The real reason oil prices are skyrocketing

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thrustbucket

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If you smell BS whenever you hear the reason for gas prices being "simple supply and demand" then you aren't alone.

Came across a really good article about why Oil prices are doing what they are doing, and it makes more sense than anything else I've read.

I know this isn't really political, and may not be controversial, but I'm sure we can find something in it to argue about. ;)

Read it here and post your thoughts.
 
As much as I'm inclined to keep a pile of salt on hand around a site with an obvious agenda ... I can't really find much to disagree with. Granted, investment economics aren't exactly my strong suite, but oil prices clearly have nothing to do with supply & demand. Let's put it this way: if you have a limited commodity, you can charge more for it. No sweat. But you also have less product to sell. That shouldn't lead to record breaking profits.

If I might pick out one of the few posts of merit from another, sure-to-be-catastrophe of a thread:

[quote name='thrustbucket']Where is the oil we have gotten so far from recent wars? My wallet at the gas pump would love it if you were right. All those bumper stickers claiming blood for oil are crickets chirping now, as we get raped at the chevron.[/quote]

I think you inadvertently hit the nail on the head. Ask yourself: where is all the oil we supposedly went to war for? I think we can take a pretty good guess; the mistake so far has been in assuming that a war for oil is meant to benefit the consumer of the oil, rather than the vendor.

And all this under a president whose primary experience is as an oil man? That's a hell of a coincidence in my book.
 
Supposedly, the supply lines in Iraq keep getting sabotaged, thus the reason why the Iraqis can't even get to it. If they can't get it, we sure as hell aren't. If i remember right, Dubya said the Iraqi oil would pay for the war.
 
[quote name='trq']I think we can take a pretty good guess; the mistake so far has been in assuming that a war for oil is meant to benefit the consumer of the oil, rather than the vendor.

And all this under a president whose primary experience is as an oil man? That's a hell of a coincidence in my book.[/QUOTE]

A couple years ago I'd have argued that. But now I'm inclined to agree, the way things have transpired.

Someone clearly is manipulating this for massive gain. I honestly don't think it's the oil company's themselves. I've been reading for a while now that it's essentially world banks, imf, etc.
 
Dunno what thrusts posts say, but perhaps something else to talk about in this thread could be why Exxon-Mobil made more money last year than any other company in the history of the world.

Just a thought.
 
Yeah, the gas company profits are ridiculous. That's enough to show it's not just supply and demand driving it.

Which is good, it means prices can come back down eventually. Be it through some scandal that breaks up these gas monopolies, or simply prices getting so high that people cut back their driving and the companies reduce their fleecing of people to get their profits back up by dropping prices to get people to drive more again.

BTW, is it the biggest profit ever after adjusting for inflation? Just curious on that--the profit level is absurd whatever the case.
 
Supply and demand + political situation = oil price

We currently have political instability in many oil producing nations due to our war in Iraq.

You can't expect to threaten, bully, and bomb the biggest oil producing countries on the planet and NOT increase political uncertainty, along with prices.

Hugo Chavez in Venezuela seems to think the CIA is going to assassinate him any day now due to our dislike of him.. And he is one of the biggest exporters of oil to us. It has nothing to do with oil company greed... Those companies are making the same amount of oil they always have, and when prices go up they obviously make more profit. The prices themselves are effected by political instability more than anything else.
 
[quote name='mykevermin']Who the hell didn't know that oil prices are driven by futures?

No offense, really, but that's common knowledge.[/QUOTE]

Not if you're Joe Bob from Small Town U.S.A. Most people around here think the high oil prices are because of:

The Guv'nment
Them damn Ter'rists.


OP, I get where you're going with this, but you're point is redundant; futures contracts are dictated by supply and demand, even if the supply and demand is temporally dependent. Thus you're saying it's not supply and demand;it's supply and demand.

This website reeks of misinformation and carefully worded explanations regarding the functioning of these contracts to make it seem like it's possible to radically drive up the price of oil as a commodity.. This is not how futures contracts work. A person speculating with a futures contract is guessing that, when the contract reaches it's delivery date, that the underlying will be a higher price on the spot market than what they purchased it for(under the contract). It's not the contract that drives up the price, it's the conditions in the spot market. A high spike in demand for oil futures contracts CAN push up oil prices due to increased fear of volatility, but 60%? No.
 
I just thought the parts about oversight on certain commodities markets being dropped or drastically reduced coinciding with spikes in gas prices were interesting.

I'm still not totally convinced there is a real supply shortage, it seems so far to be an excuse. I think the price is being artificially manipulated. By who and how, is speculation at this point.
 
Maybe with some more insight than I have knows this. I keep on hearing that, the U.S uses a specific type of oil/gas forget which one and the number of refineries in the past 20 years has been cut in half. I can't imagine this making this situation any better.
 
