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1. Why are gasoline prices all around the Minneapolis/St. Paul area so uniform? Gas prices used to vary up to 20 cents depending on what part of town you were passing through. Now they are within 2 cents no matter where in the metro area you might find yourself.
2. In years past the oil big wigs used to say that it took 6-8 weeks for changes in oil prices to impact the price of gasoline. Now when oil goes up (which is almost every day) gasoline prices follow within a day or two.
3. What have the oil companies done (aside from push to drill in ANWAR) to promote America's energy independence?
http://www.telegraph.co.uk/money/main.jhtml?xml...
Are oil and food the next big bubbles? This is "compassionate conservatism" at work; destroy the most basic needs of the American people: shelter - done, food and transportation - in the works.
#29-37 are the bomb
I've been a grateful lurker for a long while, but your request for substantive sources on the current commodity corner have brought me out of the shadows, so to speak.
I'm not a peteroleum industry professional, but I've been studying this industry from the perspective of investing/speculating since the 1980s.
One of the things that your readers should understand is that there is an empirical observation that anyone willing to do their homework can discover. That is, in a nutshell, that the price of oil is positively correlated with supply imbalances, but that the range of prices is wildly disproportionate to actual market conditions. For example, the price of a barrel of oil went from $80 in 1981 (in inflation adjusted dollars) to $8 in 1989 based upon a surplus of about 5% above world demand for product. Thus, a swing from 5% deficit in supply to 5% surplus supply, a swing of 10% more or less resulted in a 1,000% swing in price. As George Soros has pointed out, unregulated markets tend toward irrationality.
So that's the first thing you need to realize, i.e. this price madness has been going on for a long time. It just used to be less globalized.
You say that you are seeking good sources on the oil industry. I can recommend several.
Investment banker Matt Simmons, a man who is on a first name basis with George Bush is someone I happen to greatly admire. He's as much an educator as banker. His presentations [ http://www.simmonsco-intl.com/research.aspx?Typ... ] are some the clearest thinking available. Be sure to also check out his book, "Twilight in the Desert". http://www.twilightinthedesert.com/
On the net, a couple of blogs have proven to be exceptionally prescient over the past few years. Here's a couple I'm happy to recommend:
The Oil Drum: http://www.theoildrum.com/
Energy Bulletin: http://www.energybulletin.net/
OK, if that is of use to you, let me know and I can continue in this vein. I've got some pretty deep files on this topic.
Thank you so much for AmericaBlog. I come here daily and find this to be one of the most intelligent blogs I have found on the Intertubes.
Best regards, Ray
Oil Price in 2000 $ 35- / barrel
Add : Bush Admin belligerence and Wars 10 -
Supply & Demand 10 -
Commodities Speculation 10 -
New Price 65 -
* 2 (50% decline in value of dollar) 130 -
Reason for decline of dollar, Bush admin fiscal policy (huge deficits, reduction in taxes, stealing 200B / annum from Soc Sec).
So approx 2/3 of the current price of oil caused by Bush Admin actions.
Certainly nothing Scientific to explain. Just my best "guess".
Some of the factors might be a bit more, others a bit less.
Certainly the "speculation" is to some degree fueled ;-) by the belligerence and wars. (Iraq, Iran, Venezuela etc).
I seem to recall that the "debt" has been risen by 500-800B per year while the official "deficit" has averaged ONLY 300B. I did not look up the "official" figures.
On whether oil is a bubble, the critical factors seem to me to be, as CR says at the end of his post, speculation and storage. Speculation we have plenty of, but storage is much harder to discern. Unfortunately, there are lots and lots of little hidey-holes into which oil can be pumped, in addition to simple non-extraction. My gut says that this is not a bubble, and even if it is, we should be treating it as not a bubble just to encourage conservation and alternatives.
Nobody really knows the truth, though, because the Saudis don't tell how much oil they may have.
