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| Oil Prices; Todays news | |
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| Tweet Topic Started: Dec 19 2008, 12:00 AM (248 Views) | |
| Sgt. Jaggs | Dec 19 2008, 12:00 AM Post #1 |
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How about a Voyager Movie
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Oil Tumbles below 36 bucks a barrel Manipulation. Coordination. Speculation? The puppet master is at the wheel of his game.I don't know whether to be about this or .I am starting to be like .Whatever |
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| Dandandat | Dec 19 2008, 09:28 AM Post #2 |
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Time to put something here
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What surprises you about this? Falling commodity prices are often seen in recessions. Less demand lower prices. |
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| 24thcenstfan | Dec 19 2008, 10:34 AM Post #3 |
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Something Wicked This Fae Comes
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Jag, I was watching “60 Minutes” the other week and they were interviewing the Oil Minister for Saudi Arabia. He said the price of oil needs to be set at a certain amount to cover the costs of running his country (set at $55.00). The amount aside, the approach to covering costs sounds reasonable. They have the supply, there is a demand...why not sell it to benefit his own society. Except that it only costs them less than $2.00 to produce a barrel of oil. That’s a huge price markup. In turn, he does everything in his power (which appears to be considerable) to keep the cost of the oil higher than it needs to be. For us at least. He’s not very happy that the cost has recently gone down. Poor guy. I wouldn't be surprised to see supply cut and prices going back up in the coming months. You might find this an interesting read: Saudi Arabia Bullish On Oil's Future Kingdom's Oil Minister Tells 60 Minutes U.S. Oil Addiction Is Here To Stay Due To Lack Of Alternatives |
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| Dwayne | Dec 19 2008, 10:49 AM Post #4 |
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Profanity deleted by Hoss
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I think some people like Bill O'Reilly, need a better education, because many of them don't know a profit from a profit margin. |
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| Dandandat | Dec 19 2008, 11:24 AM Post #5 |
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Time to put something here
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Assuming I understand what you getting at; I would have to disagree. While the oil industry profit margins are lower than most; their volume is vastly grater than most; and unlike most their industry is run outside of the free market and they have a captive consumer base. There is no logical reason to compare the profit margin of the oil industry to most; because they aren't on the same playing field as most. With that indicator unavailable looking directly at profit is the only logical thing to do; and the oil industry brings in an astronomical profit. |
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| Dwayne | Dec 19 2008, 02:01 PM Post #6 |
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Profanity deleted by Hoss
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The point I'm getting at is that most people don't know or are even capable of understanding what drives the futures market and how that affects pump prices via the expected replacement value the distributors will have to pay to keep their tanks full. And while OPEC is a cartel and therefor distorts free market supplies and prices, it is wrong to thusly conclude there isn't a free market for oil and that the consumers don't have alternatives to oil. Any farmer who wishes to have an alternative to oil as a fuel source, has it within their capacity to do that. Anyone can purchase a form of transportation that uses something other than a petroleum based fuel. The fact that people don't use an alternative to oil is not really the fault of the oil companies or the consumers, but it's a matter of physics and economics. As well, the fact you're saying this makes me modify my opinion in one way... Bill O'Reilly doesn't need a better education, but a different ideology. It's ideological, in that many items we purchase are a commodity and many of those items are affected by some sort of market interference, be it government or otherwise, yet no one whines about those greedy dairies or farmers and the lack of a free market for those items. Edited by Dwayne, Dec 19 2008, 02:31 PM.
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| Dandandat | Dec 19 2008, 03:13 PM Post #7 |
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Time to put something here
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And the cause of that goes back to your second paragraph; you are speaking in highly ideal terms when you say the farmer can switch his energy source or that the driver can get a non-petroleum based vehicle. Because the fact of the matter is because of various reasons it is extremely difficult to do as you suggest bordering on impossible. There are no viable alternatives to petroleum based vehicles at this time for most of the needs in the US nor is there the infrastructure to support the likely future alternatives; and the likewise the upfront switching costs for the Farmer makes changing over too difficult. Another reason that cause your comments to be too ideal is the fact that the Government prohibits new entrants into the energy industry through over burdened regulation. Also the fact that competition does not exist with in the existing industry further exasperates the problem. That’s what sets the oil industry apart from the dairy industry. The consumer can walk away from the dairy industry as easily as it decides what pair of paints they wish to wear on a particular day. This is not so with the oil industry. Whether or not it's our own fault, because of decades of misuse and complacency, is beside the point. We are where we are in the now; and in the now the Oil industry has us by the short and curlies – they know it and they take advantage of it. There for it is incorrect to treat them like everyone else; because they aren't like everyone else; they are in a category all their own. Is this ideological? In a way I'll grant you that, all of what we are talking about comes with a healthy dose of subjective analyses. But wanting to treat the oil industry as if they where like every one else is just as much an ideological call as treating them like they are different. There is more than enough exceptions to create a logical argument that they are not like everyone else; so to deny that this exceptions make a difference is just as subjective as saying that they do. Of course in my opinion it's more subjective to say the exceptions don’t make a differences which is why I hold the view I do. |
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| Dwayne | Dec 19 2008, 03:59 PM Post #8 |
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Profanity deleted by Hoss
