people don't care about it because it is too far off. further they don't know how much is recoverable so the "market" kind of hears it and just tosses it aside. that's how things work when people are only looking for reasons to buy.
Speculation is not good either way you would have to tax it both ways. Personally after it went over 130 I wouldn't touch oil either long or short. I think american's can afford 4 dollar gas, but thing about how it affects the poor countries who don't have food. I would guess in countries like india and china which are "booming" you are going to have civil unrest if these commodities keep rising like they have.
so just oil and not other commodities? not nat gas? not potash? not gold? what about companies that hedge energy prices on the open market? are we taxing them as well if they make good decisions with their hedges?
Wrong. Queuing theory. Learn about this concept. It explains why you are wrong. Everyone read this who falsely believes that speculation is driving this market. . Let me give you an illustrative example: Your local bank. On average, the line is 1-2 people long. At 5:00pm, when workers leave their jobs, more people go to the bank. Because there are only 2 tellers at your bank, the line swells to 10-12 people. This is 5 TIMES the average wait time. Has there been a 5 times increase in banking products demand? No. Has there been a 5-fold decrease in banking products supply? No. THe issue is AT THE MARGIN. Your wait time increased 5 time because volatility, at the margin, increased dramatically. The system in place to deal with the volatility did not. The same thing is happening today with our energy supply chain. Demand, at the margin, has increased dramatically as a result of China and India's growth. The supply of oil and the supply chain for oil products, has not. So at the margin, you see HUGE volatility. It's queuing theory in action.
Nice post. This is a very interesting way to look at it. Thanks. Though I think there is something to be said for the theory that the blood-sucker oil companies and price gougers are still not in this for the average guy's benefit.
At the risk of making myself a hypocrite, I'll take a turn responding... The above is where speculation comes in. Even the most expensive wells in the world can produce oil at ~70-80 bucks a barrel, including development and profit. Reailty however, is that you cannot simply "rev up" oil production to meet demand - it takes time as noted repeatedly in this thread. The speculation then is that oil is either running out or becoming prohibitively expensive to pump in newer and even more extreme locales. This has prompted a $50 buck upswing or so in prices. Is this legitimate? - it depends on the numbers; numbers that I have repeatedly emphasized are fuzzy, at best. For example, China does not report consumption, and some think it may be stockpiling. China also has a bunch of smaller (and usually illegal) refineries that are left out of the statistics.
I really doubt it. And I work in this field. PBR's Carioca field is ~2000m deep. That's 1 and a quarter miles down. The technical issues are rather daunting, to put it politely. I would not trust the economist on this. Remember how TJ laughed at engineers who tried to explain economics? The opposite is even more true.
You know what the funny thing is…nonrenewable resources can never run out… especially oil. Technically speaking oil will become harder and more expensive to drill eventually pricing out oil as an energy source… but to the topic in general…demand is outpacing supply…its simple economics…while speculation does have an effect (probably around 35 dollars a barrel) the trend has been set…even without speculation the trend is for demand to continue to outpace supply, thus leading to ongoing gas price increases
is there any point in the world in your opinion that is experiencing a real shortage worry in meeting demand in the next 12 months? meaning, running out of gasoline.
They can run out - but you are correct that oil will probably never truly be "gone". Probably a poor choice of words on my part - let's call it "imminent shortage" instead of "running out". Some experts think it's bad - like 500 bucks a barrel bad. Others think it's overblown - like 70 bucks a barrel overblown.
maybe 5 years is optimistic but I think more than 12 years for Petrobras is too conservative. Petrobras boosts itself as one of the leading innovators in offshore technology, since its privatization. Its also the third largest publicly traded company in the Americas, so it has sufficient capital to take on any project in an aggressive nature Economist CNBC
For those of you who think Bush went to Iraq.. for their oil. Why aren't we using their oil if that's the reason he attacked?
