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Old 04-29-2006, 08:29 PM   #46
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Originally posted by anitram
After Dubya invades Iran, it'll be great! The gas prices will go down just like after Iraq!

Oh, wait...
Iraqi oil does have the potential to play huge role in the energy market, much larger than it ever has before in history. But new infrastructure will have to built which will take many years.
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Old 04-30-2006, 01:40 AM   #47
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When you have a certain level of productive capacity combined with unexpected GDP growth in certain parts of the world in this industrial age, your going to get a rise in oil price. Just 7 years ago, you go buy gasoline in the United States for less than 99 cents per gallon. If the Oil Companies really had so much control, there is no way that prices would have dropped to that point in 1999. In addition, when you adjust for inflation, the price of gas in the United States at 3 dollars now, is less than it was in the decades after World War II.

As far as affording current oil prices, the United States has done just fine the past three months with GDP economic growth at a robust 4.8%! China annual GDP growth last year was nearly 10%!
- There has been consolidation in the oil business.
- More investment money than ever is invested in energy and other commodities, driving up the prices. Most hedge funds own energy and/or commodity contracts.
- China and India have FAR fewer vehicles than the US, in both absolute and per capita terms.
- China and India are trying to secure oil in Central Asia partially because of the high prices.
- GDP is not the best measure. Low labor costs more than make up for it.
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Old 04-30-2006, 01:48 PM   #48
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- There has been consolidation in the oil business.
- More investment money than ever is invested in energy and other commodities, driving up the prices. Most hedge funds own energy and/or commodity contracts.
- China and India have FAR fewer vehicles than the US, in both absolute and per capita terms.
- China and India are trying to secure oil in Central Asia partially because of the high prices.
- GDP is not the best measure. Low labor costs more than make up for it.
-Its not just the amount of vehicles a country has, but the amount of total energy the country uses whether its to watch TV, cook food, refrigerate food, turn on the lights, heat their home, drive a car, ride on a train, plane flights, etc. The level of demand here impacts everything on the energy market.

-All countries and companies around the world are constantly attempting to find new sources of energy.

-GDP is the ultimate measure in seeing the impact of growth on demand for more energy which naturally raises prices if supply is not keeping up.

-If the country was really reeling from the high cost of gas, 4.8% GDP growth would be impossible. The fact is, what people pay at the pump currently is less than what most people pay in Europe as well as being less than what most people have paid since World War II over the years.
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Old 04-30-2006, 02:42 PM   #49
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-Its not just the amount of vehicles a country has, but the amount of total energy the country uses whether its to watch TV, cook food, refrigerate food, turn on the lights, heat their home, drive a car, ride on a train, plane flights, etc. The level of demand here impacts everything on the energy market.

-All countries and companies around the world are constantly attempting to find new sources of energy.

-GDP is the ultimate measure in seeing the impact of growth on demand for more energy which naturally raises prices if supply is not keeping up.

-If the country was really reeling from the high cost of gas, 4.8% GDP growth would be impossible. The fact is, what people pay at the pump currently is less than what most people pay in Europe as well as being less than what most people have paid since World War II over the years.
- China is adding nuclear plants on a large scale to look for alternative sources of fuel. Obviously, it is a huge consumer of energy but not at the level of the US.

- China and India are going beyong trying to find sources of energy. They are actually trying to secure off-market deals and ownership of foreign energy companies such as PetroKazakhstan. India also has a natural gas pipeline deal with Iran. This will allow the countries to secure energy at below market rates.

- The GDP growth went up in 1Q - but oil prices also fell relative to Q4 2005. I don't think I ever said the country was reeling from the high cost of gas - maybe someone else did. I was referring to the China 10% GDP growth, of which low labor costs are a main factor.

- Today's oil price has built into it tomorrow's oil shortages. This speculative element is largely to blame for the high price. Today, there is sufficient supply.
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Old 04-30-2006, 03:38 PM   #50
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- China is adding nuclear plants on a large scale to look for alternative sources of fuel. Obviously, it is a huge consumer of energy but not at the level of the US.

- China and India are going beyong trying to find sources of energy. They are actually trying to secure off-market deals and ownership of foreign energy companies such as PetroKazakhstan. India also has a natural gas pipeline deal with Iran. This will allow the countries to secure energy at below market rates.

