I thought 130 would be the place to short, but I have no idea where oil is going anymore. An interesting thing to note about the supply report was consumption was dropping. These senators are clowns.
Unbelievable ignorance on display today by the democratic senators. Just unreal. It's like they've never owned a stock in their life. They don't understand the basic tenets of a market-based economy, the basic tenets of the role of a corporation, or the basic tenets of the oil & gas industry. This is a worldwide phenomenon -- so why lower the boom on American companies? The entire world is being hit by rising commodity prices across the board. This problem isn't unique to the US. In the near term, we have two remedies -- lower demand or increase supply. The Democrats are obviously against increasing supply, as they resist each and every attempt to drill offshore or in Alaska...they also make it difficult for the permitting process to enable construction of new facilities. Taking profits away from oil & gas companies only LIMITS their ability to bring new production online, which makes our problem WORSE. The dems just don't get it. The market will respond to the pricing environment by bringing new supplies online -- if they are able to. Consumers will respond to the pricing environment by reducing their energy consumption. This is a market-based response. The wrong response is to penalize AMERICAN companies, leaving only totalitarian regimes like Iran, Venezuela, Saudi Arabia, and Russia in charge of our oil output. Anyone want that? Not me. Wake up liberal senators. Go take an economics class for starters. Quit the stupid, pointless political grandstanding.
Just wondering what you do for a living, you seem to suggest you have great knowledge of the oil industry; do you work in that field? My father has worked in about 10-12 different countries as a Petroleum/Reservoir Engineer (35 year), yet he himself can’t seem to grasp the current reason for oil being $130....... Wondering what makes you so sure you understand the industry so well......I’d really like to know, you and Bigtexx appear to share this knowledge .......I've asked this before from you but you've never replied. You sure do drum the beat very loud when talking about this subject.
Many of the foreign oil companies are state owned. So when saudi aramco, the largest oil company in the world, makes money the saudi gov't is making money. The price of oil is no longer being controlled by supply and demand.
too many people are short now and i've felt that way since oil was at 120. market is also in contango now. further, not enough are accepting high oil and trying to fight the tape. once people start accepting $200 forecasts then it will be time to short. also, that crude inventory miss certainly didn't help things. there will be a time to get short but not now. i can tell things are getting close when i see these scamex stocks like MXC, FPP, SSN, PDO and so on are running. when people start going after these low float bs stocks then a top is usually coming but it could still be months away.
I think one of the reasons for the inventory drop was that the refineries have just cut back. High crude is bad for them. They aren't making any money and with the crude going up what is their incentive to order more.
You can never really trust what these guys say. You have no idea what they are really doing, but I guess he has been right more often than not.
Dear Mr. Oilman, please explain how record oil prices result in record profits for oil companies since companies are obviously only passing along costs and not raising prices above the rate in the rise in costs. TIA
The whole thing about oil is in 6 years has it really been such a big gigantic demand to where prices jumped from being in the 20s per barrel to 120 and rising. I know that they are things like banking and hedge funds that also effect prices...but $100 barrel over a period of less than 6 years.
It might be a bubble like the housing or tech booms. But no one was mad at those because people could just go out and buy a house and because tech companies were mostly American.
Other countries are nationalizing their resources. If we don't do the same, we run the risk of being exploited like a 3rd world nation. I think TJ's fears are founded, but not his rationale. Those companies didn't complain about the generous subsidies during the era of "market based" economics. It was the best situation for them... socialize the losses, privatize the gains. Now that they run the risk of having it taken away and then some, they're running back to their libertarian safety blankets. Anyways, burning the oil industries in tax effigy is not the way to solve our long term energy needs. While I don't believe in a peak oil scenario where the world goes dark, the commodities boom looks here to stay as long as growth in developing nations continue at their pace. We need an energy plan. One that overrides local NIMBY interests while also throwing the oil players a bone, such as drilling in ANWR or offshore. Of course, there are caveats to this compromise. More investment in fossil fuel alternatives. More materials given to build wind farms. Harsher enforcement of lightweight car materials and CAFE standards. Washington intransigence over entrenched interests have gone to a point where not one position serves the national interest. It shouldn't be this hard.
I made this post in the gas prices thread, but I think it's relevant here: Profits alone are a pretty poor way of judging financial success. A more meaningful number to me is profit to revenue %. Yes, ExxonMobil posted record profits in 2007 ($40B), but their revenue was $350B, which means they had to spend a whole lot of money to realize that profit. Microsoft 'only' made $13B in profit last year, but their revenues were $44B, meaning they had to risk far less investment capital to make their profit than Exxon did. But I don't see people up racing to slap a windfall tax on Microsoft, or any of the investment groups like Citi, Wells Fargo & Bank of America. Nor do I see any resentment of Coca-Cola, Johnson & Johnson, Time Warner, Intel, AT&T or GE, all of whom had better profit/revenue ratios than any members of the Big Oil conglomerate. Source - 2007 Fortune 500
The Senators need to learn how the commodities market works. The supermajors took it in the ass for years in the 80s and 90s when crude was trading between $8 and $30/bbl. Now they're trying to get every drop out of the ground just to meet the demand. Clean Air Act: The Clean Air Act is killing us now since our refining capacity isn't increasing like it should. It provides a huge disincentive for the majors to invest in downstream projects. Look at the independent refiners like Tesoro, Sunoco, and Valero. They are taking a killing as refining margins are razor thin with the small crack spread. Dollar Down + Inflation: Combine that with the weak dollar and massive inflation in the U.S , you have pretty big issues with crude since its traded in dollars. Just one year ago the FX rate was $1.30/Euro, whereas now its ~$1.55/Euro. Combine that with the inflation, commodity prices are spiking and equities are tanking. Demand Increases from EMCs: Finally, over the past few years we've seen a massive demand increase from emerging market countries like China and India who have recently become extremely industrialized. They are consuming more and more oil which is driving up the price. All those 3 factors together make for a perfect storm for commodity spikes.
