How To Play the Oil Conspiracy Theories

Tony Daltorio, Investment U Research

Despite the world’s economic growth woes this year and consequent decreased energy demand in the U.S., the price of oil has held up pretty well this year ($77 as of November 3) when you’d actually think that it would be lower.

What gives?

Fundamentalists will point to two factors…

Continued strong demand for oil from emerging markets. Decreasing oil output from non-OPEC producing nations such as Russia and Mexico.

Conspiracy theorists on the other hand, scoff at that notion. They blame it on the huge quantities that greedy oil companies hold offshore for no better reason than to increase their profits.

While I largely consider myself a fundamentalist, I decided to check it out, just in case there were any facts to support the complaints. And it first means asking a simple question…

Why would anyone

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People have been scratching their heads wondering why the price of oil has held up relatively well this year in the face of a global slowdown and decreased energy demand in the United States.

Fundamentalists will point to continued strong demand for oil from emerging markets like China and decreasing oil output from non-OPEC producing nations such as Russia and Mexico. But then we have the conspiracy theorists who say the only reason that oil prices are so high is due solely to huge quantities of oil being held offshore in tankers by those greedy oil companies in order to boost their profits.

First of all, why would anyone want to store oil in tankers and not sell it? After all, it costs money to charter those oil supertankers. Storing oil in tankers does make sense if the price difference between crude oil sold for immediate delivery and the price on oil

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