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Oil Question
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Oil Question |
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Huan Yi Member Ascendant
since 2004-10-12
Posts 6688Waukegan 
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. I can understand an increase in the price of a barrel of oil but not this dramatic increase in so short a period of time. What event, (not trend), or combination of events is the basis for the dramatic increase in recent months and weeks? . |
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Bob K Member Elite
since 2007-11-03
Posts 4208 |
Huan Yi, what are your speculations about this interesting question? |
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Denise
Moderator
Member Seraphic
since 1999-08-22
Posts 22648 |
I think foreign entities are trying to influence our elections. |
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Huan Yi Member Ascendant
since 2004-10-12
Posts 6688Waukegan |
. panic . |
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Bob K Member Elite
since 2007-11-03
Posts 4208 |
Dear Denise, Sure. But countries are always trying to influence each others elections, I think; and political parties try to influence the outcomes of the internal struggles of their rivals. Isn't that pretty much a given? BobK. |
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rwood Member Elite
since 2000-02-29
Posts 3793Tennessee |
To me, it's simple math and the daily exchange rate between dollars, euros and yen, and the fact that a few specific countries are no longer paying for their oil in dollars, which makes sense, but makes our dollar worthless and our gas prices skyrocket. At any rate, a supposed conspiracy would prove Europeans to be veteran victims...after all their years of high priced petrol...wouldn't it? I think we've had it pretty grand, and it would be nice to see gas back down below $3 but I'm not going to hold my breath. |
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Grinch Member Elite
since 2005-12-31
Posts 2929Whoville |
The onset of Peak Oil - it seems Hubbert may have been right. |
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Huan Yi Member Ascendant
since 2004-10-12
Posts 6688Waukegan |
. Some analyst says the price could go to a $150 a barrel, and in that single day the price of a barrel of oil jumps up by over $10. Now who’s making money off of that? . |
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Balladeer
Administrator
Member Empyrean
since 1999-06-05
Posts 25505Ft. Lauderdale, Fl USA |
Maybe we should use all that oil that people think we invaded Iraq for.... |
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Bob K Member Elite
since 2007-11-03
Posts 4208 |
Dear Balladeer and Other Fellow Political Junkies, I've never understood clearly why we invaded Iraq, Balladeer. Most of our own oil historically has come from Mexico and South America, especially Venezuela, I believe. It seems that oil that's not being exported from Iraq is being held off the world market. I imagine that would tend to drive oil prices up artificially. But I think everybody needs a fairly clear and politically neutral tutorial in oil and the economics of oil, if there was any such thing that was in fact neutral and interesting enough actually to read. We all seem to be in such a hurry to score points off each other that I'm afraid we haven't vetted our facts as carefully as I'd like to see them fact checked. General sarcasm on my own part or anybody else's simply ups the heat of the conversation without shedding extra light on the subject matter. I wonder if maybe The Christian Science Monitor and The Economist have any information the generally acceptable as a fact basis for us to work off of in general? I don't entirely love the point of view of either publication, but I have to admit that they both do try to stay pretty committed to the facts. The CSM from probably what the Europeans would call a Christian Democratic point of view and The Economist from a slightly more traditionally conservative stance than what we adopt over here, perhaps Eisenhower Republican, but still pretty concerned with objectivity. I'd be happy to hear of any other additions, especially of more left wing publications that folks can generally agree are respectably interested in being as straight with the facts as the two that I'm proposing. Maybe we can build up a source of commonly trusted information, which would be useful in our discussions here sometimes. We wouldn't have to limit ourselves to it at all, but we wouldn't have to be quite so nervous about the information we supply each other sometimes, either. Wikipedia's good too, most of the time, I find. Anyone else who has thoughts about this, I'd love to hear them too. Speculatively yours, BobK. |
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Just.Another.Falling.Star Member
since 2008-05-08
Posts 422Canada |
So here's the story. Up here in Canada, we were out diggin' for some oil, when all of a sudden, it started to run out! Oh no!!! And now when we have to keep digging furthar and furthar, and in more than a 100 places, it gets to be a heck of a lot of money. So ya, sorry for the let down. |
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Grinch Member Elite
since 2005-12-31
Posts 2929Whoville |