An oligopoly is a market form in which a market or industry is dominated by a small number of sellers (oligopolists). The word is derived from the Greek for a few over many. Because there are few participants in this type of market, each oligopolist is aware of the actions of the others. The decisions of one firm influence, and are influenced by the decisions of other firms. Strategic planning by oligopolists always involves taking into account the likely responses of the other market participants. This causes oligopolistic markets and industries to be at the highest risk for collusion.
You think Amoco was in danger of going out of business?
However, the profitability of U.S. refining and marketing during 1997 was the highest since 1989, when the return on investment from these operations last exceeded 10 percent (Figure 1). Refiners were able to achieve their high level of profitability partly because of events of 1997 (such as lower energy costs) and partly because of efforts and developments over the last several years (such as lower marketing costs). (Cost-cutting through a number of downstream mergers, as well as the formation of a number of downstream alliances and joint ventures, also underlie the current profitability in downstream operations. For a more extensive discussion of these developments, see the section entitled "Recent Structural Changes in U.S. Refining: Joint Ventures, Mergers, and Mega-Mergers.")
http://www.eia.doe.gov/emeu/finance/usi&to/down...
It was more than just the BP/Amoco deal.
When Exxon and Mobil merged, they were number one and two in the industry.
You telling me they didn't have enough "scale" already?
It also has in it an Enron twist.
And when I watch CNBC, all the the people say its only supply and demand. But of course these are the guys making all of the money out of the confusion from it.
-increase demand without an ability to increase supply
-US foreign policy in the middle east bringing about instability (it costs more to pump and transport oil when the fear of terrorism or war is there)
-rumors (last one I heard was Saudi Arabia overstated their reserves and reached their peak output already)
-a decreasing dollar (multiple reasons for that one)
So, the moral of the story is that everything you don't like is not criminal. The upside is that it has made investing in alternative energy sources price competitive. If it wasn't for this, investment in new sources would be a fraction of what it is going to be going forward
and rumors. But let me give a quote from the article from the HuntingtonNews by F William Engdahl.
"A June 2006 US Senate Permanent Subcommittee on Investigations report on “The Role of Market Speculation in rising oil and gas prices,” noted, “…there is substantial evidence supporting the conclusion that the large amount of speculation in the current market has significantly increased prices.”
What the Senate committee staff documented in the report was a gaping loophole in US Government regulation of oil derivatives trading so huge a herd of elephants could walk through it. That seems precisely what they have been doing in ramping oil prices through the roof in recent months.
The Senate report was ignored in the media and in the Congress."
Also your right, everything I don't like is not criminal. But maybe you should speak to the people who lost their life
savings when Enron collapsed. The futures traders at Enron did not think they where doing anything criminal.
new one, the Dubai Mercantile Exchange. And I quote from the Senate report.
"Until recently, US energy futures were traded exclusively on regulated exchanges within the United States, like the NYMEX, which are subject to extensive oversight by the CFTC, including ongoing monitoring to detect and prevent price manipulation or fraud. In recent years, however, there has been a tremendous growth in the trading of contracts that look and are structured just like futures contracts, but which are traded on unregulated OTC electronic markets. Because of their similarity to futures contracts they are often called “futures look-alikes.”
The only practical difference between futures look-alike contracts and futures contracts is that the look-alikes are traded in unregulated markets whereas futures are traded on regulated exchanges. The trading of energy commodities by large firms on OTC electronic exchanges was exempted from CFTC oversight by a provision inserted at the behest of Enron and other large energy traders into the Commodity Futures Modernization Act of 2000 in the waning hours of the 106th Congress.
The impact on market oversight has been substantial. NYMEX traders, for example, are required to keep records of all trades and report large trades to the CFTC. These Large Trader Reports, together with daily trading data providing price and volume information, are the CFTC’s primary tools to gauge the extent of speculation in the markets and to detect, prevent, and prosecute price manipulation. CFTC Chairman Reuben Jeffrey recently stated: “The Commission’s Large Trader information system is one of the cornerstones of our surveillance program and enables detection of concentrated and coordinated positions that might be used by one or more traders to attempt manipulation.”
