| N_Jay |
Now some politicians are talking about using the Strategic Petroleum Reserve to try to fix prices!!!
1) it was not and is not intended to be used for market influence.
2) it is not the job of the government to become a player in any market
3) It will not have significant effect if any
4) if there is a disruption due to war, terrorism, accident, or natural disaster depletion of the reserve will prevent it from fulfilling its proper purpose.
I don't get activist often, but if you care to, PLEASE write your newspaper and politicians and let them know how stupid and DANGEROUS this action would be!
(Hope this not "too" off-topic" or "too" current events, since it does have to do with oil)
P.S. I even depoliticised it from how I originally posted it on another forum |
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| robrecht |
| IIRC George Bush Senior deftly used the SPR to stabilize the oil market during the first Iraq War but of course he was only planning on a short war so the situation is no longer comparable. Regardless, the very creation and current expansion of the SPR affects the market and arose from economic and market conditions created by OPEC during the first oil crisis. Of course, I'm not arguing for obviously ineffective measures to avoid dealing with the larger issues, but I do think there are indeed better geopolitical approaches to this issue, which of course I will not go into here since I don't see how you will be able to keep this thread within the nonpolitical parameters desired here. But good luck trying! |
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| bigdadi |
| The COMMODITY price will go south as soon as the NEWS is out. You don't have to do it in ACTION. What it needs is just a LITTLE ACTION and this can be stopped anytime. You really don't have to empty the reserve, just a gesture. |
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| N_Jay |
quote:
Originally posted by robrecht
IIRC George Bush Senior deftly used the SPR to stabilize the oil market during the first Iraq War but of course he was only planning on a short war so the situation is no longer comparable. Regardless, the very creation and current expansion of the SPR affects the market and arose from economic and market conditions created by OPEC during the first oil crisis. Of course, I'm not arguing for obviously ineffective measures to avoid dealing with the larger issues, but I do think there are indeed better geopolitical approaches to this issue, which of course I will not go into here since I don't see how you will be able to keep this thread within the nonpolitical parameters desired here. But good luck trying!
Yes, maybe it should have been used STRATEGICALLY at the beginning of the war to adjust for the (relatively) short term disruption anticipated.
That is a LOT different from what is being called for by the talking heads today.
Time will only tell if we can keep this non-partisan. |
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| N_Jay |
quote:
Originally posted by bigdadi
The COMMODITY price will go south as soon as the NEWS is out. You don't have to do it in ACTION. What it needs is just a LITTLE ACTION and this can be stopped anytime. You really don't have to empty the reserve, just a gesture.
You think so?
It reacted very little to when we stopped buying oil for the SPR.
What indication do you have?
If (when) the little action does not work, when do you call it quits?
Even if the Little action does work, when happens when you stop the action? |
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| rockman19762001 |
| Two important events will happen by the end of September. One the Olympics will be over, and the election cycle will end in India. It is believed by many that after these take place, both countries will stop subsidizing the price of gasoline and diesel within in their borders. Once this happens the crazy no holds bar consumption of oil by both countries will dry up and drive down the price of oil. This is the only thing that is going to drop the price of oil, slow the consumption by China and India. |
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| jdeanski |
quote:
Originally posted by rockman19762001
Two important events will happen by the end of September. One the Olympics will be over, and the election cycle will end in India. It is believed by many that after these take place, both countries will stop subsidizing the price of gasoline and diesel within in their borders. Once this happens the crazy no holds bar consumption of oil by both countries will dry up and drive down the price of oil. This is the only thing that is going to drop the price of oil, slow the consumption by China and India.
Very interesting insight. |
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| robrecht |
I'm a little skeptical, but sure hope it's true--here's some more details:
http://articles.latimes.com/2008/ju...-chinagasoline9
BTW, I was just reading an article that said that the '73 OPEC embargo effectively raised the price of oil by less than $3 a barrel to a whopping $8/barrel. Not sure of that time frame for those numbers since it continued rising higher into 1974, etc. Wikipedia shows the price increasing from around $3/barrel to $15ish over 2-3 years and leveling off. I was too young and unaware to remember these details but it's pretty amazing, isn't it? |
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| N_Jay |
quote:
Originally posted by robrecht
I'm a little skeptical, but sure hope it's true--here's some more details:
http://articles.latimes.com/2008/ju...-chinagasoline9
Interesting stuff.
