so it appears inflation is under control. BUT the oil prices aren't lying. Your money is simply getting worth less and less, and all commodities traded in U.S.D. (almost everything) are feeling the pinch. PS A leade that calls Israel a cancer that must be cut, can hardly be considered a rational actor. While M.A.D. might have worked on the godless commies, (who would fear death more than a godless commie)? I suspect it will not have the same effect on paradise seeking Ayatollah's

    March 9, 2012 at 3:05 pm |
    • senoy

      I'm not sure that makes sense Brian. True, the dollar is weaker than it used to be, but then currencies that are independent of the dollar would not be seeing price gains in oil since their currency would become more valuable relative to the US dollar and rise at comparable rates to the commodity. So I guess the question is: is Canada not seeing oil price rises? Since I know the answer to that question, I'm going to perhaps suggest a different theory is in order. Geopolitical stress is certainly one part of the equation.

      March 9, 2012 at 4:22 pm |
      • Brian fr Langley

        Of course Canadians are seeing oil prices go up, the U.S is our biggest market, so we're printing money as fast as you are. Rather than comparing currencies compare oil to other key commodities, and what you see is???? yes they are going up as fast (or faster) than oil.

        March 9, 2012 at 9:40 pm |
      • Mike

        You're not sure it makes sense 'cause you have no idea that oil is traded for gold, then converted to dollars. Brian is absolutely correct... monetary policy is the culprit driving gas prices.

        March 13, 2012 at 12:39 pm |
    • Sabrina

      Brian, you are CORRECT. The majority of the problem (not all) is that oil is valued in U.S. greenbacks. You can thank Bernake and the FED for QE1and QE2, a policy that purchased/bought back bonds by printing several TRILLION Dollars to pay for it. Printing and borrowing has reduced the value of the dollar to some of the lowest values in years. Inflation is also a result of the reduction in the value of the Dollar. All global currencies' values are down because they aren't based on the gold standard, unless the country manipulates it's currency value. Watch the ticker, when the value of the Dollar increases, the value of gold and oil goes down. However, there are geo-political situations (like Iran/Israel, Iraq War, Libya, etc.) which causes temporary spikes due to speculation.

      March 10, 2012 at 1:00 am |
      • Uniema

        @Sabrina
        I don't agree. What is Uncle Sam suppose to do? He can't raise taxes without hurting the economy and he can't cut spending without hurting the recovery. The problem is who controls the money... and hint it's not the government. Whether its debt or gold, if the government doesn't directly control its own currency... we are always going to be at the mercy of those few who are.

        March 11, 2012 at 4:04 pm |
    • Aziz

      You are not Canadian.
      Talks like a sandpit scorpion.
      Sings like a sandpit scorpion.
      Must be a sandpit scorpion.

      March 10, 2012 at 6:55 pm |
  6. mike

    Iran is just the most convenient excuse for speculators to do what they'd have done anyway.

    Commodity trading for oil must be banned.

    March 9, 2012 at 3:10 pm |
    • jim

      It can't be done. The oil companies are more powerful than the U.S. government, in fact they are capable of buying it. Congressmen aren't that expensive. The oil companies will continue to do whatever they want

      March 10, 2012 at 10:52 am |
    • Aziz

      Why, because it says so in the Kuran?

      March 10, 2012 at 5:24 pm |
  7. Harry

    1. wall street killed the housing market
    2. wall street killed the "Americans and their cars on super highways" dream with high oil prices
    3. wall street is killing the gold market

    March 9, 2012 at 3:11 pm |
    • earl

      How much has the price of gold gone down in the last 6 months? What was the price 6 months ago? What's the price now?

      March 9, 2012 at 4:40 pm |
    • Dan

      Wall Street didn't kill the housing market- Terrible lending practices (meaning lending money to people who had no business borrowing in the first place- as indicated by credit score) did that. Oh, and you can thank Clinton for that. The theory that every American should own a home won't work. Home ownership never works for those who can't/won't pay their bills.

      Wall Street didn't kill the gold market- You haven't paid attention to the history of that commodity. It's one of the safest items to invest in. I personally own gold. It's the one tangible thing that backs MY money.

