It cracks me up when I hear people talk about the shortage of oil;as in if we got better millage there would be no shortage of oil. We have several hundred years worth of oil even if consumption doubles (not likely) we could last at least 100 years (known reserves). This is market manipulation. Cali, just a couple of years ago was running out of electricity. What were they going to do, that entire situation was market manipulation. I am not saying it is some waked out conspiracy, it is just a miss representation of the facts that is creating a market bubble. remember a year ago we had no land left to build houses!

 

Didn't you see the article in the paper? Atlantis rose back up and provided some nice new shorefront properties

 

I have heard that sulfur dioxide is what causes ice ages (discovery channel/volcanoes etc) if we are suffering from global warming, then reduced sulfur in the fuel is contributing to the problem! And then there's the old argument of "if we're concerned about pollution, how does burning MORE fuel help?" I quote an EPA critic:
"There is NO CURE for stupidity"

 

I'm just wondering who is in control of opec, If you remember 9-11 they said they wanted to kill are economy well looks like it took longer then they thought but looks like they are getting there. Now are demoract congress needs to pull there head out of there butt and get something done on drill here and drill NOW!!!! Then tell opec to take a flying leap!!
Rant done

 

You the consumers are in control of Opec.You have no problem buying the gas at $4/Gal, so they have no reason to bring it down. You stop using as much gas, their sales go down, prices go down.

 

That's exactly what is happening right now. We are driving less and using less gas, but price stays the same due to a few reasons that are not related to us but affect the price nonetheless.

A. Tensions in Middle East especially when Iran mentioned they would attack oil supplies if attacked.

B. Increased demand in China despite reducing the subsidies, but they have the Olympics to host as well. So while we and the EU(as of right now the largest consumer of oil) are going down in demand the burgeoning economies of developing countries are picking up the slack.

C. Last but not least the ever loveable speculators that are just now joinging the came because of our slumping economies(ironically even one airline company was doing this and it's what's keeping them afloat).

This is much more then just how we(US) consume oil and other fuels and that's what people have to realize as well.

 

A. Drill here and NOW OPEC will shake in their Robes.
B. Drill Here and NOW, China will feel the SuperPower Coming to a new Life.
C. Drill Here and NOW, Flood the Market with OIL, speculators will move on to greener pastures.

What KILLS me is when INsane Obama says wil not lower the price a Penny, Does he have a crystal ball?? Has he already tried this?? They are all WACKED in the Head....just start drilling and lets see, lets see.

 

That I actually do doubt on both counts. Particularly when some parties there aren't acting on a rational basis or what we consider rational.

Yes and no, I doubt it would flood the market, but it would help with supply concerns that is for sure. What kills me is that people think it is as easy as drilling to get out of this hole and it's not. It has been a long time coming when we all became involved in a global economy. I do believe in a global economy, but I believe in energy diversification which most oil drilling advocates are not even in the long term, which I do not advocate. Drilling to help buy time is one thing, drilling to continue on this route is another.

 

OK I will address these myths
A. Tensions in Middle East especially when Iran mentioned they would attack oil supplies if attacked.

Why do I pay more now for something that might or might not happen in the future? Even if war with Iran is inevitable (Bush has said this for 5 or 6 years) there is no guarantee that it will impact the flow of oil. Basically we have them surrounded. They are not allies of the Saudi's and would attack them after Israel if they become a Nuclear state. So either the flow of oil appears to be impacted?


B. Increased demand in China despite reducing the subsidies, but they have the Olympics to host as well. So while we and the EU(as of right now the largest consumer of oil) are going down in demand the burgeoning economies of developing countries are picking up the slack.

Increase demand that Saudi's can meet indefinitely. Also do not forget that even with out drilling we have 2.5 trillion barrels in oil shale. At today's price it is cost effective but today's price is not the true market value so why invest billions just to have OPEC flood the market and make your oil too expensive?

C. Last but not least the ever loveable speculators that are just now joinging the came because of our slumping economies(ironically even one airline company was doing this and it's what's keeping them afloat).

Now this one is a driving force. It is like every other bubble when it is going up it is easy to make money but as in every other bubble this one will bust too. I am not saying $20 oil is coming back (even though cost for OPEC is about $10) but $70 - $90 is easy and I would think it would be even less as shell claims at $70 shale oil is viable and with commodities the most expensive to produce sets the market price. I hear people say shale oil is not viable but the process does not seem to be too different then the oil sands that Canada is making profitable.

When I say that there is no shortage (for aleast 200 -300 years) that is just known oil as the ice caps melt (also that is thier normal state they are only frozen because they are still thawing from the last ice age) the artic appears to have vast oil reserves.

In a nut shell we pay more because war might break out and we might run out of oil in 200 years.

 

The speculators have a very small impact on price in the short term. Speculators do not set the price of oil, but if every one of them is buying CALLs the price will go up until an inventory is taken. Once inventory/reserves are verified, the price either remains the same, drops or jumps up for new contracts depending on the surplus or deficit of inventoried reserves, and expected future inventories.
Speculators only try to guess which way price will go and buy or sell according to that strategy. Once oil turns around, and it will, the speculators will buy PUTs and make money on the declining price of oil. Speculators could care less which way a commodity is moving, just so long as it is moving. Right now, ALL trends, point to higher prices so all speculators are buying Calls.

Two major factors right now are a contracted supply and a VERY weak dollar. Lesser factors like Iran/Israel and speculators contribute as well, but Drill Here Drill Now is the only thing we can fix ourselves.
Oh, and alternative fuels are a must as well. That's a given. Unfortunately, any alternative doesn't power diesel trucks that move supplies so electric cars and hydrogen don't cut it yet and won't for many years. Try getting a load of block to a job in a Prius.

 

That is the nature of the futures market. The people bidding for contracts now are trying to predict what will happen in August(as that is what month is being contracted for now). By it's very nature, everyone in commodities is a speculator, every single one. That is why you see higher prices when tensions get stressed, it all depends on what might happen, not necessarily what will, but what might.

 

Where is supply constricted?

Not talk of in the future but current supply constraint (1-3 months). What refinery does not have enough oil to process so it is shutting down?

Where is this huge increase in demand?
2%-3% increase is what we are going crazy about?

The dollar is weaker but not enough to double the price of oil in 6 months.
bad news is the Fed will have to raise rates and needs to be aggressive against the Euro.

 

It's about likelyhood or possibility, not necessarily is it now, but could it be in the future when they are bidding for that month's contract. They use what they supposedly know now to help determine where it's going to be in the future. It's about possibilities not certainties.

 

We might start Drilling and and find a Buttt load of oil too.

 

That is very true, as well as the possibility that you could have something that might previously have shown promise and turn out to not be as promising as once thought. Now I want to stress that I'm not saying all this because I don't believe in drilling, I'm just trying to stress that this isn't as clear cut as drilling along. Having a one track mind can lead to worse problem then not considering all avenues(and that would mean continued and adding more drilling rigs).