I have a new comment about the rising oil prices, and that the president should release some of the reserves that are being held in case of a major disaster. I constantly watch these oil prices daily and I have noticed that when the price of oil goes down and our dollar strengthens the oil companies start to worry that there profits will go down. Therefore, it seems to me some terrorist group attacks one of the major oil refinery or oil line and then the price jumps up higher than the last time. This just seems to me that maybe these people have someone pay these terrorist’s to do this discreetly. Now to our reserves, why not release this large supply? The president claims that we need this in case of a major crisis. This is a major crisis!! It’s only hurting our economy, and things will only get worse. I just wish that the president had to live off of just the current minimum wage and still have to pay for his own gas as well. Then he would see how tough it is for a family of 4 to survive.
“If you forecast a price, don’t forecast a date”, old saying.
There is no theoretical price of oil; over the long term, it will trend to rise at the rate that the value of the dollar declines (i.e. the rate of inflation). There will be times when it rises faster (like now), and there will be times when it declines (during recessions). Also, oil is not renewable; it is a declining resource every day of the year. It will eventually have one last rise too many, and then decline forever as a replacement takes over (just like whale oil in the late 1800’s).
The replacement could be biofuels, which are available now. The replacement could be coal as a chemical feedstock (already happening, much cheaper) or as a liquid fuel (in the planning stages). There are others.
The replacements will not be cheaper: any confident supplier wants the same price as the other suppliers are getting. But, they will be domestic, not imported.
What to do right now:
-Drive less;
-Fly less;
-When you replace your car, get a 3- or 4-cylinder instead of a 6 or 8. Our Saturn gets 46 mpg on the road, and it’s domestic and much cheaper than a hybrid. The small Ford Ranger gets 29 mpg on the road; domestic and much cheaper than a hybrid;
-Get creative.
We can do it.
Another thought. We want oil cheaply. We want it from whichever source will supply it continuously. We hope it is like the water which flows from the faucet tap. I can’t even recommend hydroelectric power; the water seems to be evaporating from every natural source. Take a drive one day(it’s ok, it won’t use much gas) and observe all the dying, non-blooming trees,perhaps at a forest near you. When mankind(arguably our biggest resource on the planet) learns to consume sustainably (meaning no unchecked overpopulation), like the Chinese are being compelled to do, maybe we can remember that the planet wasn’t built for 6 billion (like McDonald’s) served.
For starters our Congresss could get to work closing the Enron loophole http://www.closetheenronloophole.com/ that gets speculators out of our markets so they can make a profit while the rest of us pay to deepen their pockets. The Senate passed it in December and now it is sitting in the House….GET TO WORK…on something that could really burst the Commodity bubble, and provide relief to ALL AMERICANS!! This is not all about supply and demand. Contact your representative!!! PS: Ben – STOP THE RATE CUTS!!!
I have a general comment. As my wife and I go back and forth to her work we do see prices that range from $3.49 at most stations and then you will see some stations charging $3.79 a gallon for regular unleaded and then you see someone at that station buying the gas it just reinforces to what I like to call “test stations” for these companies to say well it looks like $3.79 is where we can raise it next. One last thing to mention. My brother in law used to work for one of these stations and he let me know that there is really no difference in the grades of gas. Those who say I need premium could just go to Auto Zone and buy some octane boost and it would be a lot cheaper. I’m no fool I’ll just keep buying the regular gas it’s too expensive already but I’m not going to give these jerks more money than I already have to. Signed ticked off!!
Ha Ha…….I think its rather hilarious ….pretty soon nobody will have ANY money…no matter how inflated it is……..then it really doesnt matter how high oil goes now does it….I’m already paying $3.35/gal and i bet oil will reach upwards of $165/bbl and gas reaching upwards of $5.75. Keep in mind……right now if oil sustained even its current level…..gas would be $4.00 today.Impressed yet?….Im 100% content……we should just send the rest of our money overseas……cause its happening right now, at an accelerated rate every day, and will continue because OPEC still thinks the price of oil is too low….Have a profitable day
(continued) In the long run we do need to shift to other sources of energy but in the short term we need to rein in those who do not consume oil and gas but drive up the price for speculation and peculation.
In reply to Mark. He is being as simplistic as those he derides. Oil is priced in dollars and as the dollar free falls courtesy of the Fed the price of oil flies up. Speculators seem to make money primarily when prices rise; what do you think is in their selfish interest – cornering a market for speculative greed is not a new concept.
