they're profiting so much from the price of oil at $50/barrel, it's silly. yeah, $1.50 is reasonable to me, too. that sounds about right, actually.
Really? How much does a barrel of oil cost to produce? I know they're not the ones charging for refining and all the other costs that actually go into making oil into useful products.
i can't remember...i know i've read it before. but their cost is very, very low for extracting oil from the ground and shipping it, on a per barrel basis.
I kinda remember when Saudi tried to put a squeeze on the off shore oil companys, they claimed they can sell oil at $5 a barrel and still make money. (of course that was a while back)
yeah..so i'm guessing they could make money with oil at $20/barrrel, no problem. i'm not suggesting it's going down that far, though. it would be an utter nightmare for the local economy if it did.
http://chron.com/disp/story.mpl/front/4211755.html "We'll go beneath last year's autumn-winter low of $2.12 a gallon, and we may do so as early as October," said OPIS director Tom Kloza.
Yes, I have a rudimentary understanding of how the final price of gasoline at the pump is determined. But it is almost as complex as predicting the hurricane season 6 months in advance, which by the way is a contibuting factor to the price of gasoline. It's generally said that the value of anything is what someone is willing to pay for it but the value of something is also what someone will willing to sell it for. By jawboning with the heads of the producing nations a president might ensure that they will maintain produuctions at high levels. By jawboning the CEO's of the major refining companies he might have them delay those 'maintenance' shut downs and keep refining at 100% and he might talk to the CEO's of the major's to take a slight reduction in margin. If you are the ones sitting on a mountain of oil, you can control the futures market. You can buy and sell it to yourself at any price and not lose money. The logic and motivations are clear, they just have to be coordinated. The friendly middle eastern goverments, though members of OPEC owe their strategic security to the US and moreso to a Republican adminstration that to a Democratic one. The Major oil companies certainly don't want a democratic congress considering an excess profits surtax, raising the minimum milage standards for US auto's or tax breaks for alternative energies. All the parties concerned have an interest in keeping the US economy robust; a recession will mean less profits for everyone. I think the President did use his influence to start the drop in gasoline prices and he did it for political expedience; after all he has lost national security as his trump card. However I think his influence was at best subtle. I think the dramatic fall in gasoline prices says more about the multiplied effect leverageing has on economic markets. One thing you can always count on is greed overcoming caution. If smart people are making money in a market, the greedy people will always pile on; and usually with borrowed money (insured by the federal government if at all possible). So, even a slight change in the paradigm causes huge effects.
Let's see, the summer driving season is almost done, the hurricane season is almost done, the supposed demand that drove the oil price up turned out to be not really the case. Plus there is no war breaking out in Iran. All these things are not really driving the market, but Bush's "subtle" influence is what's lowering the oil price, and he is using that to win the mid-term? I have no doubt that Bush or any other president would want to lower the price of gas, but you are reaching just a bit here.
Bust! Those speculative, over-inflated prices just couldn't last. It was just a matter of time. To celebrate I may end my boycott and actually put gas in the SUV.
Sure I am. it's the internet. As long as the housing market was fueling the economy and Bush had the the final say in any political argument, I don't think he was concerned at all with lowering gasoline prices; his peers and supporters were making money. But when the economy starts to weaken and you are losing credibility with your main issue , you'd better make the people feel good about something. The futures market is driven by information. The 'unbiased' information comes from the federal government, they work for the president. The industry information is generated by the same people who profit from it. Stewardship can lead the assumptions, just like the stewardship of the global warming data. I am not trying to make a conspiratorial claim but wouldn't the ocean temperature data suggested an El Nino well before uh last week. Did it just sort of pop up after there were no hurricanes? Also I realize Chevron had not actually extracted any oil out of The Jack #2 well till September the 5th but the 'annoucement' seemed like a PR event to me. The sesimic data had been around for a couple of years, it wasn't like Dad Joiner hittin' a gusher.
What exactly do you think he did? Who did he use his influence on, and what did he ask them to do (in your thinking)? Keep in mind that all of the production and consumption numbers are very public information.
Apparently $1.90 in some parts of Pearland... But seriously though, I am hoping that the prices won't drop too much, and more than anything else I hope Americans don't fall back to their nasty and gluttonous driving habits, because eventual energy independence must remain high on our nation's to-do-list if we're to prevent similar hardships in the future. I hope the upward trend in sales of smaller sedans/SUVs will continue...
I remember that during the months after 9/11 and shortly before and during the Iraq invasion, the Saudis produced more oil to offset any fluctuations in the crude market. The Iraq invasion, in particular, was interesting because officially, their government was condemning our unlawful invasion while they were supporting us through back channels. Kuwait might've also helped, but Saudi involvement was crucial since their production dwarfs several other OPEC nations. However, there's no proof this is happening now. As we've seen, production is only one factor towards determining final gas price. During the era of cheap gas 10 years ago, there was a refinery explosion in N. California that drove regional prices 50 cents above the median. There's only so much Bush can do...
