NEW YORK (TheStreet) --Speculation for crude has been rampant over the past six months. Despite the fact that we are merely one month and 0.03% away from making an all-time high in crude oil supplies, we're seeing WTI crude at $102.76. If the price was based purely on a supply/demand theory, we should be in the low $80s.
We've all heard market pundits mention the U.S. should repeal all the laws prohibiting the exportation of crude oil. What they don't mention is these laws have not prevented these companies from exporting all forms of refined products. We have doubled our exports of gasoline in the past five years. Despite this, people are paying about $4 per gallon at the pump. Regardless of what you feel about fracking, it has produced huge amounts of oil.
Recently, U.S. refineries decreased production to about 9.5 million barrels a day. Despite this decrease we saw an uptick in the surplus of gasoline by 0.2 million barrels. This shows us the demand is slightly down while prices continue to climb.
Why? Well there have been several reasons over the last six months to believe that crude may spike. Russia, a major producer, was playing a risky game of geopolitics with Ukraine and the rest of Europe. Things were tense and worries were high that the supply they gave Europe could be turned off. Libya, a very minor producer in the global landscape, had a revolt where rebels stormed the capital. They were already only running on a fraction of capacity. Iran, another major player, had been hit with major sanctions limiting its output.
For the most part, all of these political fears have been resolved. Putin appears to be playing nice, and is even telling Ukraine it has more time to pay its natural gas bills. Libya has calmed down to a whimper. Iran not only had been ignoring earlier sanctions, the U.S. gave it the green light to go ahead and produce as much as it wanted as long as it discontinued the nuclear program. T
This all has happened while Canada realized the oil sands in Alberta, in addition to not drying up, were yielding much more than originally thought. Just for this area alone Canada is realizing there will be an increase of 72,000 barrels a day than originally expected.
Due to the invention of fracking, U.S. production was up 14% in 2012 and 15% higher in 2013. Just since January of this year crude production is up roughly 12% again. North Dakota and Texas are responsible for the vast majority of this production, but it is only a matter of time until they find another hot spot somewhere in the U.S.
We are literally at the point where we are running out of storage room for our crude and companies are distilling it for export.
What's the point? There's no longer any excuse for us to be paying more than $3 per gallon at the pump. We're all for using cleaner energy and getting rid of crude, but in the meanwhile prices should be much lower. The entire 25% difference would be going directly to GDP in the long run.
Speculators, wake up! With all the geopolitical issues resolving themselves... crude isn't worth $103 per barrel.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.