      Wall Street didn't kill oil prices- Most of our pricing is controlled by OPEC and passed on to the consumer. Most countries are seeing gains in fuel prices. Using your fanciful theory, the US Stock Market controls other economies directly, rather than indirectly. The remainder of the fuel price has to do with much higher and ever increasing anti-pollution standards... forcing fuel to be even further refined.

      And for the record- we only get about 12% of our oil from the M.E. Of that 12%, 8 of it comes from Saudi.

      March 9, 2012 at 7:51 pm |
      • dljr

        Dan, you must work for Wall Street. Saudi could ramp up production. Obama wants oil to be high....I travel to 2-30 countries each year. Your evidence is flimsy at best. cheers. Americans we need to unite. Let's not let political parties destroy us.
        A house divided can not stand

        March 10, 2012 at 2:38 am |
    • dljr

      I agree with you. But common sense and dignity no longer exist in our country.

      March 10, 2012 at 2:35 am |
  8. Jimmer

    be a patriot .....shoot a speculator today

    March 9, 2012 at 3:17 pm |
    • Sabrina

      Tone it down... that's uncalled for. Don't you think there's enough violence in the world already. How about locally in your neighborhood. Kids shooting kids as carelessly as your flippant statement.

      March 10, 2012 at 1:14 am |
    • Marcus

      Introduce them to your friends, Glock, Smith and Wesson, and Magnum and ask them if they want to gamble and speculate if your friends rule.

      March 10, 2012 at 12:38 pm |
  9. Tom

    Why doesn't anyone talk about the oil cartel? it's called OPEC (Organization of Oil Producing Countries). The HQ is in Vienna. It's a consortium with representatives from middle-eastern countries, Venezuela , other producers, and no doubt Canada, from whom the USA gets 50% of its oil. The cartel operates independently, and can set prices world-wide at any level it chooses. I question whether Iran has a greater impact than OPEC.

    March 9, 2012 at 3:19 pm |
    • The Mad Zak

      They go together. In the past OPEC has decreased the production of oil to force an increase in the cost of crude. I'm sure they would be doing it now if they had to, but they don't need to.

      March 9, 2012 at 5:33 pm |
    • steven harnack

      OPEC controls production, they don't control speculators. There is already more supply than demand but speculation ignores immediate supply and demand. Removing oil from the commodities market is the only way to stabilize prices.

      March 9, 2012 at 6:07 pm |
    • Rick D

      Canada is not a member of OPEC or any other cartel!

      March 9, 2012 at 8:21 pm |
    • glennrobert

      You are right Tom! The US was the one sovereign nation until year two of George W.s first term. We are now laughed at. The oil industry is now the one sovereign power and will be into the future. The steep rise in oil and gas is the industry warning us to stay out of Iran. Don't do anything that interferes with profits!

      March 10, 2012 at 6:45 am |
    • Arthur Paliden

      Canada is not part of OPEC.

      March 10, 2012 at 1:55 pm |
  10. John

    Yet our number one export is now refined gasoline.
    Apparently we have so much excess of this, that we're selling it off to the rest of the world rather than trim our prices at the pump.

    March 9, 2012 at 3:27 pm |
    • The Mad Zak

      That is true. This is why drilling more in the US or building the Keystone pipeline is not going to drastically reduce gasoline prices. The US petroleum companies will always sell to the highest bidder. If that bidder happens to be a foreign company then so be it.

      March 9, 2012 at 5:51 pm |
    • James

      I was skeptical, so I looked it up. It is actually true 🙁 Energy export is our #1 export

      http://www.usatoday.com/money/industries/energy/story/2011-12-31/united-states-export/52298812/1

      March 9, 2012 at 5:55 pm |
    • Damo

      You say that as if you're surprised. It's a global commodity, we sell it to the world, nobody can step in and say "stop that, only sell it to America, we want our prices to be cheaper right now".

      Free market.

      March 10, 2012 at 1:33 pm |
  11. FedFraud

    One word: GREED

    March 9, 2012 at 3:28 pm |
    • sparknut

      Finally, an honest and wise response!