Hopefully oil climbs to $200/barrel and $6/gal… it’s the only way we will cut back on usage, buy more efficient vehicles, search for any and all types of energy sources (coal, coastal drilling, nuclear..even renewables), and become somewhat energy independent. However, none of that will happen…we are a crisis management nation…we saw it coming in ‘72 and are feeling the consequences of inaction and excessive personal, city, state and federal spending now…we won’t do anything involving a hard choice or sacrifice …ever…end of story…period.
I love how everyone wants to blame someone else for the high prices – “its the speculators faults” or “its bernanke’s fault for inflating the money supply” or “its the fault of oil companies for being greedy.”
The blame lies squarely with everyone who consumes oil. The world is stuck pumping 86 million barrels a day of oil. This is due to geology. If you don’t believe that ask yourself why with prices rising 1000% over the past six years US oil production continues to decline and is at roughly 1950 levels. North sea production has been in freefall since 1999. Mexico has been in decline since 2005. Even Saudi Arabia has been in decline the past two years. At the same time, demand continues to rise. Basic economics tells you that in a world with virtually no spare production capacity, rising demand in the face of stagnant supply equals higher prices. Any meaningful sustainable decline in the price of oil will be caused by decreased consumtpion.
Someone pointed out that alternate sources of energy are viable at $50 a barrel oil – that not necessarily accurate because production costs to tap into those alternate sources keep rising (to tap into the tar sands in Canada, you need to use a massive amt of natural gas, and fossil fuel prices accross the board are rising, not to mention that oil is used to make the equipment needed to tap into alternate sources of energy). Regardless of how economical it is to use heavy oil sources like the tar sands, there are numerous constraints on ramping up production (cost of equipment, availability of water, cost of natural gas). The tar sands in Canada are analagous to giving someone a $100 million dollar inheritance and then telling them that they can only withdraw $100,000 a year.
Seems like a lot of people feel its their right to have cheap oil, cheap transportation, etc and it will take a lot of people a long time to wake up to the reality that we are living in a different energy paradigm than the one that existed in the 20th century.
Have you ever played poker with someone who doesn’t know how to play? There are no rules. Strategy is out the window. They’re playing the ultimate bluff. Even they don’t realize they have absolutely nothing in their hand and yet they keep raising the bet. It’s fearless ignorance that feeds on itself and cannot be read. The only way to win is to outlast them and hope you’re luckier than they are.
This oil market is exactly like that game. There are no rules. What is it going to take for this market to play intelligently?
I’m probably wrong, but here is my prediction. I believe that oil will continue its rise until there is an official declaration and proof that this economy in a recession. A real recession in American will affect the global economy and that will bring oil under control. The major world markets are more dependent on America than we are on them. If we slow down, they slow down. America depends on foreign oil for now. However, foreign oil depends on America forever. Once the fear becomes reality, denial is replaced with realization, and once the panic is over, responsibility and order should resume. I look for oil in the $50 range. Pricing much higher than this makes alternative sources of energy including less conventional oil reserves more cost effective which is undesirable for some influential oil producing countries. Inflation is becoming more of a focus for the Federal Reserve. And lastly, I believe speculators hiding from the falling dollar are confusing cause and effect and are due for some clarification.
At least I think so. Oil traders are unpredictable. Remember the card game. You can’t read an idiot. You can only outlast them and hope you’re luckier than they are.
By the way, recession is a relative term.
Gas will definitely hit 4.00 this year, The feds need to stop cutting rates now. hold flat and then the greedy investors will probably start to back off. Don’t forget about the stimulus package, coming in May, Flooding the market with cash and low interest rates will definitely skyrocket inflation, As far as tapping the reserve, Its a great idea but whats gonna happen theres only so much supply there. Its gonna push the price up more. Right now we are in the commodity bubble. Just like the sub prime mortgage crisis. One day its just gonna hit a brick wall. Its time to stop discounting rates and take a hard nosed turn upward. increasing the value of the dollar will also start to kick the price.
I AGREE WITH THE COMMENTS ABOUT THE GREED DRIVEN SPECULATORS. GET RID OF THEM AND OIL PRICES AND OTHER RELATED COMMODITIES WILL DECLINE.
THEY SHOULD NOT BE ALLOWED CONDUCT BUSINESS IN THIS MANOR.
