Who is really profiting from High Gas Prices? The Arabs? The Oil Corporations?

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With the continuity of gas prices rising, we can make a simple prediction that we will be paying $8 a gallon in several years.  Is $8 per gallon gas coming soon?  At the current $4 per gallon rate, many in the lower income communities are struggling even more to conserve their own resources.  When prices rise, someone profits from it.  People can point to supply and demand.  Many are pointing to the emergence of China and India.  However, pointing fingers at certain countries is the easy thing to do.  The greater challenge is someone stepping up and becoming accountable.

The top money makers are three main players:  The Oil Brokers and the countries and corporations that produce oil.  These are not poor people; these are not your average middle class citizens.  These are wealthy people seeking to make maximum profit from you.   People just want cheap gas.  People in cities such as Atlanta, Los Angeles, and Houston rely on their cars for transportation and many of them do not have the alternative of public transportation.  

Boston, New York and Washington, D.C. do not need to worry as much as Atlanta, L.A. and Houston on gas prices; they have the option of public transportation.  In Manhattan, a car is not a requirement because you can walk or take the subway.  The closest Starbucks is probably a block away.  Wall Street is part of Manhattan.  But living in Manhattan comes at an expensive price for the average American Citizen.  Washington, D.C. is where our representatives live, our U.S. Senators, Congressmen, the President, his cabinet, etc.   They may have concerns, but they do not have to feel the pain of rising gas prices.  We have to remind ourselves that Washington, D.C. has a well respected public transportation system.  Our corporate leaders are in New York, our politicians are in Washington, D.C.  What about the rest of us? 

While we can blame the Arabs for the high gas prices, we have to take in account those other people that profit from the rising oil prices: the Oil Brokers.  Who are the oil brokers?  They are the middle men between the oil corporations and the oil producing countries.  These people probably have the most secured jobs and are similar to sports agents for athletics.  Just like the sports agents demand the best money for their players, oil brokers demand the best money for their products.  They point to national security threats, regional instabilities and the Iraq war.  Sadly, without a strong public transportation many of us do not have a choice of an alternative.

Oil Brokers have the power to predict future prices and how far are people willing to go, if they can make a big profit at a higher price and people are willing to pay for the gas, they will raise the prices.  They are in your local stock market through commodities futures exchanges such as the NY Mercantile Exchange (NYMEX).  

How do Oil Brokers work?  While one can explain all the details in a more complex language, oil brokers are like sports agents.  Oil brokers are third parties in the market, just like sports agents. 

A Basketball Player = The Oil Production Nation

The Team = The Oil Corporation

Sports Agent = The Oil Broker

The Oil Broker does not make the majority of the profits, but the oil broker plays an influential role in raising prices.  In fact, he or she predicts future prices and bids the highest on oil.  While Sports Agents do not bid on players, they determine the best price for their product.  Yes, the basketball player will get a significant portion of the price.  But his price is not determined by him, but it is determined by the market created by the sports agent.  The team does profit from him and sell him to the audience.

Higher Demand = Higher Price

When the sports agent feels that he can get a better price for his player he will go for it.  What sounds more appealing to you?  Getting 10% of $1,000,000 or getting 10% of a $100,000.  The higher return is more appealing.  Oil Brokers go for the top dollars.  They predict the prices that determine the market.

One can predict that greed does happen.  That is what is difficult to control in these times.  Although Presidential Candidates Barack Obama and John McCain talk about alternative energy sources to control gas prices, they are not going after the oil brokers.  In fact, their websites do not mention anything in regards to oil brokers.  On their websites, the Presidential candidates list alternatives, but not solutions.  They do not address anything regards to the oil brokers.  In this case, it is the oil brokers that are getting away with record profits, while the blame is being shifted on the oil companies and oil producing nations.  OPEC can only do so much; it is the oil brokers in New York that need to be held accountable.  What you can do is tell your Congressman or Senator to go after these Oil Brokers who control the prices.  Your representatives may be reluctant, but remember, you elect them and you have the power to remove them and change the course.  Our Senators must be more aware of the oil broker issue. Just like Sports Agents are responsible for 100 Million Dollar Contracts for major players, Oil Brokers are responsible for the rising oil prices that result to $4 a gallon.  We must control this greed. 

Munzir Naqvi is a freelance writer.  He graduated from Kennesaw State University with a Bachelor of Science in Political Science.  He is pursuing a Masters in Liberal Arts at Harvard University.

Munzir Naqvi graduated with a Bachelor of Science in Political Science from Kennesaw State University.

He serves as an advisor to the Pakistan Israel Peace Forum (PIPF) & Pakistan The Next Five Years. Mr. Naqvi has served as President of Student Government at Kennesaw State University in 2004-2005. 

Naqvi is interested in developing countries and economic policies.  He is an advocate of Free Trade in a Free World.  His Motto is Diplomacy before Dialogue.  You can follow him at www.twitter.com/naqvi and Join the Facebook Group: Pakistan The Next Five Years

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