quote: Unfortunately that wouldn’t work, there’s no doubt that having access to Iraqi oil might have been a tempting reason to occupy that country but the current oil production, and the future predicted production, isn’t enough to make a difference. Iraq at present can’t increase oil production even if it wanted to I’m sure that Iraq’s oil, or the lack of it, has been a sore disappointment to the government. Insurgent action has devastated the Iraqi oil infrastructure and continued attacks on the pipelines and oil workers has meant that oil companies are reluctant to risk money and lives recovering oil that costs more to recover than it’s actually worth. So Bush has to go, cap in hand, to Saudi Arabia, but if Hubert’s predictions of peak oil are correct OPEC are running at close to maximum output and demand has simply outstripped supply. Even if Hubbert is wrong and OPEC have the ability to increase production they have no real incentive to do so - it makes no economic sense. I wouldn’t be surprised if oil hit $175+ a barrel in the next twelve months, cheap oil is a thing of the past and until viable alternatives are available the price will continue to rise in line with demand. |
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Bob K Member Elite
since 2007-11-03
Posts 4208 |
Dear Grinch, There are all sorts of ways to make money with oil, I suspect. Even by invading Iraq. Which would make you more money, selling a lot of cheap oil, or selling a little less very expensive oil. On the whole, my money would go with selling a little less very expensive oil, especially since it would allow you to continue selling oil longer. Keeping Iraqi oil off the market might make pretty good sense. It provides an oil reserve, and it drives up the price overall, but not necessarily your price as an oil company, which will be passed on to the consumer, and which will allow you to bank record quarterly profits. It's to your advantage to own as many oil leases as possible, but not necessarily use them, and to keep the number of oil refineries low... And to keep the whole process as muddied as possible, so that a public understanding of the facts is as unlikely as possible. My understanding of the whole oil issue today seems to be slightly in advance of what I knew about cigarettes in 1956. I have the feeling that the consumer advocates don't have a lot of reason to be lying to me, and I hear a lot of distortions coming from the oil folks, but I's still stunned and shaking my head in confusion. Yours, BobK. |
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ramisf Member
since 2007-05-17
Posts 93 |
imagine that the price of oil reach $500 a barrel. we can see people riding horses again. war will stop because aircraft and tank fuel will be very expensive. I think there will be time where poeple will use darts and knives in war again. life will be a better place to live. Agricultural life is the best. |
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Grinch Member Elite
since 2005-12-31
Posts 2929Whoville |
quote: There’s no doubt Bob, at least in my mind, that the control of Iraqi oil was one of the deciding factors behind the invasion but I’m equally sure that pushing up the price wasn’t part of the plan. For one thing it makes no economic sense for any government to risk the world-wide recession that’s an almost inevitable consequence of sustained high oil prices simply to line the pockets of a select few oil barons. I can imagine a scenario where an invasion was used to scupper and nullify the Russian, French and Chinese oil exploration contracts that were in place before the invasion and to hand new contracts to friendlier companies. That would at least ensure America’s short term oil supply, if that was the plan however it went sadly awry, Big Oil wants the option to tap the Iraqi fields but won’t even contemplate putting money into the operation until the risk of insurgent attacks ends. At the end of this month contracts will be given (without bids) to western oil companies to re-build and re-structure Iraq’s run down oil recovery infrastructure. Those contracts will run for two years and are aimed solely at consolidating Iraq’s existing ability to produce and deliver oil from existing wells. The increase of oil production, if any, is likely to amount to an additional 1.5 mbd (million barrels a day) at which point Iraqi production will peak - providing of course the whole exercise isn’t undermined by the insurgents. And therein lies the problem and the source of increased oil prices. World consumption of oil is currently running at 83 mbd, and is increasing at a rate not far short of 2% per year. World production last year fell to 81 mbd a full 2 mbd short of consumption. Almost all sources of oil are said to have peaked (reached the maximum production limit or on the slippery slope of reduced production) and even Iraq’s best estimated output won’t dent future consumption requirements or make up for reduced worldwide production. At some point world Peak Oil production will be reached, where demand outstrips the possible supply - at that point oil prices will spiral in the wake of declined production. Hubbert’s prediction is that we’ve already reached the point of Peak Oil - I tend to agree - and so it seems do all the investors clambering on the oil options bandwagon. If that is the case cheap oil is a thing of the past and the price will continue to rise until demand subsides. Ramisf, I can’t see that happening, it’s more likely that alternate energy sources are introduced - we won’t be riding horses we’ll still be driving cars, they’ll just be cars with a different power source. |
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Essorant Member Elite
since 2002-08-10
Posts 4769Regina, Saskatchewan; Canada |
www.carfree.com |
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Bob K Member Elite
since 2007-11-03
Posts 4208 |