In contrast to trades conducted on the NYMEX, traders on unregulated OTC electronic exchanges are not required to keep records or file Large Trader Reports with the CFTC, and these trades are exempt from routine CFTC oversight. In contrast to trades conducted on regulated futures exchanges, there is no limit on the number of contracts a speculator may hold on an unregulated OTC electronic exchange, no monitoring of trading by the exchange itself, and no reporting of the amount of outstanding contracts (“open interest”) at the end of each day.”
And as RayDuray just said upstairs, Gemany is opening it's eyes and hopefully the rest of the world!
Oh, about Enron. You and I will not agree about what the future traders did. But the SEC did do the right thing and went for the people at the top. Kind of like we should do with Bush!
i think 'supply and demand' is not the whole picture by far...agree with the first comment below that problems with our currency are key, AND somehow I can't shake the feeling that dick cheney going behind closed doors with all the big oil boys to set U.S. energy policy has something to do with it...big time.
http://www.citizen.org/documents/nocompetition.PDF
And, here, the GAO estimates a 7 cents per gallon effect, which seems small, but a 1 cent per gallon increase is considered serious enough to be investigated by the FTC.
http://www.gao.gov/new.items/d07902t.pdf
Again, Clinton let these mergers move ahead without a peep.
The Banks will not accept their own subprime debt back as collateral because thanks to the collapse in real estate prices subprime debt is not worth the price the hedges bought it from the banks.
This lowers the cash the hedges have from what they thought they had and forces them all to chase in a down market any deal they can to pay off the banks. Higher oil prices are that deal
oil prices are higher now than when Bush took Iraqi oil off line completely for at least a few weeks and years of only partial pumping oil to capacity.
Second the US Dollar is down around 30% to the Euro so if gas was $2 a gallon and now its $4 a gallon subtract 60 cents from the price of gas thats $3.60 we should be paying remember wages have not really gone up during the Bush years compared to inflation, that and rises in gas and food prices are not taken into account when inflation rates are calculated. Because the prices on these commodities is too volatile meaning they go up and down to fast to effect the economy, but if they stay high or for a long period of time they do have an effect on raising inflation which further weakens the Dollar.
Peak oil is a factor but if gas was $2 a gallon recently there is no way to justify gas at $4 a gallon we did not lose half the oil we are pumping because of oil wells running dry faster than we can find new ones or Iraqi oil pumping problems.
But Peak oil and the very real fear of war with Iran do provide the Hedges a reason to speculate that oil prices will go higher. I think the hedges are colluding to make oil prices higher to save themselves its the only game in town and they are not regulated nearly as much as banks and other big money players are.
I think the price of will collapse if Bush does not invade Iran. Remember any change in the economy takes about 6 months as a rule to be felt through out the economy so maybe 6 months after Bush leaves office.
Remember the oil guys say that based on fundamentals and not price speculation oil should be trading much much lower. I'm not sure I believe their numbers but I believe the direction their numbers are pointing.
Good news a collapse in oil prices would likely help the next Presidents economy.
Bill got lower oil prices as a result of Bush 1's gulf war 1, It now seems that Obama will get lower oil prices to help his economy as a result of Gulf war 2. Why this is I don't know maybe the Saudis like Democrats, maybe the Saudis just use Republicans as servants to fight their wars.
http://hallofrecord.blogspot.com/2008/04/reply-...
That "Factors that influence Gasoline Prices" from the GAO that I referenced below is as good a place to start as any, it talks about other issues besides Clinton's approval of Oil Company mergers.
(I was in the petrochemical industry when all those mergers were happening, and it seemed crazy to me at the time, since they were basically allowing Rockefellers Standard Oil Trust to come back to life. That's why it still sticks in my craw.)
Anyway, be suspicious of anything that comes from the American Petroleum Institute.
And, by the way, if you want a historical look, check out this book:
http://search.barnesandnoble.com/The-Prize/Dani...
(it won the Pulitzer and was also made into a PBS series, which probably can be rented or purchased.)
