http://www.time.com/time/business/article/0,8599,1834888-1,00.html

Oil spikes of as high as $100 in current dollars occurred as far back as 1864 (yes, 1864); it’s part of the game. Congress recently scared a lot of the speculators out of the market by taking steps to investigate, causing a rapid drop in oil spot prices of more than 27% since mid-July. We should all keep writing our congresspeople to insure that these investigations are successfully concluded.

We can’t do much to quickly affect the supply; drilling is very expensive, inconsistent, and risky. It takes a long time, and there are no rigs available for years; they’re all booked. People I know in the oil industry are working very hard just to keep production from falling; increasing output is not likely from here to depletion.

On the other hand, we can do a lot on the consumption side: drive less, use smaller engines and lighter vehicles, fly less, use less chemicals, insulate your home before winter strikes, substitute cheaper fuels for oil, etc. By the way, these things are also very good for our health, environment, and economy.

We need to think about and personally take actions that permanently lower our oil consumption before it runs out, not afterwards.

Additionally, as oil drops, Americans (both individuals and businesses) will return to their old habits of high consumption. Our economy needs more oil input to produce a dollar of GDP than any rich country competitor. The habits, institutions, distorting subsidies, and institutionalized bias that drive this fact are not broken yet. Merely shaken. Cheap oil will simply allow this broken system to ramp back up, la-dee-da, like nothing ever happened. Demand will rebound strongly, and the price will move up again.

By the way, OIL CONSUMPTION REDUCED the most since the 70’s when the last crises hit. For all of you that think that has nothing to do with the current downturn of oil prices, you need get real. Quit blaming everyone that makes a profit and blame yourself. Oil prices will go up once people and corporations get lazy again because the price has subsided for the end user. If you want oil prices to go lower, use less! Thus you won’t cry when they go up. Even though I live in a rural area and need to drive 60 miles to work everyday, at the peak of the prices I spent $50 a week. Sure it is higher than the $30 a week I used to spend, but IT DIDN’T HURT. I drive a small car. I hate being small in a world of SUV’s and Minivans, but it suits my needs. I can fit the car seat, the dog (85 lbs mind you) and my husband in car with a trunk full of groceries for the month. Don’t fool yourselves, OIL PRICES WILL DROP for a while (they usually do after summer), BUT, THEY WILL GO HIGHER THAN THIS YEARS HIGH NEXT YEAR, unless demand significantly drops. Your government can only help if they increase supply. By the way, if drilling does occur and it is sold to other countries, it still helps the GDP (reducing deficit) and creates jobs!

How does the Pres of the U.S. help control the world opil prices? How does a Exxon/Mobil control the global oil prices? Remember, this $108/bl price is a global price, not just U.S. price. In additon no U.S. oil company (even combining the top 5 U.S. oil companies) represent a pimple on the butt of Saudi or many other OPEC individual country’s production, and many of the OPEC participating countries do not like Bush.

If Obama is elected and implements a excess profit tax and not allow additional domestic production how that will possibly help global oil prices within the next 10 years?

The world uses something near 100million bl/day. So 900billion bl is 9 thousand days of total oil consumption. If they had that oil sitting around, they can’t EVER put it on the market. It would drop the price so low that it wouldn’t pay for the cost of storing the stuff for (givemeabreak) 10 years.

Maybe my understanding of this is flawed, but I thought that “speculators” mostly bought and sold futures contracts.

With a futures contract, you’re basically making a bet that the price of will go up or down at some point in the future — say, you might sign a contract saying that you agree to sell someone 100 barrels of oil for $100 each three months from now, no matter what the market price is at that time. In this case, you’re betting that oil will cost less than $100 a barrel in December, and they’re betting it will cost more than $100 a barrel.

“Speculators” don’t really want to buy the oil; they’re just trying to profit by betting how its price will move. The contracts just get settled with cash. Even for a company like Southwest, that DOES actually want the oil it hedges against, I suspect the contracts are just settled with cash and they simply buy oil on the open market as needed.

AFAIK, few (if any) “speculators” are actually buying barrels of oil and putting them “in a barge or tanker somewhere”. Where would you even PUT 900,000,000,000 barrels of oil? That’s more than a thousand times more oil than is in the Strategic Petroleum Reserve!

Since the late 90’s speculators have taken more than 900 billion barrels of oil OFF the market. Off. As in, gone. Sitting in a barge or tanker somewhere. Speculators have created the demand and the world is paying for it.

Oil costs about $40-50 to produce, so at $60 a barrel ($10 a barrel is plenty of profit) and with increased refining capacity (the real culprit), gas should be closer to $1.50-2.00 within the next 2 years.

Remember, the rise and fall of gas is cyclical, just like the economy; we’re at a peak now, we’ll head into a valley soon enough.

Oh, wait to lose your first game Wolverines. Hahahah! It won’t be the first nor last.

OHiO State Buckeyes #1 National Champs!

I think companies need to take a serious look at the risk cost of using oil, and, energy in general. Energy cost is a wildly fluctuating variable cost to a business. When businesses calculate the real cost of energy, they need to include the volatility risk cost into the energy source’s price. A lot of businesses don’t seem to be including that volatility risk cost.

If you do something simple like changing your incandescent light bulbs to compact florescent lights or LED based lights. You are trading a wildly volatile variable cost, energy, for a fixed cost. If the variable cost item is very volatile, trading it for a fixed cost makes good business sense, especially if your organization has a long term facility plan.