Dear Grinch, Sensible set of facts and predictions, I think. I confess you seem to be much more at home with this set of facts than I am, as indeed you seem to be with the legalities of the impeachment process. I'm always glad to pick up knowledge where I can get it, and especially grateful when it's well presented. Thank you for your efforts here, a distinct pleasure. Do you recommend any sites or books for a fuller presentation? I'm not terrific with math, but I hate it when politicians tell me that things are over my head and I should bow to their superior wisdom, if you know what I mean? I seem to have a weakness for buying stock in bridges, and education is my best hope. Thanks for your explanation of facts where Bob Ks have not yet dared tread—too heavily, at least. Sincerely, Bob. |
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Grinch Member Elite
since 2005-12-31
Posts 2929Whoville |
Bob, Simply type “peak oil” into a search engine and read all the results with an open mind and your BS filter set to warp factor ten. Make a note of all the undisputed facts and run through all the possible scenarios discounting any that run contrary to the facts. Once you’ve eliminated all the possible scenarios whatever you’re left with - however improbable - is likely to be the truth. Liking Sir Arthur Conan Doyle also helps.  |
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Bob K Member Elite
since 2007-11-03
Posts 4208 |
Dear Folks, I'll be out of touch till at least 7/4. Have a great time! BobK. |
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Huan Yi Member Ascendant
since 2004-10-12
Posts 6688Waukegan |
"Oil Trading Curbs Could Bring Back $2 Gas! [Noel Sheppard] Two weeks ago, I suggested in “An Unconventional Fix for Fuel Prices” that changes to oil futures trading regulations specifically for speculators could cause a huge decline in energy prices. On Monday, four energy analysts testifying before Congress strongly agreed with my arguments. As reported by MarketWatch (emphasis added throughout): Testifying to the House Energy and Commerce Committee, Michael Masters of Masters Capital Management said that the price of oil would quickly drop closer to its marginal cost of around $65 to $75 a barrel, about half the current $135. Fadel Gheit of Oppenheimer & Co., Edward Krapels of Energy Security Analysis and Roger Diwan of PFC Energy Consultants agreed with Masters' assessment at a hearing on proposed legislation to limit speculation in futures markets. Krapels said that it wouldn't even take 30 days to drive prices lower, as fund managers quickly liquidated their positions in futures markets. "Record oil prices are inflated by speculation and not justified by market fundamentals," according to Gheit. "Based on supply and demand fundamentals, crude-oil prices should not be above $60 per barrel." […] There are two kinds of speculators in the futures markets, Masters said. Traditional speculators are those who need to hedge because they actually take physical possession of the commodities. Index speculators, on the other hand, are merely allocating a portion of their portfolio to commodity futures. Index speculation damages price-discovery mechanisms provided by futures markets, Masters added. And here’s the money quote: “Speculators now account for about 70% of all benchmark crude trading on the New York Mercantile Exchange, up from 37% in 2000, said Rep. Bart Stupak, D-Mich., chairman of the investigations subcommittee.” Since then, oil has risen by more than 300 percent. Any questions? " . From: An Unconventional Fix for Fuel Prices "In the past, energy price appreciations of last week’s magnitude have typically been caused by supply disruptions — like the 1973 OPEC embargo, or the 4 million barrels per day in lost production that followed the Islamic Revolution in Iran in 1979, which restricted international oil supplies for several years and caused a spike in prices. In this decade, though, world oil production has continued to rise, making it difficult for simple supply and demand to explain the explosion in oil’s price from $20 in 2002. The Energy Information Association reports that since 2002, world petroleum production has risen from 76.995 million barrels per day to 84.594 million barrels per day in 2007, a 9.87 percent increase. Over the same period, demand has gone from 78.036 million barrels per day to 85.354 million barrels, a 9.38 percent increase. So total world oil production actually rose faster than demand, but prices increased by almost 400 percent nonetheless. Kind of throws a monkey-wrench into blaming this crisis on China and India’s lust for crude, doesn’t it? The fact is, the explosion in oil futures trading on the various exchanges around the world has unquestionably been a huge factor in the nearly 200-percent increase in oil prices since January 2007. How huge? Estimates vary. . . . The connection between the recent explosion in oil prices and speculation on futures exchanges is clear: it’s both logical and salutary to reduce or prevent such non-essential price pressures. . . As a pure capitalist, I’m all for defending the free market. However, with food and energy prices going through the roof largely due to commodities speculation, calling these markets “free” seems a tad oxymoronic.” http://planetgore.nationalreview.com/post/?q=ZmViNTgyNTI5NDRmYzAyODU3ODFjMjExYmU0ZjFh NzY= . So no "There are all sorts of ways to make money with oil, I suspect. Even by invading Iraq." it wasn't Bush. [This message has been edited by Huan Yi (06-24-2008 07:10 PM).] |
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Grinch Member Elite
since 2005-12-31
Posts 2929Whoville |