It has nothing to do with the refiners. Refining is a capital-intensive, high fixed cost business, the costs don’t stop just because you refine less. They’ll refine even if they are losing money, as we’ve seen in the past. Besides, refining is gradually being outsourced overseas anyway. This is about the price of crude, plain and simple. More and more of the production capacity will be held by the state-owned producers in coming years, because they have almost all the reserves. And they openly collude with each other to rig the prices. I don’t think $120/bbl is sustainable, but nor do I think we are going back to $20.
The price of ALL commodities WILL continue to rise at an accellerating pace. There is a small group of people who control the world governments (military industrial complex) with a lot of money and influence, who have supressed the technology that would negate the need to burn fossil fuels. (because they can’t put a meter on it) The technology will remain supressed while they sell as much fossil fuel, for as much as they can get people to pay for it. Then they will either hole up in their compounds, while the world population dies off to within the Earth’s biological carrying capacity, then use the money/wealth (I have little faith in any currency maintaining any value over the next 10 years) they’ve accumulated prior to monopolize the “new” technology. Google “Tom Bearden” Ret. LTC US Army. The charade has just begun in the last 2-3 years, and it has become painfully apparent. In short: Gahawar and Cantarell are in terminal decline. Ethenol is a net energy loser, too corrosive for our current infrastructure, is starving the 3rd world (soon the US middle class as well), and is raising the price of feed, and food in general. Shale and tar sands are an environmental disaster, and require copius amounts of natural gas and fresh water, both of which are already in short supply. We will never be able to extract hydrocarbons from those deposits fast enough to make any meaningful difference. It’s just a distraction to keep the public complacent. We live in an exiting time. Grow a vegetable garden.
The price of oil and the availability have not much in common. Except for the analyst, hawkers, on the Wall-Street selling floor. Look more to the greed of the oil companies and speculators.
The price of oil has more to do with the economy and credit crunch than slumping house prices and foreclosures.
I hope the price of oil drops to $50.00 by the end of summer.
” . . . if prices head back towards $100, you could see a big relief rally in stocks,” Dow said. LOL!
Such a short time ago not only was “everyone” shouting that oil wasn’t going to actually hit 100$ (ever), but that if it did it would destroy the US economy. Now, if it gets back down there, stocks will all be happy again.
I agree there is a speculative bubble happening with oil right now. I think with stocks too, for that matter. There are too many people with nothing but money and too much of it. They are messing up any normal market process.
But I also think basic market forces (supply/demand) will mean that oil wont go down much, or long.
Food also isn’t going down soon. Too much consumption. And now prices helped along by people willing to encourage starvation for the chance at making yet more easy money.
I read that the Fed has added 20% more money to the system in the last year. That has to drive up the price of something.
Too much money. Not enough productive work.
Who knows what happens in the short term (i.e. next few months). Over the next decade though, the price of crude oil is likely to continue to rise. Production has been at a plateau since 2005 and global demand keeps rising. We are at or near the point of peak oil production and need to get used to the reality of higher and higher oil prices until one day the price of oil intersects with the price of the cheapest scaleable alternative to oil. For those who think $5 or $6 gas will have a dramatic impact on oil consumtpion in the US, remember that our transportation infrastructure and the layout of many of our cities and suburbs makes it very difficult for people to change their driving habits (LA is a great example – how do you substantially reduce driving when you have to go to work and public transit system is weak). It will take decades to shift to a minimally oil dependant infrastucture. As long as the price of gasoline continues to gradually rise, people will get used to paying hiher & higher prices. There are simply no scaleable alternatives to $120 a barrel oil. We have a long way to go with respect to price increases. I don’t like guessing numbers, but $200 or $300 a barrel oil in the next 5-10 years would not surprise me at all.
Short term or long term?
Short term: Since the baby boomers run the government and they want to enjoy their retirement–boats, SUVs, RVs, etc. then it wouldn’t surprise me to see heaven and earth moved to reign in prices, the sooner the better. Tap the strategic oil reserve, ANWAR, cut all gasoline taxes, subsidize—whatever it takes. Given the fundamentals of oil and gas production (depleting reserves, developing increasingly challenging assets, increased demand, global instability) there will be a strong head wind against falling prices (but the government will do everything in its power to minimize impact. My senator is Chuck Schumer—he is doing a great job on the above.