[quote name='thrustbucket']I just thought the parts about oversight on certain commodities markets being dropped or drastically reduced coinciding with spikes in gas prices were interesting.[/QUOTE]

That's what I took, too -- futures being sold isn't news, but the apparent lack of oversight is.
 
[quote name='homeland']Maybe with some more insight than I have knows this. I keep on hearing that, the U.S uses a specific type of oil/gas forget which one and the number of refineries in the past 20 years has been cut in half. I can't imagine this making this situation any better.[/QUOTE]

That's why there seems to only really be two sides to the argument of the oil crisis at this juncture:

1- We need to continue to suffer until people cry enough to force new energy sources to be found.

2- We need to make it our top priority to become energy independent first.

Unfortunately our leadership across the board on this issue is asleep at the wheel and prefers to argue these two points without getting anything done.
 
Be careful trq, to some cons in here, you're a communist.

Oversight is regulation, regulation is interfereing with the market, and THAT is contrary to capitalism.
 
[quote name='pittpizza']Be careful trq, to some cons in here, you're a communist.

Oversight is regulation, regulation is interfereing with the market, and THAT is contrary to capitalism.[/QUOTE]

LoL. Little does he know I am the one that brought it up :).


Isn't ignore fun?
 
Ha, there's no such thing as true capitalism in the oil markets. Most oil is extracted by state-owned entities. The largest state-owned entities formed OPEC, a cartel which controls most of the world's supply of oil. Then there's the weak dollar contributing to high oil prices...speculators...commodity index funds...etc.

But the underlying fact is that production cannot, and will never, keep up with growing global demand. High oil price are here to stay, unless demand plummets, which would indicate a massive global recession.
 
[quote name='pittpizza']Be careful trq, to some cons in here, you're a communist.

Oversight is regulation, regulation is interfereing with the market, and THAT is contrary to capitalism.[/QUOTE]

I've always wondered about that. If an unregulated, free market is the way to go, why are the proponents thereof usually also big fans of "Buy American!" and "Don't let foreign interests buy up America!" and "Don't send jobs to Mexico and India!" and so on? Live by the sword, die by the sword, right?
 
There's no such thing as "Buy American!" anymore, so the point is moot.

My Honda and so-and-so's Toyota is as "American" as that hunk-o-shit Chevy y'all own.
 
[quote name='trq']I've always wondered about that. If an unregulated, free market is the way to go, why are the proponents thereof usually also big fans of "Buy American!" and "Don't let foreign interests buy up America!" and "Don't send jobs to Mexico and India!" and so on? Live by the sword, die by the sword, right?[/QUOTE]

Hippocrits.
 
[quote name='trq']I've always wondered about that. If an unregulated, free market is the way to go, why are the proponents thereof usually also big fans of "Buy American!" and "Don't let foreign interests buy up America!" and "Don't send jobs to Mexico and India!" and so on? Live by the sword, die by the sword, right?[/QUOTE]

I don't know of anyone that has argued that total no regulation is the way to go.

The argument lies in how much regulation. And the argument is usually split between "regulate enough to equalize everything" and "regulate enough to prevent total takeover of the market by a single corporation"

We have NAFTA to thank for deporting all our jobs south, and we have Clinton to thank for opening up thousands of little portals to China in every WalMart.

But ultimately, the more we keep devaluing our money, nobody can afford to do business here.
 
money_toilet_paper_cover.jpg
 
[quote name='JolietJake']If i remember right, Dubya said the Iraqi oil would pay for the war.[/quote]

lool, Obviously that was a load of fucking bull shit from the start.
 
[quote name='thrustbucket']
But ultimately, the more we keep devaluing our money, nobody can afford to do business here.[/quote]

Wouldn't the devaluation of a currency allow for jobs to return to a country?

Cost of a job in India < Cost of a job in the US -> Job goes to India.

Cost of a job in India > Cost of a job in the US -> Job goes to the US.
 
[quote name='fatherofcaitlyn']Wouldn't the devaluation of a currency allow for jobs to return to a country?

Cost of a job in India < Cost of a job in the US -> Job goes to India.

Cost of a job in India > Cost of a job in the US -> Job goes to the US.[/QUOTE]

Good question. I didn't really think of it that way. I'm not economist but i'd like to know.

I would think that the lower the dollar gets, the more company's will seek even poorer countries to take business to that are as far outside of the influence of the dollar as possible.

But I really don't know.
 
Its not just about cost, guys, its about Intellectual Property.

Offshore (or near-shore as the case is slowly becoming) is great for grunt work. In the trenches coders or people answering phones.

But that business model fails when you start moving your Business Intelligence offshore. Now you're sending the brains behind the code offshore, and people in India switch jobs faster than you can blink, because the economy is so hot. So now you've got a system designed by contractors who are very likely going to leave.

You've also exposed your business logic to groups that aren't within your company, also a problem.
 
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