      March 10, 2012 at 2:59 pm |
  12. usmletutor

    Guys 1.2 million barrels is not a small things...even though Saudi may say that they can compensate but they can't...also there could be element of the market playing into this...oil companies earn from high prices and they want the governments to keep speculating wars to justify high prices giving the excuse of tension in the market...these are the same people who do insider trading and leach middle class of their hard earned money...lets push for reforms in the way prices are fixed to have a cap on the prices.

    March 9, 2012 at 3:29 pm |
  13. Bob M

    Uncontrolled oil prices are the direct result of politics and speculation. Our own government US production roadblocks and decisions, as well as, Irans agenda to disrupt the Middle East, both contribute heavily to the price of Oil. And do not forget the higher price of Shale and Sand Oil production, higher barrel costs are needed to support them.

    March 9, 2012 at 3:33 pm |
    • The Mad Zak

      In the 70's gas prices went up because oil production could not keep up with demand. Currently, the petroleum industry can keep up with demand. It is the speculators that are keeping the prices high. Drilling more or building the Keystone pipeline is not going to drastically lower gasoline prices in the US because petroleum is a global commodity. Let's say we have more wells and the Keystone pileline is built. That would allow US petroleum companies to produce raw crude more cheaply. But they will not sell to US refineries for less if they can sell to global markets for more. They will continue to sell to the highest bidder and just take a higher profit.

      March 9, 2012 at 5:22 pm |
  14. jc

    Please, explain to me why we are being held hostage to Iran's politics or Saudia Arabia and how much oil they can pump? America has more oil than Saudia Arabia but we won't pump it because the environmentalist have us convinced we can't do it safely.That just isn't true and yet we are sending our money to people who don't like us. Drill on our own soil and then the price will come down for us and we will be getting the foreign countries to buy from us! Please lets use some common sense!

    March 9, 2012 at 3:41 pm |
    • Donny

      jc, you are wrong. The aggregate output for US crude peaked in the 1970's and has largely declined since, with a few upticks here and there. It did not peak because of the environmentalist. It peaked because all the major, large, easy to access oil fields were pumped past their natural peaks. If you knew anything about the resource, you would understand that as a field matures, the oil in it becomes harder and more expensive to obtain. Even with the extra effort to obtain the "bottom of the barrel" oil, it is of a lower quality and more expensive to refine. Anyway, the main problem is that the resource is finite and the US just doesn't have the enough recoverable oil in the ground to be produced in a manner to quench America's thirst for it. Even the CEOs of all the major oil companies acknowledge this fact. So, whether you like it or not, the US is stuck in the position of being dependent on foreign oil for the foreseeable future. This presents us and our way of life with a huge problem. As demand keeps increasing across the planet, the price will continue to rise as it is the lifeblood of ALL economies across the globe. The answer is not to "drill baby drill" as the dimwit Sarah Palin and her kind like to espouse. The answer is to invest huge sums of money in renewable sources of energy. If we don't, we will look back at the days of the past recession as a minor bump in the road.

      March 9, 2012 at 4:15 pm |
      • Pete

        Excellent commentary.

        March 9, 2012 at 7:00 pm |
      • CNNick

        Invest in renewable......Solyndra!!!!!

        March 10, 2012 at 3:41 pm |
    • The Mad Zak

      jc: You may hear some people make comments about the US having huge oil reserves. A lot of that oil is imbedded in rock which requires fracking to extract. That is an expensive procedure. It is not really profitable until you are charging $3.50 a gallon for gas. That's why companies are doing it now. But since it is such an expensive process, it will not lower the gasoline prices substantially.

      March 9, 2012 at 5:15 pm |
    • MIJohn

      Typical manager-type comment. Never worked a day on the floor (or in the oil fields or exploration teams) but thinks he's more qualified than the people with 4, 6, and 8 year degrees and years of experience in petroleum geology to make decisions about policy.