Long term: Any rational look at the numbers will show that oil & gas has no place to go but up. It is a finite resource.
Come to think of it, many of the government policies seem to be motivated toward baby boomers and present needs—social security, housing bailouts, foreign policy, tax policy, national debt–at the expense of the next generations. But that would make for another discussion.
Sadly, I don’t think that most Americans quite understand the seriousness of the situation just yet. If gas gets too expensive, people will stop driving at some point. How high it needs go is not known yet (obviously, since most Americans are still going strong), but when it gets to that point [when Americans stop driving because its too expenisive] the world will basically stop. Thats is when the real problems will start.
IF THE FED KEEPS CUTTING THE DISCOUNT RATE OIL WILL CONTINUE TO RISE. OIL IS PRICED IN US DOLLARS ON THE OPEN MARKET AND AS YOU KEEP WEAKINING OUR CURRENCY IT MOST DEFINITLY BUYS LESS. IF WHAT THE PRESIDENT OF IRAN IS PROPOSING STARTS TO BECOME POPULAR WITH OPEC OIL WILL BE BOUGHT USING A BASKET OF DIFFERENT CURRENCIES, WHERE WILL THIS LEAD?? HIGHER NOT LOWER.
Where will the prices go…up up and up. The supply seems to be doing well.
Plenty of oil out there to be sold.
Government subsidies around the globe are not helping….driving up consumption in the “thurd” world.
Let them pay market rates in india, china, ect and consumption will go down. Now lets talk about the investors…better returns in commodities than the stock market…select few driving up prices for food and energy…enough greed….see what greed did to the credit market….and then the refiners…not making the product with the crack margins so thin….not going to lose money…they have to make their numbers for the shareholders…undersupply the market, drive up prices….awful cycle of greedy people making money off of the general population….so until the dollar rebounds and the greedy people trying to recoup their loses from he subprime debacle the price of fuels will increase until the whole economy goes to hell in a handbasket…we are half way there.
I still expect Gas to to to $4.00 per gallon by Memorial Day. Oil would more than likey go down to about $105.00 by the end of this month.
Http://anthonyvalentinojr.com
Is it out of the realm of possibility for oil to hit $150 a barrel? i don’t think so. $4.25 a gallon for gas as well. Unless people actually stop driving and start taking the bus oil prices will continue to rise.
I feel it has nothing to do with the value of the dollar, These speculators in oil are in all probaility the same ones that invested in the sub prime nightmare. They see another killing at the expense of the average American. As long as the oil companies are allowed hold back production of gas, heating oil, etc. as they have done for the last six weeks. The manipulation of higher oil will continue.
SHORT TERM TOP OUT
I think prices have topped out for now. As consumers cut back on trips and going out to pay the bills, oil must retreat. That being said, it will probably fall from 120 to the $90-$100 range in the next 6 weeks.
However, the fundamentals of finding cheap oil in hard to find places are not going away anytime soon. It could easily be $150 by year end.
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I can not believe it!!!! 130 dollars a barrel of oil!!!! Wow!!!!! Now that is enough incentive to look at technology. All the hype over the oil supplies running out is just a bunch of hype. We actually have about 50 years more oil supply than is needed. Technology has been developing new super-conductors and super-conducting magnets. Once we have a room temper super-conductors and magnets it will than be possible to make powerful small generators to supply an electric motor in a car and the car would never have to stop to recharge or fill up, nor will it cost anymore than the purchase price of the car powered by it they can also be used to generate energy right in the house to supply the whole house, battery replacement too.
Oil is only supplying about 37% of the energy needs of today which is a pretty big market; however, super-conducting technology such as generators are about to tap magnetic fields for energy as long as it has a magnetic field (i.e. earth, sun, solar system) these generators will be able to supply 100% of the energy needs of today and for the future. Bigger market more profit. All these people, investing heavily in the oil market based on speculation make me wonder if they took the super conducting technology into account because I in my calculation we are about 5 to 8 years from having the technology which upon that date oil is not going to be in demand as I is now. You know china will pass laws to use cars made with this technology and any country that is not oil rich country will too which means the oil rich countries will be the only ones using oil for energy maybe. I guess all those who speculated about the oil supply never really thought about the future however they think I think they will be looking for a money tree after they lose all they have in the oil markets. By the way you never know it can be developed sooner. Ask you local scientist.