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In the case of the farmer, you're absolutely wrong, because it's easy to convert a vehicle to operate on an alcohol based fuel and it can be done with minimal expense and very little technicial know-how: http://journeytoforever.org/biofuel_library/ethanol_motherearth/me2.html And as for competition in the oil market, that's simply O'Reilly-esque hogwash. I can watch competition in action in the oil industry every single day. There are literally thousands of oil wells in Kansas and literally hundreds of them were left inoperative during the lean years for the oil industry, because the competition (OPEC) could under cut the producers of oil in Kansas and the Kansas producers simply couldn't make enough to justify the cost of running the well. In other words, they were losing money. So why was that the case? Competition. As the future supplies of oil stayed fairly constant, but the future demand for oil rose, the price rose accordingly. That's a perfectly natural thing in a free market economic system. As the price for oil increased, it became more cost effective for domestic producers to get into the act, consequently many of the idle oil wells in Kansas were brought back online, thus increasing the level of competition and helping to increase future supplies. That is what is expected in a free market and that's exactly what occurred. Now you're not going to get an argument out of me on the effects government regulations have on all this, but that kind of thing just distorts the free market... it doesn't eliminate it. |
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| Sgt. Jaggs | Dec 19 2008, 09:18 PM Post #9 |
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How about a Voyager Movie
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I have a simple question for you Dwayne. If I can even form the question accurately. Souldn't Supply and demand be a reality of actuality on a given market place at a given time? Speculation Molests this economic model and artificially changes the actual price on emotion and opinion right? In the over all view of things, the OPEC guys need to meet their minnimums and they are getting pinched. Three months ago the American consumer was getting pinched with twice the price at the pump. So whom is most well served by the instability? Traders? Speculators? I just don't know. I feel skeptical about supply and demand arguments, speculation, Bill O'Reilly's Take on how profit margins are blah blah whatever. None of it makes sense to me because of its drastic volatile swing that we have seen. I think there are people and forces controling things that are over reacting. As for the Market Is this what the world market does in drastic times maybe? If so it SUCKS and I am glad to see it FAIL and go away. Two things we need to operate have been severely damaged. Trust and Confidence. Fear and Skepticism will rule the next three quarters, maybe two years. The game cannot be played with all of the players on the sidelines. The crooks will have to be publicly hanged before anyone shows their money to the market again. Back to Oil If you think "they" know something by bidding oil into the pisser than what is that? Like the demand will end with a Fat Depression of the world economy? Bullcrap we will all still need to drive and Fly. Crap I could banter along for hours but you get what I am saying. If you do, let me know because I am lost in even forming my argument. I dont know what to think. I suspect somebody does know. |
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| Dwayne | Dec 20 2008, 12:42 PM Post #10 |
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Profanity deleted by Hoss
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What you're seeing Jag is the herd mentality. One person starts buying up oil futures, his buddy starts doing the same and in time, because of all the small individual efforts to buy up oil futures, the price of oil on the future markets begin to climb, thus re-enforcing the herd mentality to buy more oil futures. In very simple terms, the free market allows society to ration a commodity by price instead of by force. Now, if you had just point blank asked me if there is something nefarious in the oil markets that has distorted the free market prices, I'd agree with you until I was blue in the face. That distortion is multifaceted to be certain, and those main facets are oil cartels (OPEC) and government interference (taxes and regulations). |
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| Admiralbill_gomec | Dec 22 2008, 10:25 AM Post #11 |
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UberAdmiral
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I agree that there was something manipulated in the oil price rise last year, but one thing you have to remember is one of the reasons for the rise. Oil is not just a commodity controlled by some select group but is actually bought and sold as a fungible commodity by mutual funds and individual investors. Back when oil was 60 bucks a barrel a few years ago, Goldman Sachs was trumpeting 100 a barrel oil. Their clients stood to make money if the price was higher. When oil was 90 bucks a barrel, they wrote about 150 dollar a barrel oil. Before our recession hit the news was about China and India buying more oil so their economies could expand, and their (China's) factories could export... to our markets. Once we slowed down the ripple effect slowed them down, demand dropped in the same ripple effect, and prices collapsed. Oil is a fungible. If it isn't sold here it is sold somewhere else. A lower demand (due to this ripple or cascade effect) means drastically lower prices. There were so many factors this year that influenced prices, and one of them was... communication. We have more ways to get news instantaneously that the smallest thing can be hyped up as "analysts" try to figure out patterns and influences. Does anyone remember the start of the price collapse back in July? It was caused by the eeeeeevil George Bush telling Congress he was going to sign an executive order ending the ban on offshore drilling. Prices dropped five dollars a barrel that day, starting about five minutes after he made the announcement. Suddenly we wouldn't be under the thumb of OPEC, or so the news stories said. Those fools who made the specious claims of "it'll be ten years before any of that oil comes to market" were either ignorant or intentionally lying. Actual figures are "weeks" to "months". Our main Achilles heel is refining capacity, but that is now being addressed. Oil prices will go up again next year. We won't see four and five dollar a gallon gasoline, but $1.30 a gallon gas will only be around until early next year. |
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| Dwayne | Dec 22 2008, 01:15 PM Post #12 |
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Profanity deleted by Hoss
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^^^ I don't disagree with a single thing you've said. But I will add this, I understand what you're saying about mutual funds and such, but even they are victims of a herd mentality.
Edited by Dwayne, Dec 22 2008, 09:15 PM.
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| Admiralbill_gomec | Dec 24 2008, 12:38 PM Post #13 |
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UberAdmiral
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Dwayne, I don't think "herd mentality," I think "panic and/or desire" (depending on situation) thanks to instant communication. People want to protect what is theirs. A herd follows a leader, while current actions seem a lot more egocentric. Just my two cents. EDIT: Here's an example of current behavior: Kirk Kerkorian, billionaire investor, bought several hundred million shares of Ford Motors in the hope of getting others to follow his lead and elevate the company. Investors did not follow his lead. Ford shares continued their downward slide, and Kerkorian sold seven million shares, driving the price down more. In this case, other investors in Ford DID follow his lead and sold theirs. I see this as individual motivation. Edited by Admiralbill_gomec, Dec 24 2008, 12:42 PM.
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at the wheel of his game.
about this or
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2:12 PM Jul 11