      We have oil yes. As others have pointed out – it's also far more expensive to extract and refine than what is available elsewhere. It's the same reason the Canadian's didn't t bother with their oil sands deposits until the price went sky high – when all it said and done it ends up being a net negative value in terms of energy production. In idiots terms, that means we would need to burn more oil to get that "American" oil into a useable form that we would get out of the process. Besides, using up the oil somewhere else before tapping out our own reserves makes for sound policy. If we use our domestic reserves as the "drill baby drill" mouth pieces want to, then what are going to do when that runs out and we find ourselves in the middle of a conflict? We've already seen how jittery the market is at the possibility of war – imagine what it would be like in a real war when tankers regardless of national flag would be a huge target.

      Conversely if we reduce our dependence on fossil fuels in general and sit on our own reserves, we have the ultimate trump card; when the big exporters are dry and the hostile importers like China are watching their economy and military go down the drain, we would be chugging along. That was one of the reasons for putting the oil on the Arctic Shelf off limits to drilling and filling those salt domes under Louisiana with oil; if war broke out with the USSR they were our reserves in case the Middle East got closed off.

      March 10, 2012 at 9:09 am |
      • bigttt22

        I agree Mijohn. Fracking is not going to help our cause nor is the supposed job creating pipeline through Nebraska and that is why the Governor and his whole state blocked it. Look it up half wits! That pipeline is to pump all that to Texas for export. Now that it is blocked they have to try to route it through Canada through the Indian land and they are saying hell no. Look it up. For anybody who thinks that we are going to get that oil you are a fool. It will all be exported just like we are exporting gas now for the first time in most of our lifetimes. 40 yto 50 years at least!

        March 11, 2012 at 5:49 am |
  15. Realist

    Actually it started right after Katrina.... Gas hit $5 a gallon, and big oil made record setting profits. You didn't really think the prices would come back down after a taste of those profits did you?

    March 9, 2012 at 3:45 pm |
  16. Skolo

    There's ALWAYS an excuse to raise oil prices, but NOTHING is ever a legitimate reason to do so. Until Iran is sinking oil tankers in the Middle East, it's all BS to raise prices over TALK!!! Is that all it takes to raise prices? – THREATS!!?? It's oil companies making excuses!

    March 9, 2012 at 3:54 pm |
    • Georgia Hull

      I agree. The oil companies are always raising prices and blaming anyone but themselves. Remember they raised prices during Carter's administration because they said they were running out of oil. Than Bush's because of Katrina. Every time it is just price gouging. Not it is blame Iran. When it is really Blame Big Oil.

      March 9, 2012 at 8:17 pm |
  17. Doug

    The reason for high oil prices is because of oil speculation from trading.

    I personally know several energy traders and they tell me that speculation accounts for 30-40% of the price of oil right now.

    Right now speculators are only required to put up $6,885 for every 1,000 barrel contract to meet margin requirements. That is ONLY 5-6% of the value of the contract, which means that speculators have can buy lots of oil contracts with very little money. In fact CME (the clearing house that set commodity rates) lowered its margin requirement on Feb 9th of this year and prices of oil instantly went up from $99/barrel to today's rates.

    Speculators work under what is referred to as “margin-equity ratios” which represents the amount of their trading capital that is being held as margin at any particular time. The low margin requirements of futures results in substantial leverage of the investment. The more leverage employed, the more likely a substantial change will occur typically driving the value of the investment (prices) up. Futures trading normally require low margin deposits in order to PERMIT an extremely high degree of leverage. being highly leveraged is what got us into the currently economy problems that we are in now.

    I would increase the margin requirements to 30-40%, if that was done then all of the speculators would immediately jump out of the oil market since they would lose their ability to highly leverage the contracts by having to place more of their capital into the actual contracts. Additionally they would be forced to SELL there contracts to cover the increased margins, which would force down the price of oil.

    Here is proof this would work, in May 2011 CME raised margin requirements on silver and the following day prices of silver crashed. Commodity prices actually fell across the board as speculators feared that the margin requirements would increase for other commodities as well. After 2 weeks silver prices fell by 33%.

    Raise the margins on oil contracts and watch the prices drop like a stone!!!!