- The GDP growth went up in 1Q - but oil prices also fell relative to Q4 2005. I don't think I ever said the country was reeling from the high cost of gas - maybe someone else did. I was referring to the China 10% GDP growth, of which low labor costs are a main factor.

- Today's oil price has built into it tomorrow's oil shortages. This speculative element is largely to blame for the high price. Today, there is sufficient supply.
No matter where you get your energy from, you are impacted by overall global demand and supply for energy. Today's below market deal, could mean nothing in terms of savings in a matter of months, depending on the global market.

As far as why the price of oil is high, here is what energy Secretary Samuel Bodman had to say today: “The oil has gone up because the suppliers are unable to make the flows equal to the demand,” he said. “... Clearly, it’s going to be a number of years, maybe two to three years, before suppliers are going to be able to keep up with those demands.”

Global demand vs. available supply explains the jump in prices. The two are not always at an equilibrium. In the Spring of 1999, excess supply lowered Gas prices to as low as 98 cents. In todays dollars that is a $1.13.
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Old 04-30-2006, 03:52 PM   #51
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Originally posted by STING2


No matter where you get your energy from, you are impacted by overall global demand and supply for energy. Today's below market deal, could mean nothing in terms of savings in a matter of months, depending on the global market.

As far as why the price of oil is high, here is what energy Secretary Samuel Bodman had to say today: “The oil has gone up because the suppliers are unable to make the flows equal to the demand,” he said. “... Clearly, it’s going to be a number of years, maybe two to three years, before suppliers are going to be able to keep up with those demands.”

Global demand vs. available supply explains the jump in prices. The two are not always at an equilibrium. In the Spring of 1999, excess supply lowered Gas prices to as low as 98 cents. In todays dollars that is a $1.13.
Almost all, if not all, projections show a increase in energy demand for the future. As for Bodman, sorry but I don't take politicians' or political appointees' words seriously when it relates to oil. The statistics released regularly, e.g. by the Energy Information Administration do not bear that out.
BTW Bodman also said:
"We have encouraged producing nations to keep oil markets well supplied - I think they've done that."

Last week, Saudi Oil Minister Ali Al-Naimi, Opec's most influential voice, told reporters:
"You know and I know that the reason the price is where it is is not from a shortage of (crude oil) supply."

ETA:
An Opec statement after the talks said "crude volumes entering the market are currently well in excess of actual demand, as levels of stocks in OECD countries demonstrate."
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Old 04-30-2006, 07:09 PM   #52
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Almost all, if not all, projections show a increase in energy demand for the future. As for Bodman, sorry but I don't take politicians' or political appointees' words seriously when it relates to oil. The statistics released regularly, e.g. by the Energy Information Administration do not bear that out.
BTW Bodman also said:
"We have encouraged producing nations to keep oil markets well supplied - I think they've done that."

Last week, Saudi Oil Minister Ali Al-Naimi, Opec's most influential voice, told reporters:
"You know and I know that the reason the price is where it is is not from a shortage of (crude oil) supply."

ETA:
An Opec statement after the talks said "crude volumes entering the market are currently well in excess of actual demand, as levels of stocks in OECD countries demonstrate."
Projections are not always accurate which is why sometimes as in the late 1990s, there is to much supply and the price of oil drops. The market always swings back towards the equilibrium eventually.

If current supply was well in excess of actual demand, the price of oil would be falling like it did in the 1990s.

You won't take Bodeman seriously, but you will take the Saudi Oil Minister and Opec seriously on the issue. Interesting.

The price of oil is determined by the relationship between global demand and supply. Companies whether their in Saudi Arabia, the United States or Russia, charge prices for oil based on global demand. Charge to much, and people will go somewhere else for their energy. Charge to little, and you risk being faced with shortages as everyone jumps in on your low price.
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Old 04-30-2006, 07:44 PM   #53
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Originally posted by STING2


Projections are not always accurate which is why sometimes as in the late 1990s, there is to much supply and the price of oil drops. The market always swings back towards the equilibrium eventually.

If current supply was well in excess of actual demand, the price of oil would be falling like it did in the 1990s.

You won't take Bodeman seriously, but you will take the Saudi Oil Minister and Opec seriously on the issue. Interesting.