The world can only pump 85 million barrels yet demand is now at 87 million and rising. Our elected officials are worthless especially when congressmen from both CA and FL say NIMBY...Not In My Back Yard. Well if you don't want to see oil platorms out in the ocean and if you own a home in
Nantuket and say you don't want to see windmills on the horizon, where in the world is all this energy going to come from? Do we continue to pollute the air with coal emissions and keep burning fossil fuels that are getting
scarcer? If GM and all of the other car manufacturers move in the direction of plug ins, just where is all of this electricity going to come from?
The answer has been staring us in the face since the 70's and to a large extent can take care of domestic useage through the use of solar power as well as wind. I know I have pounded the table over this point, but what has an ineffective Congress been doing for the last thirty years other than being in bed with the oil companies? Do any of you realize that the greatest profit that is made on a gallon of gas goes to state and federal taxes? Check it out at the pump the next time you fill up. So ask yourself, why would a politician give up a cash cow like that while sucking the life out of the middle class or at least what's left of it?
What America needs as I've said in the past is a Manhattan product for energy. If it were possible to bring the greatest minds together in the 1930's in coming up with a way to kill millions of human beings, then surely today, we can bring together today's great minds to find effect alternatives to our energy needs. The problem is now and has always been greed at the corporate level and power at the politcal level and that is exactly what Eisenhower warned us of back in 1960. Perhaps a better way to put the military/industrial complex to work rather than finding ever more ingenious ways of killing people, would be to finding solutions to the energy crisis. While I like Obama alot, I have yet to hear any of the candidates take on the energy issue in any meaningful way.
It can be done, but untill and unless the people raise their voices loud enough, government will continue to look the other way while draing every last penny from us. It is long past time that Americans woke up and took their country back from robber barrons and an ineffective Congress.
http://www.youtube.com/watch?v=ZvjRv3Xhy-s&eurl
http://www.theoildrum.com is the best place on the web to learn more than you'll ever want to know about peak oil.
As much as it hurts (I definitely feel it) we should probably look at these oil price increases as a good thing. You want out of the Middle East, cut US oil consumption by 35%. Nothing is doing that short of changing consumer behavior. The only problem here is that the increased prices in the market are going to producing countries and the oil industry; we could simply knock up gas taxes to achieve the same result and actually do something productive with the money: invest in alternative energy, subsides for more fuel efficient cars, investment in mass transit, etc.
MCain was supposed to have lost 5 of our aircraft when he was in the service.
http://www.vietnamveteransagainstjohnmccain.com...
Like Ray I have been a lurker on Ameriblog for a long time and your request for Information on the price of oil got me to finally make a comment. I have represented independent oil and gas producers (not integrated oil, like Exxon et al.) since 1978 and have watch the price go up and down all these years. I highly recommend Matt Simmons writings, because he is an investment banker to independent oil and gas companies. While there is, of course, a speculation bubble at these high prices, no one should expect the price to drop as suddenly and precipitously as it has in the past - it could go back to the $85 to $100 range, but I think its very unlikely to go below that. One person correctly noted that the US reserves have already peaked and therefore, we must depend on oil from overseas and the great majority of that oil is (1) controlled by national oil companies, who have agendas in addition to supply and demand (2) has to be brought to the US by ship. As Matt Simmons points out is his writings - national oil companies have historically overstated reserves. The undeveloped reserves in the United States are all extremely expensive to find and to bring to market - deep offshore and arctic geological provinces. Because of improved technology it is possible to produce newly discovered reserves more rapidly, which also means depleting them sooner. One of the key factors in judging an "oil company" is whether it is replacing the reserves it produces with new oil. Many of the mergers have been motivated by obtaining new reserves, because replacement of reserves has not kept pace with decline rates and production. We have been enjoying low gas prices and our SUVs and trucks for more than a decade now, while Europe has dealt with these kind of prices for quite some time now - they are way ahead of the US on CAFE standards. We have been on an oil binge and our politicians have been content to let it happen. We are now reaping what we have sown.
INTERESTING. . . ?
How many zeros in a billion?
This is too true to be funny.
