Thursday, June 9, 2011
Congratulations to all G&S managers and crews for helping to make G&S Services Company one of the Top 10 ConocoPhillips Marketers who had the most sites in the top 250, in the 2010 Spirit of Performance program.
Special congratulations goes to Kim McClure, manager of our Colorado Springs convenience stores, whose G&S CAMPUS CORNER scored the highest of all G&S locations for 2010. In addition, the other two stores under Kim’s supervision, UINTAH CONOCO and GALLEY CONOCO, tied for 2nd place at G&S with Dan Gipson’s CIRCLE DRIVE CONOCO, who was last year’s winner.
Kim’s experience, hard work, and big smile make our Colorado Springs stores some of the best around. Thanks again to Kim and her crews.
Thursday, June 2, 2011
An oil-trading pro blames a flood of new investors buying oil ETFs for the recent pain at the pump.
By MSN Money partner on Tue, Mar 29, 2011 11:33 AM
By Charles Wallace, Daily Finance
Have you ever wondered why when you go to the gas station to fill up the family car, the price of gas at the pump has just jumped 25 cents a gallon over the past three days? Perhaps you thought the oil companies were just being greedy. Or you believed the nightly news pundit who said that gas prices went up because the crisis in Libya was affecting supplies of oil. One professional oil trader says that you’d be wrong on both counts.
Dan Dicker, who has spent nearly three decades in the oil market, has a profoundly disturbing explanation of why the price of oil, and the gasoline that comes from the crude product, has risen so dramatically in recent months. It turns out, Dicker says, that the price has nothing to do with supply and demand for oil. It’s the financial market for oil, filled with both professional speculators and amateur investors betting on poorly understood oil exchange-traded funds, who have ratcheted up the price of gas to such sky high levels.
“There is no supply issue going on here — what you have is the perception of the possibility of a supply issue,” Dicker says. “A whole bunch of people are pouring money into an oil market trying to take advantage of what they perceive to be a real risk in supply. It’s a marketplace that I argue should not be allowed to be wagered on like a stock or bond.”
Dicker notes that Libya produces only 1.3 million barrels of oil a day, just a tiny fraction of the world oil market. Even if Libyan crude were lost to the world market in the current turmoil, and there is no sign that it is, Saudi Arabia has 5 million barrels a day to use in case of an emergency.
Dicker, who has just published a book called Oil’s Endless Bid: Taming The Price of Oil To Secure Our Economy, makes a strong case that if the government stepped in and regulated oil trading so that only investors with a genuine interest in the physical product, such as airlines and heating oil companies, could buy and sell oil futures, then the price of oil would fall by 50% overnight and our economy would be much better off.
Why Greater Regulation is Needed
“You have to make it so the original intent of commodity markets, to be used almost exclusively as hedging tools, is returned,” he says.
Though Dicker acknowledges that is not likely to happen, he points out that when the 2008 economic crisis froze all financial markets and investors stampeded to the sidelines, the true price of a barrel of crude oil became known: $32. It’s now hovering at around $110 thanks entirely to investor demand, he says.
One of the reasons Dicker is calling for greater regulation of the oil market is that no one really knows how large it is or what is going on it on a day-to-day basis. In fact, it reminds Dicker of the market for credit default swaps, which brought down the insurance giant AIG and forced the government into a $180 billion bailout.
The market for oil traded financial instruments has been estimated at between $8 trillion and $30 trillion, but there are no concrete numbers because traders don’t have to tell anyone how much they are betting either for or against the oil price. Dicker says if the government minimally required oil trading to be conducted in a transparent manner on exchanges instead of the current over-the-counter system, a large number of speculators would leave the market and the price of would fall sharply.
He also notes that the major shift in oil trading has been relatively recent. First, financial firms such as asset managers and pension funds realized they needed to diversify their holdings of stocks and bonds, which had performed badly over the previous few years.
The move was made easier by the arrival in 2006 of electronic trading of oil futures. The formerly cumbersome process of trading oil with a floor trader at the New York Mercantile Exchange was suddenly replaced by a streamlined process requiring only a few keystrokes on Chicago Mercantile Exchange’s Globex computer platform.
From a few thousand trades an hour at the old NYMEX, traders now process millions of trades an hour by computer. Dicker estimates the financial market for oil is 15 times greater than the amount of actual oil being traded, with 75 types of futures being sold on exchanges. That doesn’t even include all the private, over the counter transactions that take place.