They're scrambling. They started all sorts of construction plans based on these prices and they're fearful they'll keep falling. But they better be careful, because there are real signs of a significant downturn in the US economy. Delicate balance. http://www.ft.com/cms/s/7ef0bb92-4cc8-11db-b03c-0000779e2340.html Opec considers drop in output By Kevin Morrison and Javier Blas in London Published: September 25 2006 20:10 | Last updated: September 25 2006 20:10 Oil exporting countries may consider a cut in output after crude prices fell below $60 a barrel on Monday for the first time in six months. The decline came as global demand fell back from its mid-year peak and tensions over Iran eased. Ministers from the Organisation of the Petroleum Exporting Countries are understood to be concerned about the drop in oil prices, which are down almost a quarter from their recent peaks. They have discussed the prospect of trimming production ahead of the oil cartel’s next ministerial meeting in Nigeria in December, according to Opec officials. The oil price fall over the past month has been accompanied by investor selling in oil and other commodity markets, mainly on concerns that economic growth in the US is slowing. “There is a concern by hedge funds that oil and commodities are no longer the one-way bet they once were,” said an Opec official. Brent, the European benchmark oil price, dropped 50 cents to $59.91 a barrel, down 24 per cent from its record peak of $78.40 reached last month. The US benchmark oil price, West Texas Intermediate, yesterday hit $59.62, its lowest level since early March, before recovering to $60.54. It was flat on the day. The WTI is now lower than the level it ended at last year. The magnitude of the decline in percentage terms is the largest in more than three years. Investors have been selling out of oil futures over the past month, after taking bets earlier in the year on expectations of hurricanes disrupting oil supplies in the Gulf of Mexico. But with the Atlantic hurricane season finishing at the end of September, there is little prospect of a repeat of last year’s devastating storms. Opec is not only worried about investor activity in oil markets, but also about preserving high export prices, which underpin government budgets in member countries. Many Opec producers have embarked on big spending programmes in recent years on the back of the higher oil price. Opec maintained its quota of 28m barrels a day at its recent meeting in Vienna, and this is close to the cartel’s actual production last month. Saudi Arabia, Opec’s linchpin member and the world’s largest oil exporter, has been cutting its output since the end of last year. If Opec does trim its official production ceiling, it would be the first cut since December 2004, when oil prices were close to $42 a barrel.
1. Choose to edit public information in it's most favorable interpretation. 2. Ask Saudis to keep production up - OPEC cheating is SOP 3. Ask refiners to delay maintenence that might reduce output. 4. Ask retailers to squeeze their margins a bit. Remind them that a democratic congress could enact a surtax and that higher prices now bring alternative competition faster that will reduce future profits. No conspiracy therory crap there, just good politics. Remember all the parties above are allies of a Republican administration. Once the speculators feel the pressure to bail out on and cover their futures contracts (ooh ooh I missed an opportunity to say 'tipping point') the market makes a correction. Some of the upward market pressure was certainly leftover Katrina hysteria coupled with the NOAA hurricane season prediction; maybe that was the bulk of it. I do think their are some more duplicitous acts that can be taken by hugely wealthy Bush/Republican supporters like writing and covering their own contracts, disinformation, PR, and yes actually taking less short term profit than they could make. (I thought I said this) Apparently I'm not alone in this thinking Though I wouldn't have thought the American Public would have even thought about it really.
OPEC isn't cutting supply anytime soon. http://www.breitbart.com/news/2006/09/26/060926194135.8syn5ezb.html Oil prices down as OPEC rules out emergency talks Sep 26 3:41 PM US/Eastern World oil prices dipped after the OPEC cartel of producer nations signalled no cut to its current output levels for now. The Organization of the Petroleum Exporting Countries said it was not considering an emergency session of talks ahead of its scheduled December meeting, despite recent heavy falls in crude prices, dealers said. Markets also reacted to news from British energy giant BP that it expected Prudhoe Bay in Alaska, the biggest US oil field, would resume full production totalling 400,000 barrels daily by the end of October. New York's main contract, light sweet crude for delivery in November, eased 44 cents to close at 61.45 dollars a barrel. In London, Brent North Sea crude for November delivery fell 68 cents to a settlement of 60.12 dollars a barrel. Both the New York and London contracts had fallen below 60 dollars in intra-day trade Monday to their lowest levels since March 8, sparking talk that OPEC may cut output before December to put a floor under prices. But a spokesman for the 11-nation cartel told AFP in Vienna: "There is really no meeting planned as of now (before December). "The (OPEC) president is always in consultations with the other ministers and they're discussing the matter, but there is no emergency meeting scheduled," she said. Calyon analyst Mike Wittner called it a "notable statement". "This week, the markets are really looking to figure out when OPEC, in particular Saudi Arabia, is going to take some action." Dealers said the market was concerned that the cartel might begin to trim production if prices dropped much further. "The market is watching out for any signs of what OPEC might do and what prices they may support," said Mark Pervan, an energy analyst for Daiwa Securities in Melbourne. Michael Davies, an analyst with the Sucden brokerage in London, added: "Voices within OPEC have started to make noises about being concerned by the sharp fall in oil prices. "However, there is still no plan to call an emergency meeting before December." OPEC kept its official quota steady at 28 million barrels per day (bpd) at its last meeting in September, but said it could call an emergency meeting if necessary. The next meeting is due on December 14 in Abuja, Nigeria. Regarding Prudhoe Bay, a BP spokesman in London told AFP that output had been raised over the weekend to 300,000 barrels per day after normal production was slashed by about half last month owing to a pipeline leak. The spokesman added that output at the Alaskan field would rise to 350,000 bpd over the next week. Easing concerns about oil supplies have sent prices tumbling by as much as 25 percent since crude futures hit record highs in July and August. Prices have been dampened by a mild Atlantic hurricane season, healthy US energy stockpiles, signals pointing towards a slowing US economy and lessening tensions over the Iranian nuclear crisis.
i'm stocking up on as much fuel as humanly possible right now. i know this things not gonna last - but you take what you can, when you can.