    Fareed, you should be contacting CME on a daily basis and ask them why they LOWERED the margin requirements and why they keep them so low. This is the REAL problem, its just that no one wants to admit whats happening because wall street is making a killing on speculation.

    March 9, 2012 at 4:05 pm |
    • Stephenson

      Doug, thank you for making that clear, because you've hit the nail on the head here.

      The thing for our government (Obama) to do is to release oil from the Strategic Petroleum Reserve before the delivery for those contracts come due and make those political vulture speculators lose their shirts.

      Remember, those guys are betting heavy on war and they are praying for it. Dump some of our citizen owned oil on their heads like that a few times and they won't have the 5-6% of the value of the contract in their pockets anymore. It will be back in ours, like it should be.

      March 9, 2012 at 4:57 pm |
    • The Mad Zak

      Excellent info. Idon't know if your info is right or wrong, but it sounds right.
      If your figures are right, how do we get the 5% margin increased to a reasonable figure like 30% or 40%? Meaning, who has the power to force CME to increase the margin? The SEC?

      March 9, 2012 at 5:11 pm |
    • MIJohn

      Now why can't this sort of thinking be the norm when it comes to policy? Oh right, it doesn't fit onto a bumper sticker so most American's aren't able to remember what came one paragraph before, much less understand it. I keep forgetting that for the last 30 years there has been a deliberate effort to create mindless drones who can perfectly answering meaningless questions on standardized tests but are incapable of using what is termed "critical thinking".

      March 10, 2012 at 9:17 am |
    • Mac Qurashi

      Doug
      Great information. I wonder if our representative understand what is happening because they take their ques from the oil company doners. We need to write to our congressment and demand that they raise the margin requirement. Low margin speculaiton is also responsible for the increased prices of other commodities.

      March 10, 2012 at 5:13 pm |
    • Aziz

      I hate to tell you this but your mother lied to you.–you are not very smart. You are not very smart because you underestimate your foes. We know you are not American and that you and your small brained friends are hiding in a sandpit somewhere. Honesty leads to successful dialogue not this very silly game you are trying to play.

      March 10, 2012 at 6:00 pm |
  18. Bob

    Fareed Zakaria s a F tard!! Write about something you may know a little about next time.

    March 9, 2012 at 4:06 pm |
    • Georgia Hull

      Right you are. This guy is full of it. He needs a basic economics class. CNN should can him.

      March 9, 2012 at 8:12 pm |
      • Donny

        Please explain to me how he is wrong about the world oil supply being in a position where it will not be able to meet the demand once the world's economies come out of recession. Tell me. I want to hear you explanation seeing as the supply crude oil has remained relatively flat for the past 6 years and is in no position to climb for the foreseeable future. If anything, it appears as if world supply has peaked. Even the Saudis have started to explore deep water drilling in the Persian Gulf. Tell me, why would a country which claims to have "inexhaustible" sums of oil start drilling deep water wells, the most expensive and inefficient type of oil drilling if their field are inexhaustible? Tell me. I want to understand.

        March 10, 2012 at 12:18 am |
      • Aziz

        Hey Fatmah, do you and your little friends call each other to decide what names you are going to use. I can just hear it, I want to be Elizabeth, no no Georgia hehehe......

        March 10, 2012 at 6:04 pm |
    • blucorsair

      Canada and Mexico are our largest supplier of imported oil and, because of Obama devalueing our currency by adding another $5 trillion to our national debt inless than 3 years is the real reason why oil is going up at the pump here in the U.S.! We get almost none of our oil from the middle-east! U.S. dolars are currently, worth less than Canadian dollars for the first time in approx. 70 years thanks to our "spend thrift and chief" in the white house!

      March 12, 2012 at 4:28 am |
      • Tyler

        So if I were to tell you that $1CAD was worth $0.63US in 2003 and $1.09US in 2007, would you admit that you're INCREDIBLY misinformed and reevalute your position? That was under Bush. (Since the executive branch is responsible for everything...) Today it's about $1CAD to $1.01US. You're right though. Stupid Obama. http://www.bankofcanada.ca/rates/exchange/10-year-converter/

        March 13, 2012 at 12:53 pm |
  19. Cabra1080

    Oil wells are being exhausted, oil is gradually running out, hence the high and sustained prices. Eventually, it won't be available at any price.