quote: Huan Yi, Interesting figures: In 2002 oil production was 76.995 mbd and demand was 78.036 mbd In 2007 production was 84.594 mbd and demand was 85.354 mbd. So demand outstripped supply in both 2002 and 2007 (figures for the years between aren‘t supplied). quote: This is so far out it’s not even wrong. The fundamental rule of supply and demand says that when demand outstrips supply a commodity rises in value, and the figures you supplied show that in the two years quoted (and only the two years quoted) demand for oil outstripped supply. Anyone care to guess what’s going to happen to the price? quote: When I was 16 I dated a girl of 20 25% older than me when I get to 60 she’ll be 64 6.666% older than me. Aren’t percentages great! It’s the difference that counts. In this case the difference is between the supply of oil and the demand, while the former is less than the latter the price will go up. http://www.energyandcapital.com/articles/oil+demand-iea-peak+oil/470 |
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Huan Yi Member Ascendant
since 2004-10-12
Posts 6688Waukegan |
. Grinch, So go to the site and call them liars. Let's see what they have to say. You could destroy their credibility forever. Do it. Why should I believe your numbers instead of theirs? To my mind you're not going to explain a "nearly 200-percent increase in oil prices since January 2007" better than their cited "facts" do. Of course: "Testifying to the House Energy and Commerce Committee, Michael Masters of Masters Capital Management said that the price of oil would quickly drop closer to its marginal cost of around $65 to $75 a barrel, about half the current $135. Fadel Gheit of Oppenheimer & Co., Edward Krapels of Energy Security Analysis and Roger Diwan of PFC Energy Consultants agreed with Masters' assessment at a hearing on proposed legislation to limit speculation in futures markets. Krapels said that it wouldn't even take 30 days to drive prices lower, as fund managers quickly liquidated their positions in futures markets. "Record oil prices are inflated by speculation and not justified by market fundamentals," according to Gheit. "Based on supply and demand fundamentals, crude-oil prices should not be above $60 per barrel." […]" these people may, for all thier experience, be stupid, though doing very well in their idiocy. John . |
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Grinch Member Elite
since 2005-12-31
Posts 2929Whoville |
I seem to have upset you by pointing out the stupidity of what they’re saying, I can’t understand why, unless you believe that I’m wrong. If that’s the case please feel free to correct me. I’ll listen carefully to what you have to say and hold my hand up if I’m wrong. quote: I don’t think they’re liars, I simply don’t believe that their conclusions make any sense. As far as going to their site is concerned why should I, I’m quite happy debating the topic here but if you like feel free to invite them here and I’ll happily show them where they went wrong. quote: Haun, I was using their numbers, I’m quite willing to accept the numbers they’ve quoted as correct, I just believe that their conclusions and manipulations of the figures are woefully flawed. You don’t have to take my word for it, do the math yourself. They say: In 2002 oil production was 76.995 mbd and demand was 78.036 mbd In 2007 production was 84.594 mbd and demand was 85.354 mbd. Based on their figures I maintain that demand outstripped supply in both 2002 and 2007. If I’m wrong please tell me where. quote: Their cited facts prove nothing, it’s how you interpret the facts that matters and they’ve made a complete hash of it. Let’s take their use of percentages as an example: They supply figures for production and demand in 2002 and 2007 and calculate a percentage increase for each and conclude supply is growing faster than demand. That conclusion is frankly useless, for one thing it totally disregards the years between 02 and 07. If demand was unnaturally low in 2007 but far higher in 06, 05, 04, and 03 their conclusion that supply is rising faster than demand is complete twaddle. Even if the intervening years show a straight line rise between the two points (which it doesn’t) the fact that demand still outstrips supply is the most important conclusion to be drawn. quote: The fact that they’re doing very well doesn’t impress me at all, or negate their stupidity and idiocy, and it certainly doesn’t make them right. |
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Huan Yi Member Ascendant
since 2004-10-12
Posts 6688Waukegan |
. From near $150 to now $82 a barrel . . . “Come and listen to a story about a man named Jed A poor mountaineer, barely kept his family fed, Then one day he was shootin at some food, And up through the ground came a bubblin crude. Oil that is, black gold, Texas tea.” Wow, did that happin agin? . |
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WTBAKELAR
since 2008-09-09
Posts 1089Utah, USA |
Well,,,, I did some sypherin, an not times not = not. So if'n you an Ely-mae, don't mind, I need to go down to the general store an fill up da ol truck so's n we cun go a coon hunt'n. It worked fer Uncle Jed, It might jest work fer Uncle Sam. Yesterday is the first time it took less than $70.00 to fill up the car. I went for a celibratory drive in the country. (then had to go fill up again) I love America. The answer is always NO, Until the question is asked. |
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Bob K Member Elite
since 2007-11-03
Posts 4208 |
Is my memory playing tricks again, or doesn't oil traditionally cost less near election times? |
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Huan Yi Member Ascendant
since 2004-10-12
Posts 6688Waukegan |
. Now that makes sense . . . . |
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Grinch Member Elite
since 2005-12-31
Posts 2929Whoville |
It definitely does when the world is heading for a recession. |
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Huan Yi Member Ascendant
since 2004-10-12
Posts 6688Waukegan |
. Yup, let's have elections all the time then to keep the price down. . |
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