The rise of gasoline futures prices is an example of having adequate supplies of gasoline domestically, but in the wrong location. In gasoline, as in real estate, price is driven by location, location, location. The key fact to understand is that futures contracts are written with a clearing mechanism based on a standard amount of a standard product delivered at a specific location on a specific day. So while speculators can trade contracts like Monopoly money, on contract expiration day, whatever open contracts exist must be settled by physical delivery of the commodity. In the case of NYMEX gasoline futures contracts, the basic contract calls for the delivery of 42,000 gallons of unleaded gasoline to New York Harbor. One factor driving up the price is the impending closure of large Northeast refineries due to oppressive EPA regulations unilaterally imposed by Lisa Jackson of Obama's EPA. Boutique blend requirements for different markets imposes extra costs on refineries and make them less profitable. Want to drive gasoline prices down? Fire Lisa Jackson....
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