The price of oil is determined by the relationship between global demand and supply. Companies whether their in Saudi Arabia, the United States or Russia, charge prices for oil based on global demand. Charge to much, and people will go somewhere else for their energy. Charge to little, and you risk being faced with shortages as everyone jumps in on your low price.
As I said before, New York and London set the prices and the rest of the world follows suit and honors the price on the free market. The exception is when private oil deals are struck off market as I mentioned before.

Speculation exists in oil just like it did with tech. stocks in 2000.
Oil is traded just like stocks.

I agree with the Saudi minister and OPEC because the statistics bear out their statement. BTW, Bodman was on TV this morning and made yet another statement that contradicted his one of last week.

BTW, there are tons of government stats and projections (including both best case and worst case) at:
http://www.eia.doe.gov/
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Old 04-30-2006, 08:09 PM   #54
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Originally posted by ntalwar
Speculation exists in oil just like it did with tech. stocks in 2000.
Oil is traded just like stocks.
True, but there is inherent value in a barrel of oil. A stock certificate for a tech company who may be profitable by 2050 is just a piece of paper.
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Old 04-30-2006, 09:07 PM   #55
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Find an alternative source of energy that is cheaper and more efficient than oil and you can put the oil companies out of business. You'll also be able to make vast sums of money, as business's worldwide start to switch to your form of energy.
Actually from what I was trying to listen to this morning on Meet The Press, Tim Russert was questioning the Secetary of Energy on why exactly Brazil has been able to do this over the last 3 years and currently have 70% of their vehicles using an alternative fuel, made from sugar cane. The secetarys response was it took 30 years for Brazil to develope this technology (which I don't believe for a moment) and implement it over the last few years. Still, they are now! doing it.

70% percent of the cars in the US would greatly reduce emissions
and make great strides in reducing green house gases causing global warming. (I know a lot of people don't believe this, but they didn't have to run from the 3 largest hurricanes recorded in history last year)

So ask or pay Brazil to give up the technology and start it in the USA and Europe.
Whats the issue? Hmm. oil profits maybe?

I didn't catch all the details since I was getting ready for work so I could make overtime to afford more gasoline to get back and forth to.. uh.. work.
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Old 04-30-2006, 09:09 PM   #56
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True, but there is inherent value in a barrel of oil. A stock certificate for a tech company who may be profitable by 2050 is just a piece of paper.
I agree. Most of the oil investors also will never take delivery of the commodity.
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Old 04-30-2006, 09:13 PM   #57
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As I said before, New York and London set the prices and the rest of the world follows suit and honors the price on the free market. The exception is when private oil deals are struck off market as I mentioned before.

Speculation exists in oil just like it did with tech. stocks in 2000.
Oil is traded just like stocks.

I agree with the Saudi minister and OPEC because the statistics bear out their statement. BTW, Bodman was on TV this morning and made yet another statement that contradicted his one of last week.

BTW, there are tons of government stats and projections (including both best case and worst case) at:
http://www.eia.doe.gov/
Well, thats what some people like to allege, but at the end of the day, your not going to succeed at selling your product well beyond its market value determined by supply and demand. If an oil company raises its price to high, it will lose potential sales. To low and you will not be able to satisfy demand.

Every business has projections, both worst case and best case senerio's, but that is just a guide. If Oil companies really had the power to manipulate the price in the way you claim, prices would never have dropped so low like they did in the late 1990s.
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Old 04-30-2006, 09:36 PM   #58
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Well, thats what some people like to allege, but at the end of the day, your not going to succeed at selling your product well beyond its market value determined by supply and demand. If an oil company raises its price to high, it will lose potential sales. To low and you will not be able to satisfy demand.

Every business has projections, both worst case and best case senerio's, but that is just a guide. If Oil companies really had the power to manipulate the price in the way you claim, prices would never have dropped so low like they did in the late 1990s.
I agree with that price is too high, and so does OPEC. They are concerned in fact:
"Opec says powerless to drive down $75 oil"
http://www.timesofmalta.com/core/article.php?id=222053

As I said earlier, there has been consolidation in the oil business and there is more pricing power as a result. People in the US will buy gasoline based on $70-75 oil, and it's the US oil companies that dominate the New York exchange. This level will help maximize the oil industry's profits, so there is every incentive to do it. It will not go to $90 right now, because there will be demand destruction at that level.