The next time you hear a politician use the
word 'billion' in a casual manner, think about
whether you want the 'politicians' spending
YOUR tax money.
A billion is a difficult number to comprehend,
but one advertising agency did a good job of
putting that figure into some perspective in
one of it's releases.
A. A billion seconds ago it was 1959.
B. A billion minutes ago Jesus was alive.
C. A billion hours ago our ancestors were living in the Stone Age.
D. A billion days ago no-one walked on the earth on two feet.
E. A billion dollars ago was only 8 hours and 20 minutes, at the rate our government is spending it. While this thought is still fresh in our brain...
let's take a look at New Orleans ....
It's amazing what you can learn with some simple division.
Louisiana Senator,
Mary Landrieu (D) is presently asking Congress for 250 BILLION DOLLARS
to rebuild New Orleans . Interesting number...what does it mean?
A. Well... if you are one of the 484,674 residents of New Orleans (every man, woman, and child) You each get $516,528.
B. Or... if you have one of the 188,251 homes in New Orleans, your home gets $1,329,787.
C. Or... if you are a family of four...your family gets $2,066,012. Washington, D.C.
HELLO! Are all your calculators broken??
Accounts Receivable Tax
Building Permit Tax
CDL License Tax
Cigarette Tax
Corporate Income Tax
Dog License Tax
Federal Income Tax < BR>
Federal Unemployment Tax (FUTA)
Fishing License Tax
Food License Tax
Fuel Permit Tax
Gasoline Tax
Hunting License Tax
Inheritance Tax
Inventory Tax
IRS Interest Charges (tax on top of tax)
IRS Penalties (tax on top of tax)
Liquor Tax
Luxury Tax
Marriage License Tax
Medicare Tax
Property Tax
Real Estate Tax
Service charge taxes
Social Security Tax
Road Usage Tax (Truckers)
Sales Taxes
Recreational Vehicle Tax
SchoolTax
StateIncomeTax
State Unemployment Tax (SUTA)
Telephone Federal Excise Tax
Telephone Federal Universal Service Fee Tax
Telephone Federal, State and Local Surcharge Tax
Telephone Minimum Usage Surcharge Tax
Telephone Recurring and Non-recurring ChargesTax
Telephone State and Local Tax
Telephone Usage ChargeTax
Utility Tax
Vehicle License Registration Tax
Vehicle Sales Tax
Watercraft Registration Tax
Well Permit Tax
Workers Compensation Tax
STILL THINK THIS IS FUNNY?
Not one of these taxes existed 100 years ago...and our nation was the most prosperous in the world. We had absolutely no national debt...We had the largest middle class in the world...
and Mom stayed home to raise the kids.
What happened?
Can you spell 'politicians!' And I still have to press '1' for English.
I hope this goes around the USA at least 100 times
What the heck happened?????
This looks like one of those crazy spam e-mails my mother gets from her redneck cousins.
Yes, an industrialized society has more taxes than a country just at the beginning of the industrial revolution.
(How many telephones do you think there were 100 years ago, anyway?)
As for "most profitable country in the world at the time"--I tend to doubt it, though I'd say that given that our life expectancy was probably in the 50s and we probably didn't have much of a middle class, comparing it to today is like comparing apples and oranges anyway.
Seriously, this is stupid stuff.
There will be fluctuations, i.e. oil prices will ebb & rise, but $4.00/gallon gasoline will always look like "the good ol' days" from here on out.
Prudhoe Bay stopped the decline temporarily but by the mid-1980s we were falling off the cliff again. And no it wasn't because of the DFH enviros putting all our precious oil off limits. We could drill in every protected reserve in the nation including ANWR and it would only make a small blip in the overall decline.
If the U.S. can hit peak production followed by a long decline, it's only logical that the same thing could happen on a worldwide scale. That's what we're seeing in the 2005-2015 time frame. Even the most optimistic experts say we'll hit global peak production in 20 years or so. Everyone else who's not a pollyanna for hire says we'll be at peak in the next few years if we're not there already.
