Friday’s crude oil market closing prices prompt a follow-up on my post “Think Again About Oil Speculation” (https://econscius.wordpress.com/2011/07/04/think-again-about-oil-speculation/). The US crude oil futures price on the NYMEX settled at $82.26 per barrel. The Brent [Europe] crude oil futures price closed at $108.62/ bbl. This set a new record differential of $26.49 between the US and European crude oil prices. 
In “Think Again About Oil speculation”, I wrote:
“But a question I ask of [ThinkProgress] or anyone who believes there is massive price manipulation in the oil market is this: why is the price per barrel of oil in the US market lower than in Europe?
“The fact is West Texas Intermediate crude (“WTI”) has been running about $15-20 per barrel less than Brent Crude (London). As of Friday July 1, 2011, WTI crude ended at $95.24/bbl., whereas Brent Crude ended at $111.86. Do the math and West Texas Intermediate crude was $16.62 (17.5%) lower than Brent Crude. If the US crude oil price is driven higher by speculation as TP claims, wouldn’t the WTI price be higher? ”
The new record differential only buttresses my prior argument against claims Koch Industries or anyone else is responsible for a large component of oil prices through “speculation”. The fact is the US price continues to be much lower than the European price.
The price differential is attributed to a recent supply glut at the big pipeline terminus in Cushing, OK. That glut is understood to be the result of weak US demand on account of the weaker than expected economy, the oil supply boom in western Canada and US Oil shale, and the lack of any pipelines bringing oil from Cushing, OK to ports for export. Exporting excess crude oil to Europe would take advantage of the WTI-Brent differential through arbitrage. The Wall Street Journal today reports of four pipeline plans to do just that: bring crude oil from Oklahoma to Gulf ports. None of the four is Koch Pipeline LP, either .
Building new pipelines seems like an awfully expensive fuss for oil companies to try to raise the price of US crude if left-wing opinion writers are correct that all it takes is a little behind the scenes, highly profitable “price manipulation”. Why bother with expensive new pipelines?
Picture from Wikipedia Commons.