$140 Oil going to $170

[Dunerunner]

Originally Posted by diegosilang

Case in point is about a week ago after the OPEC meeting, Saudi Arabia agreed to increase production by about 10 million barrels a day (not sure of the amount) to help lower the price of gas. After the news broke out, the price per barrel of oil went up instead of coming down , because the speculators were disappointed with the amount of the oil production increase.

I don't think the increase was the result of speculators being disappointed with the amount of the increased production as much as it was a market response to the drop in the bucket increase proposed by the Saudis.

This remains a supply and demand issue. No matter what speculation (betting) on the future price of oil is, the amount of oil on the market vs. the amount of demand for it is what dictates market price. Refining manufacturers have to raise prices to hedge against a supply shortfall, therefore; increases in price/barrel and that is pretty much it.

If our congressional leaders would get off the pot and quit worrying about which block of voters they were going to put off, we could open up exploration here (something we should have been doing 10 years ago) and increase the supply side in the US. We could begin construction of new refineries. We could start building nuclear power plants and retire the diesel and coal power generation plants. Oil can be drilled for safely and with little risk to the environment and nuclear power is what we need to provide a less expensive alternative to heating with oil, wood or coal. JMO

[BobDiaz]

Originally Posted by diegosilang

That is some sad development for a lot of us who barely make enough to make ends meet. I wonder what $170 would translate into terms of price per gallon. I can't help but wonder if the price increase really reflects the supply versus demand or is it due to speculation. Case in point is about a week ago after the OPEC meeting, Saudi Arabia agreed to increase production by about 10 million barrels a day (not sure of the amount) to help lower the price of gas. After the news broke out, the price per barrel of oil went up instead of coming down , because the speculators were disappointed with the amount of the oil production increase. Go figure, is it really supply versus demand driven or is it price gouging? I guess that should be worth another thread to debate on.


:MachineGun: Take that you xxxxx speculators!

(sorry cant help it).

If we compare $170 to $140; 170/140 = 1.21x increase

Thus,
$5 per gallon x 1.21 = $6.05 per gallon and
$4 per gallon x 1.21 = $4.84 per gallon.

So roughly about $1 (or so) gets added to the current price of gas.

At that point, we can call the massive low millage SUV, "The Dumb Car"!!!


Bob Diaz

[jwight]

Let us not forget the sorry state of the US dollar on the world currency market. As oil is traded in dollars (at least for now) the weaker it gets the more the oil exporting countries charge per barrel to maintain their profits. What's our plan to reverse the fall of the dollar? Plan, what plan?

[SuperGeek]

I'm half tempted to go to NAPA and get me a couple 5-gallon gas cans and keep a supply just in case there's a "shortage." When prices go up this fast, stations can't keep up and make a profit without leading the market. Leading too far will raise alarms of price gouging, and I've seen a couple stations just stop selling altogether. I passed one in Pensacola that said "No gas" and had no prices listed. I got a Pepsi and directions to the interstate, I still had a half tank.


Are we headed for price gouging, shortages and panic runs on the fuel supply? I'm also in Hurricane Alley where supply is affected by a hurricane anywhere from Texas to Florida. I think I'll keep my SUV if only for its 23 gallon tank.


If I get a few 5 gallon gas cans, how do I store 'em? Outside in the weather? Not in the garage, with the water heater...

[dlomshek]

Many discussions concerning this issue are about supply, demand, gouging, etc. but almost no one mentions the declining value of the dollar. As oil worldwide is priced in dollars when it's value drops it takes more of them to buy a barrel. The oil producing countries are not going to hold the price on oil as the value of the currency they are being paid with declines. (I sure wouldn't). Also the American love with big gas-hog pickups and SUV's has been fueling the demand side.

[kurt013]

NYMEX is a zero sum game. For every person (or fund or company) going long there is one going short. Without speculators to pick up the slack there would be no market. That would be a disaster. If you drive a car you are to blame for the gas prices.

[Dunerunner]

At one time, if it wasn't "Made in America", it wasn't worth having. With the help of government investment in specific corporations, the Japanese, China and some european countries have been able to turn that around. The US demand for imported goods is the major cause of the dollars decline. Japanese auto makers produce cars here because of the import regulations passed by congress to protect the Detroit auto makers in the 70's. I find it a challange to find anything at a reasonable price that isn't made in China. Most of my clothes are made in Malaysia or Thailand, my shoes in Italy, my car in France, my TV is a Mitsubishi, the Denon driving the home theater system is Japanese and we wonder why the US dollar is slipping in world markets.

[Westfield 11]

Folks, supply has been constant for a while, the Saudi's can't pump anymore than they are right now, despite what they say. They have been at maximum capacity for months. Demand is way up in Asia, where most fuel is sold below cost due to gov't support. The same with South America and Africa, in fact everywhere but the US, Canada and Europe, perhaps Australia and NZ too. Mexico subsidises fuel so it only costs $2.75 a gallon, no wonder they aren't cutting back. Same with Russia. Europe has been paying a lot more than us for decades, they aren't cutting back now since they did that years ago, there's no slack left. Just because the price here went up does not mean the rest of the world feels any pain, and it does not mean they are cutting back either.

[Westfield 11]

Originally Posted by jwight

Let us not forget the sorry state of the US dollar on the world currency market. As oil is traded in dollars (at least for now) the weaker it gets the more the oil exporting countries charge per barrel to maintain their profits. What's our plan to reverse the fall of the dollar? Plan, what plan?

Exactly right, 80 to 90% of the price run-up is due to the Federal Reserves actions last fall and winter, this caused a collapse in the value of the dollar. Since most of the stuff foreigners want to buy these days comes from Europe and Asia, they needed more dollars to stay in the same place. Thus the price increase.

You can thank W and his cronies for this disaster. There hasn't been a new refinery opened in the US for 35 years, this despite 6 years of Republican control of the Congress and White House. The oil companies have been CLOSING refineries for years due to low profit margins leaving the little guys like Tesoro who buy oil on the open market to produce gasoline.

If the oil companies really wanted to increase capacity they had their boys in charge for long enough to do so. Watch their actions, do not listen to their words.

[mmmeat]

Originally Posted by BobDiaz

At that point, we can call the massive low millage SUV, "The Dumb Car"!!!

Yeah. My H1 could drive through water up to the windshield and tow ... well, anything.

My Jeep Commander could drive through anything, and has never left me stuck because the snow was too deep or the sand was too soft. I could pack it up with all of my film equipment - the lights, the cameras, the c-stands, the sand bags, the computers - and still have enough room to put in two passengers.

I have yet to see Smart owners come up with as excellent an organization as H.O.P.E.

And when search and rescue looks for lost hikers in the mountains ... well, they don't call in the Smart cars.

Not that dumb...

Your pal,
Meat.