Supply and demand, baby!
Good sources are
APSO USA for engineering analysis and editorials
http://www.aspo-usa.com/
For financial analysis, Jerome a Paris at Daily Kos
http://jerome-a-paris.dailykos.com/
and Gail the Actuary at The Oil Drum
http://www.theoildrum.com/user/Gail+the+Actuary...
and The Oil Drum in general...
for news and editorials, the Energy Bulletin
http://www.energybulletin.net/
and the Energy Bulletin's peak oil primer
http://www.energybulletin.net/primer.php
for discussion forums, PeakOil.com
http://www.peakoil.com/
all of those site have links to many other sites.
It's nice to see y'all contributing. :)
ADC, to amplify your remarks regarding U.S. Peak Oil, it was predicted first at a Shell Oil internal conference in 1956 by M. King Hubbert who predicted, correctly, that the U.S. domestic production of crude oil would peak in ~1970. Most of the industry ridiculed Hubbert for his dire pessimism, but they were proven to be complete fools about the nature of a finite resource like petroleum.
One of the most imminently readable and affable observers of this and continuing studies of Peak Oil is Professor Emeritus Ken Deffeyes of Princeton University. Ken is a stitch. He's got a great sense of humor about all this doom and gloom. I recommend both of his books.
So, while this dire topic may lead some to thoughts of suicide, at least you'll die laughing: http://tinyurl.com/5cujxm
***
For laymen, another really bright writer is Richard Heinberg, a professor of ecology who has a knack for good headlines. One of his recent books is titled "The Party's Over". http://tinyurl.com/54qyh3 which is pretty much all Entertainment Tonight viewers need to know about energy.
***
Finally, for any of you arbs, derivatives traders, quants and financial legerdomain wannabees, I have a question. Recently a European based public intellectual, F. Wm. Engdahl has speculated that speculation itself is responsible for about 60% of the cost of a barrel of black gold. http://tinyurl.com/3lxgmz and continuing here: http://tinyurl.com/5r7ejg
My personal view is that Engdahl is, to an extent, exaggerating the role of unregulated speculators in the rapid rise in price we've seen so far. I'd say market fundamentals (i.e. dollar depreciation, supply/demand imbalance, the reality that Peak Oil occurred in May, 2005, etc.) are responsible for about 70% of today's price, with rapacious gamblng by speculators repsonsible for about 30% of the price and 100% of the volatiility we see.
Unlike "ruthlessgravity", I find speculators to be odious and parasitic fellows. I'm much more inclined to have the attitude expressed by V.I.Lenin: http://tinyurl.com/5r98pe
To wit: In times of famine, Vladimir Ilych Lenin took a robust line on speculation. "We can't expect to get anywhere," he told the Petrograd Soviet in 1918, "unless we resort to terrorism: speculators must be shot on the spot".
http://www.lewrockwell.com/armentano-d/armentan...
Armentano says the Dems investigations and hearings are all show. That sounds right to me. There was a lot of smirking at the table by those oil execs the other day.
It's not just about supply and demand it's more about cost and price and the vast differential which cannot hold.
http://theoildrum.com
for example, here's a very accessible primer by Gail Tverberg and another by Nate Hagens
http://www.theoildrum.com/node/4041
http://www.theoildrum.com/node/4020
For example, wanna learn about Saudi geology and arguments against spare capacity? Check out "Saudi Arabia's Crude Oil Reserves Propaganda"
http://www.theoildrum.com/node/3665
or click on the Saudi Arabia tag:
http://www.theoildrum.com/tag/saudi_arabia
I could keep going, but suffice it to say, TOD has a lot of good stuff, including a daily news summary called the Drumbeat. Very good comment sections, much like the ones here on Americablog.