I don't have a oil consumption graph handy right now, but here's a graph of World Oil Crude Production in millions of barrels a day through 2004. World oil production has gone up significantly:

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Old 04-30-2006, 10:53 PM   #59
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I agree with that price is too high, and so does OPEC. They are concerned in fact:
"Opec says powerless to drive down $75 oil"
http://www.timesofmalta.com/core/article.php?id=222053

As I said earlier, there has been consolidation in the oil business and there is more pricing power as a result. People in the US will buy gasoline based on $70-75 oil, and it's the US oil companies that dominate the New York exchange. This level will help maximize the oil industry's profits, so there is every incentive to do it. It will not go to $90 right now, because there will be demand destruction at that level.

I don't have a oil consumption graph handy right now, but here's a graph of World Oil Crude Production in millions of barrels a day through 2004. World oil production has gone up significantly:

I have nothing to add from what I said before. Nothing above shows me that basic supply and demand for energy does not decide the price.

Anyways, here is a little from this article on the whole issue:

"There's no harm in having the government keep a closer watch on the energy industry, and Kohl's sympathy for consumers is commendable, but blaming Big Oil for high gas prices is a little like blaming McDonald's (Research) for obesity. (Yes, I know that also makes for effective politics.)"

"Because while those profits might seem outrageous - ExxonMobil (Research) earned over $36 billion last year - Big Oil makes its money by pumping oil out of the ground, not refining and selling it as gasoline. Of Exxon's mammoth haul, only a tiny fraction came from making and selling gas in the U.S."

"The idea that prices are set by Big Oil, not the traders at the NYMEX and other global bourses, is a misconception that seems to come into vogue whenever energy prices start making new highs. And putting the blame on OPEC, let alone trying to subject a foreign cartel to U.S. laws, seems to be doing anything but dealing honestly with the PROBLEM OF TOO MUCH DEMAND AND TOO LITTLE SUPPLY HERE AT HOME."

http://money.cnn.com/2006/04/12/maga...tune/index.htm
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Old 05-01-2006, 10:55 AM   #60
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I have nothing to add from what I said before. Nothing above shows me that basic supply and demand for energy does not decide the price.

Anyways, here is a little from this article on the whole issue:

"There's no harm in having the government keep a closer watch on the energy industry, and Kohl's sympathy for consumers is commendable, but blaming Big Oil for high gas prices is a little like blaming McDonald's (Research) for obesity. (Yes, I know that also makes for effective politics.)"

"Because while those profits might seem outrageous - ExxonMobil (Research) earned over $36 billion last year - Big Oil makes its money by pumping oil out of the ground, not refining and selling it as gasoline. Of Exxon's mammoth haul, only a tiny fraction came from making and selling gas in the U.S."

"The idea that prices are set by Big Oil, not the traders at the NYMEX and other global bourses, is a misconception that seems to come into vogue whenever energy prices start making new highs. And putting the blame on OPEC, let alone trying to subject a foreign cartel to U.S. laws, seems to be doing anything but dealing honestly with the PROBLEM OF TOO MUCH DEMAND AND TOO LITTLE SUPPLY HERE AT HOME."

http://money.cnn.com/2006/04/12/maga...tune/index.htm
I never said oil companies had full control of the price - that would be a monopoly. We have an oligopoly, with partial price control. Speculation is also a big factor. Anyone reading this with a commodity account can speculate on oil on the same market as big oil. With only a stock account, there is an ETF of symbol USO that is tied to oil.

If there is a shortage, I have not seen evidence of it - no gas lines, rationing, etc.

Demand/supply is obviously the largest factor, but the other two factors add maybe 50% or more to what the true price of oil should be.

Last fall after Katrina, Steve Forbes said:
"'I'll make a bold prediction... in 12 months, you're going to see oil down to 35-40 usd a barrel,' he said, according to Agence France-Presse.

'It's a huge bubble, I don't know what's going to pop it but eventually it will pop -- you cannot go against supply and demand, you cannot go against the fundamentals forever.' "

http://www.forbes.com/business/feeds...fx2195813.html

At this point, we can agree to disagree. Good discussion though.
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