“The amount of money pouring into hard assets, particularly oil, is outsized because it’s new and fresh, so you get these outsized moves from $68 a barrel in the summer of 2010 to $100 now,” Dicker says.
Why does all this trading drive up the price, when buyers and sellers should theoretically cancel each other out? Dicker says that is primarily because almost all oil investments being sold by the big investment banks are long trades — bets that the price will go up. While it’s also possible to short oil ETFs, no one does. So the price heads ever skyward.
“There is no shorting of the market and the commodity market is not like a stock market,” he says. “It is not designed to have only one half of a trade. It is designed to inspire both halves, that’s how you arrive at a correct price.” Dicker gives the following example: Let’s say you live in a neighborhood where all the homes are priced at $200,000. Suddenly an army of buyers arrives who want desperately to move into the neighborhood. You were not really interested in selling before, but now a buyer offers you $400,000 for your $200,000 house. What are you going to say?
“That’s what’s going on in oil,” Dicker says. “You have this army of people who have been flooding into a brand new neighborhood and they’ve had to inspire somebody to sell and the only way you can do that is pay an outrageous price for it.”
The Biggest Winners
Among the biggest winners of the new oil markets are investment banks like Goldman Sachs (GS) and Morgan Stanley (MS), which create new products for clients and then use that information to trade on the products. In 2004 and 2005, Goldman Sachs made $1.5 billion a year trading oil, Dicker says. In the first half of 2009 alone, the firm made $3.4 billion oil trading profits. Firms like Goldman are not taking bets that oil will move lower or higher. Trading simply means naming a spread of buy and sell prices from which they can eke out tiny but regular profits, a business without risk.
Dicker is particularly contemptuous of oil ETFs of the kind that many small investors have used as vehicles to diversify their holdings. “In these markets, the way they are set up, with all the edges with investment banks, the regular investor is just fodder,” Dicker says. “The ETFs are the world’s worst investment. They’ve only lasted this long because oil prices continue to rally.”
So if gas prices would come down sharply with minimal regulation, why doesn’t the government step in and impose limitations as it has done recently for other derivatives, forcing most firms to conduct their trading on exchanges? Dicker believes it is largely because large financial firms with a direct interest in oil trading have made so much money with oil that they can afford to lobby Congress to block any significant reforms.
Tuesday, June 15, 2010
Congratulations to Dan Gipson and the crew of CIRCLE DRIVE CONOCO for being placed on the list of ConocoPhillips’ Top 60 Locations nationwide in the 2009 Spirit of Performance program, scoring perfect scores in all four quarterly inspections.
Dan and his team has been providing top notch auto repair and service to customers in Cherry Creek, Washington Park, Capitol Hill and East Denver for nearly 20 years. The reward is a result of everyone’s hard work in ALL of our locations, G&S Services Company was listed as one of ConocoPhillips’ Top 25 Marketers for 2009.
Monday, June 14, 2010
One of the unique features of some G&S Auto Service Centers is the availability of Full Service gasoline. At specified fuel islands, an attendant will fill your tank, check under your hood, check your tires, and wash your windshield. A welcome convenience in bad weather, after dark, or if you’re just too darn comfortable to get out of your car.
Since Self Service gasoline has become the norm, necessary maintenance issues are sometimes neglected. Motorists, often in a hurry, are not as likely to check their own oil, or look at their own tires as often as they should. Not only can our attendants handle the routine items, but the trained eyes of a Full Service attendant can spot little problems before they become big, expensive, or potentially dangerous problems. And technicians are usually available to assist you, should there be a situation that needs attention.
So the next time you have the opportunity, give our Full Service gasoline a try. We think you’ll like it. Full Service gasoline is available at these locations in Denver:
- 8th & Downing Conoco 1200 East 8th Avenue (Capitol Hill neighborhood)
- Circle Drive Conoco 2300 East 6th Avenue (6th & York Street, north of Cherry Creek)
- South Downing Conoco 2400 South Downing Street (1 block north of Porter Hospital)
- Colorado Conoco II 6300 East 14th Avenue (next to Safeway and King Soopers)
Want to see how Boulder Creek is running? Check out the Boulder Creek Cam located on the New Britain Building at 11th & Arapahoe.
