Good news is that gasoline and oil prices don't always move hand in hand as evidenced this past year. http://bespokeinvest.typepad.com/bespoke/2007/09/oil-and-gas-com.html "Whenever we hear that the price of oil rises, one of the first thoughts to cross our mind is that the price of gas is going to rise. However, over the last several months, the relationship between the two commodities has started to break down. Since May 1st, crude oil has rallied 26%, while unleaded gas has declined by 6%. The chart below shows the cumulative return of crude oil and unleaded gas since the start of 2006. In 2006, oil and unleaded gas had a correlation of +0.90 (1=perfect correlation). This year however, the correlation between the two has declined to +0.57. If oil keeps rising, let's hope the correlation stays that way."
Crude oil pricing is a leading indicator of gasoline prices, as evidenced by that chart. The crack spread is a refiner's profit margin. This is the spread between a refinery's input (crude) and its output (gasoline in some cases). Refineries don't like to sell refined products at negative margins, so this correlation is fairly solid, ceteris paribus.
Absurd and reflective of your ignorance on the topic. If being many years from development is a deal killer for any oil & gas exploration project, then you have totally shut down a huge percentage of new production over the next 10 years. Most deepwater projects are that way. The huge new field off Khazakstan is that way. The fact of the matter is that ANWR would most likely be the US' largest oilfield. It is a damm crime that we can't access our own reserves in a BARREN FROZEN TUNDRA, simply because 10 days out of the year, caribou have sex there. This is what the EnviroKooks have driven us to. So instead of sending American men and women to one of our own states, developing our largest field, and generating significant AMERICAN tax revenue and jobs, we are instead dodging bullets while drilling off the coast of West Africa, cutting deals with Moamar Khadafi in Libya, and haggling with Vlad Putin over how we are getting screwed out of investments in Russia. Just stupid.
I personally agree that the environmental impact of drilling in ANWR is minimal but you completely ignored Deckard's point. The actual amount of oil that could be gleaned would have a minimal impact on oil prices. That said I support drilling but its no magic cure for oil prices.
does the US have a shortage of refineries? is 100% of the existing refineries operating at 100% capacity?
It's no surprise. Trader_texxx are more interested in tag-team insults than a discussion. Very boring. Impeach Bush for Creating Idiots.
http://articles.moneycentral.msn.com/Investing/Dispatch/HundredDollarOilMayBeJustTheStart.aspx People who have experience with oil suggest that prices are out of touch with reality. "Prices have outrun the fundamentals," says Daniel Yergin, chairman of Cambridge Energy Research Associates, a global energy consulting firm. At some point, consumers will cry uncle about rising gasoline prices, Cameron Hanover's Beutel says. When they do, gasoline prices will drop and should pull oil prices down as well. "It's a bubble," Oppenheimer's Gheit has said repeatedly for months. "The $64,000 question is, when will the bubble burst?"
Dan Yergin is indeed a true expert in the field. One point here - when was the last time oil actually traded on fundamentals? It's been a while. While I don't doubt that crude prices will come down over time, in today's market, global instability in places like Nigeria, Pakistan and Iran is keeping people on edge and prices high.
You're absolutely right. It has been a while since the price of oil has been supported by the real fundamentals. Eventually that bursts. And when that happened before, it didn't look real good for Houston, in particular.
I totally disagree that this is a bubble. Totally disagree. This is supply and demand working against each other in its truest form. For every Dan Yergin that you can google and find an article from, there is a Matt Simmons stating the exact opposite. The people saying its a bubble simply are not aware of how difficult it is to bring new production online these days, and how little new discoveries we are seeing despite big exploration budgets. If OPEC is operating a full capacity currently (and they all lie about their reserves and output capacities to increase their % take in the cartel), then we are in deep trouble.
oil prices will go down if they stop trading it in dollars. so i guess if you mean recession will weaken the dollar further and cause the world to cease trading oil in dollars then yes i agree.
That doesn't make sense to me. If the dollar is weakened, the the cost of oil in dollars will go even higher since we would have to trade our dollars for euros to buy oil.
Wrong. You and Brightside seem to subscribe to the same level of shallow analysis. A possible recession would reduce the demand for oil, which will impact price. What currency oil is denominated in doesn't matter much. Here's what I posted earlier in the thread: Your thinking is off when you tie the value of the dollar to the price of oil. The currency in which oil exporters hold their assets matters a great deal - the currency in which the price of oil is quoted matters substantially less. Take a quick read of this to straighten out your logic. http://www.econbrowser.com/archives/2007/11/oil_and_the_dol.html#more
http://news.bbc.co.uk/2/hi/business/7169543.stm Single trader behind oil record The man behind the record rise in oil prices to $100 a barrel was a lone trader, seeking bragging rights and a minute of fame, market watchers say. A single trader bid up the price by buying a modest lot and then sold it immediately at a loss, they claim. The New York Mercantile Exchange said that US crude oil futures traded just once in triple figures on Wednesday. Some analysts questioned the validity of the trade, though their concerns faded as oil set a record on Thursday. New York light sweet crude climbed to a new high of $100.05 a barrel on Thursday. Vanity trade On Wednesday, one floor trader bought 1,000 barrels, the smallest amount permitted, and sold it immediately for $99.40 at a $600 loss, said Stephen Schork, a former floor trader on the New York Mercantile Exchange and the editor of an oil market newsletter. "They absolutely overpaid," he told Radio Four's Today Programme. "He paid $600 for the right to tell his grandchildren that he was the first in the world to buy $100 oil." Most trading in energy futures has shifted away from the trading floor and takes place on electronic platforms. The NYMEX, along with the Chicago Mercantile Exchange is one of the last bastions of "open outcry", where traders use frantic hand signals to trade securities. In London, open outcry trading still takes place on the London Metal Exchange, where aluminium, copper and zinc are traded. The supporters of electronic trading claim that it is faster, cheaper, more efficient for users, and less prone to manipulation by market makers. The dwindling liquidity on the NYMEX trading floor has led to considerable speculation that the exchange will soon shut down the trading floor to cut costs.
