FOX is wrong....again. O'Reilly is wrong almost all the time when he talks about gas prices and oil, one reason I really don't watch him much any more. Here's an example of misinformation being spewed out by this Harvard big mouth as well as others on the tube. They all moan that oil Refineries are fucking us by shutting down and deliberately under utilizing them in order to boost the price of gasoline.

Here's some facts. Refinery Utilization numbers have been the same for decades, when oil was $10 and now when oil is $130. The same, and this asshole wasn't bitching when oil was $10 even though most of us who traded back then realized that prices that low were actually bad for the overall economy.

Today, like in right now, the refinery capicity is running at 83.2% of capacity for April, the latest available month. April is the time when at least 1/2 of the refineries have to shut down to reformulate the gasoline mixes required by various local and state governments. They HAVE to shut down. They have to shut down in September to reformulate for winter. AND on top of all this is routine maintenance which has to be done several times each year because our refineries are all thirty years old and counting and old refineries require more than normal maintenance. So refinery capacity runs from a low of 80% to a rare high of 90%. NEVER in my twenty five years of trading have these numbers varied.

So much for the conspiracy between refineries and oil companies.

Futures markets are at fault, per the usual suspects. Futures are necessary for the survival of most companies, farmers, and large consuming entities like MacDonalds and Safeway. Futures are used to cushion price rises in the future or price drops in the case of farmers and other producers of product that must be resold. Check the volume on the exchanges all over the world and you will see that as much as 90% of the volume is hedges against price swings, not speculation. (see post above)There is massive no position limit trading allowed on the London Exchange, and it is that trading that may be moving markets. An example of a hedge placed on the futures market by a company that has to sell product in the future and has contracts based on the current price: Let us say that my widget contract for September is based on a price right now (and because of competition that's the way I have to price) of $100 per thousand. I protect myself from a sudden price rise in the raw materials necessary to make them so I BUY what I will need for the future. Meaning that if widget materials go to $120 per thousand my futures contract will pay me the $120 and my contract is still profitable. A reseller might be afraid of a sudden price drop taking place after he has bought materials for $100. His fear is "hedged" by selling the materials right now in the futures market for $100 so that even if the cash price drops to $80 he is protected because he already sold his stuff for $100 in the future. Without the mechanism of futures we'd have them anyway because everyone would sell "forward" without the quality assurance of the contracts demanded by the futures exchanges----all contracts specify the quality and the final price is always adjusted for lower quality or higher quality.

BTW, Lou Dobbs is even more wrong than is O'Reilley.