Oil, Again

I've wondered about this. The pharmaceutical and medical industries have shown the ability to have prices fall or at least not go up so fast at critical political times to.

I'd be buying oil now. Peak oil is not a fantasy.

 

Max, I'd hate to take your money on the $2 gallon by Christmas.

$2/gallon would be bad news for the environment, as it would be Hummer, Suburban and McMansion out in the distant burbs all over again.

 

okay that makes sense, I guess because there is a lot of costs ot producing and they want to lock in.

but I guess the point I'm getting at that like any other product, say for instance a car, why can't oil companies just sell at what it costs to produce. it seems to me like trading oil is outdated.

 

I guess the answer to that is price is determined by supply and demand. Also, oil companies don't supply all the oil we need. So even if the government mandated that US companies supply oil at a certain price, we'd still have a lot of excess demand we'd need to meet.

 

(From someone in the oil industry)

Y'all are mostly right about the price of oil recently being driven by the traders. The number of times that a future is traded before the oil hits the refinery has tripled over the past few years. A lot of the old internet investors saw commodities as the next place to make big money. Oil Production is very close to demand, but that's only part of the story. You never hear much about it, but Copper, Iron, and other commodities have roughly tripled in price over the same time period.

 

Because the money you can make from a car is just too little. Everything is driven by the financial market. MMs introduce all kinds of new ideas to the market, to create profit for themselves. Stocks, options, foreign exchange, fixed income, asset management, etc etc. Then, they introduced the idea of hedging and derivatives. New ideas were thrown into the market every now and then, the ONLY purpose is to take money from all kinds of market and all sides. A barral of oil will make money for MMs throughout the whole process, mutiple times, from stocks, options, loans, hedging, derivatives, insurances etc etc. Where does all those money come from?

There weren't ground breaking invention in Finance and Economics, and it does not produce anything, yet it's the only industry with a guaranteed prosperity in future, simply because they can make money from people, no matter how.

 

I said it the last time we were debating high oil prices and I will say it now that we're debating low oil prices.

I support high oil prices and think high oil prices now are one the best things that can happen to our society and economy.

This momentary drop in oil prices is only a trough in a mountain and oil will eventually be a longterm loser. Its better now that we start develping technologies and practices that conserve and developint the infrastructure to move away from fossil fuels. The problems is that humans, especially Americans are terribly shortsighted and if oil drop down and stays down below $2 per gallon for a few months you will see all of the progress we've made disappearing as we just take up our wasteful ways. In a few years we will back in the same boat.

Think about it this way if we had stuck with the conservations practices in the 70's where we might be now. Hugo Chavez, Ahmedinajad might be nothing more than Third World loud mouths who no one pays attention too. OBL might have to be begging the Falafel cartel for money to pay for global Jihad. Global warming might really be a myth and all that capital spent on burning dinosaur juice in our cars and sending our troops to defend the supply of dino juice might've been invested on everything from health care to better levees (I know unlikely but it could've gone into other parts of our economy.)

Our continued dependence on fossil fuels is a longterm loser economically, environmentally and geopolitically and the sooner we kick the habit the better. Like kicking any addiction there will be withdrawl pains but its better we deal with it now than later.

As for Houston I realize that oil still fuels Houston's economy but its long past time that H-town diversify. Other cities have proven they can. Where would Chicago be if they still depended on stockyards? SF didn't die out when the fishery industry collapsed and Oakland and Long Beach became the major CA ports. The boom bust cycles of energy aren't good for Houston and the more Houston can diversify the better off it will be.

 

you had me at hello

 

even though i'm only a figment of the internet, i can tell you that my personal energy costs would make your head spin. i am willing to take it on the chin/wallet if that's what it takes to move us in a sensble direction as regards energy needs vis a vis the environment. we need to have a sustainable world in order for REAL people to live hand to mouth.

 

Of course its going to cause pain. Major change never comes easy especially kicking an addiction. The problem is the longer you wait the more painful it gets. As I said before if we had continued the push towards conservation in the 70's most of the problems and uncertainties regarding our energy supplies would be gone by now. In the 2020's are we going to be sitting around saying the same thing that if we had stuck to conserving and working on alternative energy like in 2005 and 2006 we wouldn't be paying $20 a gallon for gas, occupying Azerbaijan and Venezuala protecting oil supplies from Central Asiatic terrorists and Leftists radicals intent on energy blackmail?

I don't create nationwide energy policy but even if I can fill up my tank with the metamorphosized remains of a stegasaur for under $10 I'm still going to bike to work, drive a Honda and use a push mower.

 

The price of oil is coming down because the Republican party is in trouble in the mid-term elections.

It's the economy stupid!

Do you think the oil Company executives want a democratic congress?
(who suggested the windfall tax?)

Do you think Prince Bandar does?
(who supplies his F-15 parts so he can keep control of Saudi Arabia)

Think Kuwait does?
(They don't want to face an Iranian controlled Iraq).

Do all those same guys want a world wide recession that would eat into their profits over the long haul. China will still be there, there will be another hurricane. Prices will go back up after the elections.

 

Already down to $1.99 at one place.. according to Houstongasprices.com

 

I agree with the rest, but high oil prices is causing inflationary pressure upon our economy. It's been mentioned before, but we're finally feeling its effects. With the sudden dry up of cheap bank money worldwide and the domestic housing bubble bursting (smaller consumer money supply from home equity) , I don't look forward to high prices in the short term.

With high oil prices, it's a trainwreck waiting to happen for the Fed. They can't raise rates because it could cause housing speculators to panic. They can't lower rates in fear of letting inflation grow uncontrolled.

Otherwise, I lean mostly towards the costly petroleum crowd...

 

Actually it says Houston east.. but I'm not familiar with 90 east. that may be way outside of Houston. not sure

 

if that conspiracy theory was only that easy. OPEC could give a crap who was in office in america. do you think the repubs just turned on the "lower commodity prices across the board" switch? it would be nice if that switch existed but it doesn't.

you are only correct in assuming this is a short term thing. you are incorrect in assuming that oil companies want excessively high oil prices. when prices get too high demand erodes (a good thing for the world) because people stop wasting so much energy and they begin to look for other sources of energy outside of oil. if oil prices stayed high (over 80 to 100 per barrel) then oil companies would see tons and tons of their customers disappear and probably never get them back.

it sounds crazy but high oil prices would have to potential to drive oil out of business.

 

In a way I sort of miss bigtexxx's economics 101 class in threads like this

 

please don't tell me MMs are market makers. seriously market makers aren't that powerful. hell I could be considered a market maker.