    March 9, 2012 at 4:10 pm |
    • The Mad Zak

      Not true. The petroleum industry is keeping up with global demand at this time.

      March 9, 2012 at 5:06 pm |
    • James

      Oil is finite, but we are in no shortage of supply. Even if the easy to access supplies run out, the demand will be high enough that it is now profitable to extra the more difficult to access reserves – Such as Shale Oil.

      The ultimate solution is still that we change our energy needs before the "end" comes. Renewable Energy is the only solution for the future. Even if we discover science fictional technology like fast than light travel, it is still in our best interest to change to renewable energy. Oil is formed from Biomass, so unless we find another planet that has life (which according to Christians that would be anathema), we are not going to find oil anywhere else.

      March 9, 2012 at 6:02 pm |
  20. Craig

    Odd. While the geopolitical situation is clearly one factor, the known facts about the impact of speculators is much better understood and not subject to political winds. Stop Wall Street from buying oil futures and, according to the Oil industry, the price could some down nearly 40%. THAT's where the prices could easily be eased...although some of those Wall Street types wouldn't get the same fat bonuses.

    Tough luck, greedy suckers!

    March 9, 2012 at 4:39 pm |
  21. earl

    "The reason they are so high is really Iran, Iran and Iran."

    Retard – the reason the are so high is really speculators, speculators, speculators.
    Just look at articles written about jumps in oil prices over the last 10 years. I'll bet 99% of the articles outline risks that speculators created. Then look at the next months worth of news – have any of the risks actually come to fruition? Again 99% – most of the so called risks never came to pass.

    March 9, 2012 at 4:45 pm |
    • The Mad Zak

      Earl: The reason why speculators are guessing that the oil prices will rise is because of the instability of Iran.

      March 9, 2012 at 5:04 pm |
      • Donny

        Thank you for correcting this unintelligible pile of mastodon dung. Earl, don't write anything unless you have something intelligent to say.

        March 10, 2012 at 12:25 am |
  22. The Mad Zak

    Hmmmm....And all this time I thought the reason oil prices kept rising was because Obama was a poor president. Maybe I should stop watching Fox News....

    March 9, 2012 at 5:02 pm |
  23. speculators

    Let me make a few corrections to this story so it's more truthful.

    Zakaria: Iran is a "speculators drug"

    It's happening for one reason, principally and that is SPECULATION. There are SPECULATIONS of a war with Iran and SPECULATIONS that crippling sanctions on Iran would cut down Iranian oil exports almost entirely.

    If you look at demand for oil, it's just not that strong. Much of the world is in slower economic times than before. In January 2007, oil was $50 a barrel. It's now $110 a barrel. This doesn't make any economic sense unless you factor in speculators. So for oil prices to decline, there must be an end to speculators and speculating of oil.

    So there are speculators that explain why oil prices are high – but not why they are so high. The reason they are so high is really speculation, speculation and speculation.

    March 9, 2012 at 5:04 pm |
  24. EyesWideOpen

    No where was fiscal policy mentioned, which is no surprise! The Federal Reserve with the blessing of the Obama Administration, has created (printed) billions of dollars which were used to prop up Treasury bonds by using the newly created (printed) money to buy them. This has caused the value of the dollar to plummet and real inflation (numbers that include food, fuel and housing) to skyrocket. It's not just fuel. Have you seen how much a gallon of OJ is now? Last time I checked oranges have nothing to do with geopolitical forces!