I would then include:
http://energybulletin.net
http://peakoil.com
and if you're really doomerish:
http://lifeaftertheoilcrash.net
No one can accuse you of being a bimbo. Nice post. :)
Something that needs to be understood by anyone who cares about predicting the future of our pretentious preternatural petro-empire is the actual state of development of oil megaprojects. Wikipedia has a wickedly wise page on this wonkery: http://en.wikipedia.org/wiki/Oil_Megaprojects
Analyst Chris Skrebowski has been the go-to guy on megaproject development for the past few years: http://en.wikipedia.org/wiki/Chris_Skrebowski
In a nutshell, "Damn, we're in a tight spot". http://tinyurl.com/5d72bz
But then, maybe I'm just cynical AND paranoid. . .
By Basav Sen, Mobilization for Global Justice, and Hope Chu, 50 Years is Enough Network
While the three-year U.S. occupation of Iraq faces a quagmire in operations, the economic forces of the International Monetary Fund (IMF) and the World Bank are moving full speed ahead implementing various economic reforms that will cause U.S.-based corporations - Bechtel, Halliburton, and others - to proclaim, "Mission Accomplished!" As the Bush administration touts its rhetoric of freedom and liberation, the IMF and World Bank are busily "liberating" Iraq's resources - oil and labor - and "freeing" Iraq's markets. The recent rise in fuel prices in Iraq and the subsequent riots are just a glimpse of what the future holds for Iraq under IMF and World Bank plans.
read complete article at below site:
http://www.50years.org/cms/updates/story/320
http://tinyurl.com/52uear
Quote: President Horst Köhler said modern capitalism had turned into a “monster”, bringing the entire financial system to the brink of collapse this spring.
Have you read Naomi Klein and Antonia Juhasz on the rape of Iraq?
The world consumed nearly 90 million barrels of oil
per day in 2007, reflecting a steady 2% annual
increase over the last decade. According to the US
Department of Energy, the US is the largest world user
of oil (about one third) with two thirds of US usage for
transportation. The world faces several tipping
points regarding energy.
1. Recovery of easily attainable reserves is projected
to peak at 100 million barrels per day with the
majority coming from the Middle East.
2. Governmental restrictions of carbon dioxide
emissions are expanding.
3. Trade deficits due to oil imports ($500 billion for
the US in 2007) have led to a devaluation of the US
currency and will continue to reduce the wealth of
western economies.!!! The US trade deficit for oil in 2008 could be $1 trillion. For reference our annual GDP is roughly $11 trillion.
The current prices are a function of our GDP versus our consumption. Just like you cant spend more than you make for too long, the US is now seeing a decrease in the value of the dollar because we consume much more than we produce. Since W dumb-ass has been president our currency has decreased in value OVER 70% seventy fucking percent versus the Euro.
Forget global warming. Energy will bankrupt this country in the next 10 years.
http://tonto.eia.doe.gov/ask/faq.asp
Our US Dept. Of Energy. Thank you Jimmy Carter.
Don't trust any other anecdotal information. This be the shit.
Especially for national security and stabilization.
How is it that if we have an oil rig explosion, or a hurricane that disrupts drilling, gas prices on fuel that has already been refined and is in fact already under the filling station parking lot, goes up immediately? How is it that "we haven't had new refinery in 30 years" is used as an excuse, but that the price has only skyrocket in the last FIVE years?
I understand that we will eventually run out of oil, but we're not there yet. There are no lines at the pump. There are no stations shutting down because the gas trucks can't deliver. So, what FORCES the price to go up? It's going up because they WANT it to, right? Is there a Oil and Gasoline Prices for Dummies book out there?
Last April, my dad was getting ready to go to Europe and was buying Euros in advance. In one week the US dollar dropped 40 cents.
There was an article about European shops no longer accepting US dollars as the value would drop during the day before they could cash them in that it ate up their profit margin.
And why has the world lost faith in the US dollar?
The Republican trifecta: Huge increase in debt, massive unfunded spending increases, and cutting income at the same time combined to make the entire rest of the world lose confidence in the US dollar. The Republican plan to destroy the US economy through war profiteering, deficit buildup and tax cutting has been a rousing success.
So even if they don't install Senator Clinton to rally the GOP base (after being so demoralized from Bush), then the media will blame President Obama for every single result stemming from the planned ineptitude of the Bush Administration. Just as the 'liberal' media blamed Clinton for every mistake made by Bush, so too with the media blame Obama for everything Bush did. By the second year of the next presidency, every main-stream news outfit will be falling over themselves to reminisce nostalgic about America's Golden Years under Bush, and how the Democrats have ruined everything.
And I am NOT saying we need to end Capitalism, no! People like Limbaugh claim Environmentalists true goal is to destroy the Free Market system. I see no need for that. We need a national energy plan, where the Fed directs the needs and private businesses fulfills them. Why can't Big Oil lead the way to new energy sources and national energy independence? Why can't the Fed kick their behind in that direction?
If we start today, we have a chance to save our way of life, but if we let the neo-cons continue to get away with literally murder, then we are all dead within 25 years, or hunting with spears...
Regardless of any additional pumping, or drilling (ie. ANWR) oil prices will remain high (yes, they may fluctuate by +/- 10%) from now on due to speculation and the knowledge that demand continues to outstrip supplies in the long run. Additional drilling will simply make the company with the drilling contract richer, and will not benefit consumers in the least.
What all of this really means is still unknown. Almost certainly, it means harsh economic times ahead in America. It may mean the loss of American hegemony throughout the world. Unfortunately, American has not invested in either real alternatives to oil or more efficient transportation. Our entire economy, from basic transportation, to distribution, to power generation is highly dependent upon oil. As nearly 65% of our GDP is the result of consumer spending, it is difficult to see how our economy can survive, in its present form, when gasoline approaches $8, $10, or $12 a gallon -- as some economists have predicted in will in the next 24-36 months.
http://www.theoildrum.com/node/3102
1) I caan't lay my hands on the information right now, but I understand that not too many years ago there was a substantial cushion of 7 or 8 million (/) barrels a day between supply and demand but that today that cusion is just over one million barrels a day. That means anything that threatens supply, like insurgent attacks on a pipeline in Nigeria, can jack up prices.
2) There's little direct relationship between producers and oil companies. Today commodity traders buy and sell oil futures just as they do precious metals, grain, etc. They're the bad guys.
3) Over the winter and into the spring the decline in the value of the dollar jacked up prices
President Bush has made the future even worse by focusing on new supplies of oil and almost making conservation a dirty word. Had Al Gore's suggestion of a 50 cents per gallon tax on gasoline been adopted today's problem would not be as bad as it is because we would have all reduced our consumption and taken a lot of the demand pressure off the supply.
Oil companies aren't totally innocent; their failure to upgrade refineries has made them vulnerable to maintenance problems. But the oil companies are getting the shaft from the media and politicians when it comes to profits. Yes, their profits appear high, but the media fails to tell the whole story. Gross revenues are also very high. As a percentage of those revenues, profits are not out of line. They run 8 to 10 percent. I would never allow my broker to buy anythibg for my portfolio from a company with such low profits.
I just read it this AM. Apparently Germany is now on the bandwagon (that we haven't heard anything about, even here in Europe) to discourage and actually ban hedge funds from speculating on the price. The idea that speculation is driving this increase makes a lot more sense than what they've been trying to shove down our throats (that somehow the population has just exploded exponentially in the past year, therefore driving up demand)
On the supply/demand side, there is also a supply issue. Moreover, a number of countries (e.g., China) heavily subsidize gasoline for consumers, which distorts the market and pushes prices higher.
The question is how much is speculation, how much is fundamental, and how does that affect future prices. Here's the link:
http://calculatedrisk.blogspot.com/
People in Europe are paying twice what we're paying for gasoline and their priorities are different as a result. I'd suggest that we reorder our priorities and stop whining. Frankly I'd be fine if we boycotted gasoline and other products made from petroleum. Perhaps then the oil cartel would lose its power.
Except we don't get the same benefits Europeans do...figure it out. With $11 billion in profits from the first quarter, Exxon Mobil (as well as their brothers-in-crime on Wall St.) are making out like the bandits they are.
We've gone from market capitalism to theft capitalism.