    March 9, 2012 at 5:04 pm |
    • MahopacPaul

      Thank you. Somebody else finally gets it. I made the same point last night. Oil is a store of value like other commodities (gold, silver, platinum, palladium, copper, etc). The difference is, everyone needs oil (energy) unlike most of those other commodities. The Federal Reserve has increased the number of dollars (money supply) through QEI, QE2, QE3 (Twist), thereby causing the value of each dollar to decrease. Therefore, the number of dollars required to purchase a barrel of oil is higher. On top of that, even though US oil demand is down, demand from developing nations is increasing, as is the demand for refined products outside the US. Combine that with an increase in crude oil extraction costs (because the "easy" oil has already been produced) and you have higher oil prices as a result. The US must encourage development of domestic energy sources while creating a comprehensive domestic energy plan which defines the specific actions required to maximize energy independence and time line within which those actions will occur. During that time we must use our domestic sources of energy wisely so as to provide a "bridge" to the future. At the same time we must reduce spending and our national debt so as to increase the value of the US dollar and decrease the number of dollars needed to purchase the energy our country needs to survive and prosper.

      March 9, 2012 at 10:35 pm |
  25. Ex drilling engineer

    The cost to drill has not increased, the cost to extract has not increased, the cost to refine has not increased – the only thing to have increased is the profits the oil companies will make at the expense of the world economy. Thank you big oil; huge profits today at the risk of financial disaster tomorrow

    March 9, 2012 at 5:10 pm |
  26. Amit-Atlanta-USA

    WANT TO UNDERSTAND HOW MAKES UP STORIES AS THEY COME ALONG……WITH NUMEROUS FLIP-FLOPS

    Check these out:

    In this article he says “The reason they (oil prices) are so high is really Iran, Iran and Iran.

    AND, COMPARE WITH THESE:

    Ref 1: “Could Middle East Tensions Boil Over” FZ, CNN-GPS 02/24/12

    Zakaria -I'm struck at how in this one week you have seen – from Afghanistan to Yemen to Syria to Iran to Egypt – all these places at a boil. One reason for this, I suspect, is that oil is at over $105 a barrel.

    And, check out my response under feedback:

    I wrote “Anyone with rudimentary knowledge of MEn affairs and the dynamics of oil prices can understand that in reality Oil price is $105 b’coz of the turmoil in the ME, and NOT the other way around as our learned Mr. Zakaria seems to think!

    Ref 2: Obama’s Oil Problem – CNN GPS Feb 26, 2012

    Zakaria – "The one obvious factor (for rise in oil prices), of course, is the political instability in the Middle East. Worries about Iran are probably the principal driver of these prices and the speculations surrounding it. "

    And, check out my response there too on Mr. Zakaria’s FLIP-FLOPS

    Still believe Mr. Zakaria to be smart & learned?

    March 9, 2012 at 5:11 pm |
    • Mohammad A Dar

      Good job Zikria, truth is poison pill for a hindu, ignorant, no Medicine is better to cure sickness of hinduism, self center ism than truth absolute, hell with hindu, ignorant. Kepp on pumping the medicine.

      March 9, 2012 at 5:31 pm |
  27. FromRU

    Oil at this price is a gift, especially for the usa.

    March 9, 2012 at 5:19 pm |
  28. amir

    just want to congratulate oil companies they make us think that they have nothing to do with High Gas Prices
    Are you kidding me people…

    March 9, 2012 at 5:19 pm |
    • Georgia Hull

      I agree. This story is bought and paid for by big oil. Blame anyone but the real culprit >Exxon, BP, Shell, etc.

      March 9, 2012 at 8:10 pm |
  29. Mohammad A Dar

    hinduism, crookedness of hindu Jew's, criminal self centered, make an excuse to play with stock exchange, hell with public, hindu Jew, criminal self centered has his sight fixed on bone.

    March 9, 2012 at 5:24 pm |
  30. Just Me

    Why do oil prices keep rising? GREED.

    March 9, 2012 at 5:34 pm |
    • Mohammad A Dar

      hindu, Judaism, criminal self center ism.

      March 9, 2012 at 6:47 pm |
    • Norma

      Exactly. its greed, greed and greed. It is so disgusting the way they keep coming up with this theory and that theory trying to justify it and they actually think we belive them!! ha ha... Its greed.
      It doens't matter what a person drives, if we all drove small cars they'd drive the prices up to 13 dollars a gallon. they have us by the nose. but..... we can all protest in our own way. DRIVE SLOWER!!! I do, it works. they're not going to get ALL of my money for the oil companies.

      March 10, 2012 at 12:15 pm |
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