I hope this does happen, because it will help our economy a good bit.
quote:
Originally posted by robrecht
BTW, I was just reading an article that said that the '73 OPEC embargo effectively raised the price of oil by less than $3 a barrel to a whopping $8/barrel. Not sure of that time frame for those numbers since it continued rising higher into 1974, etc. Wikipedia shows the price increasing from around $3/barrel to $15ish over 2-3 years and leveling off. I was too young and unaware to remember these details but it's pretty amazing, isn't it?
Yep.
Isn't it interesting what a little historical perspective does to the "Sky is falling", "Gloom and Doom" proponents of today.
I saw some "Democratic Strategist" on TV this morning saying we were in the "worst economic times ever!".
I thought the rest of the panel was going to fall off their chairs. |
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| jay |
quote:
Originally posted by N_Jay
...
I saw some "Democratic Strategist" on TV this morning saying we were in the "worst economic times ever!".
....
The Starbucks that's on his way to the office is probably slated to close. :p |
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| robrecht |
quote:
Originally posted by N_Jay
Time will only tell if we can keep this non-partisan.
:2: :2: :2: |
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| N_Jay |
quote:
Originally posted by robrecht
:2: :2: :2:
I was not being partisan. That was the title under her name.
Since it did not say; "Renowned Economist", or "Noted Lecturer",. I had no other title to apply. |
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| robrecht |
quote:
Originally posted by N_Jay
I was not being partisan. That was the title under her name.
Since it did not say; "Renowned Economist", or "Noted Lecturer",. I had no other title to apply.
Democratic strategists try to exaggerate how bad things are to try and win presidential power and Republican strategists (eg, Phil Gramm) minimize how bad they are or even promote how strong the economy is in an effort to maintain presidential power. And much of the media only looks at economic and other issues through these biased and partisan political perspectives with these huge conflicts of interest warping any genuine attempts at analysis and understanding.
I resisted the temptation to contribute to your Phil Gramm thread because I figured it was inevitably partisan. It's just too easy to ridicule the projected attempts at analysis from either partisan political perspective. And maybe too hard to do so without adopting, promoting, or baiting the polar partisan political perspectives.
Good luck in avoiding current political punditry, but even both sides of the current political debate completely ignore the larger geopolitical issue behind the very creation of the SPR. |
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| N_Jay |
quote:
Originally posted by robrecht
. . . Republican strategists (eg, Phil Gramm) minimize how bad they are or even promote how strong the economy is in an effort to maintain presidential power. . . .
Did you read Phil Gramm's statements? Do you think he was exaggerating or minimizing any of the issues?
quote:
Originally posted by robrecht
. . .but even both sides of the current political debate completely ignore the larger geopolitical issue behind the very creation of the SPR.
While it was a cold war creation, I believe it is still quite strategic in today's world. Maybe more so as our society has become even more sensitive to fuel disruptions regardless of cause.
Too bad it is not as easy to store refined product as disruption of refinery capacity has become almost as big an issue.
Either way, I don't think we should use it in attempts at price adjustment as long as the market is operating.
I would be interested in hearing your view, as you are (usually) one of the less emotional and more thoughtful people here. |
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| robrecht |
quote:
Originally posted by N_Jay
Did you read Phil Gramm's statements? Do you think he was exaggerating or minimizing any of the issues?
While it was a cold war creation, I believe it is still quite strategic in today's world. Maybe more so as our society has become even more sensitive to fuel disruptions regardless of cause.
Too bad it is not as easy to store refined product as disruption of refinery capacity has become almost as big an issue.
Either way, I don't think we should use it in attempts at price adjustment as long as the market is operating.
I would be interested in hearing your view, as you are (usually) one of the less emotional and more thoughtful people here.
As I said, I don't think I'm gonna discuss Phil Gramm's statement because I think such a discussion would be inevitably partisan.
The SPR is, of course, strategic, but it's still defensive and minimalist and does not attempt to address the primary geopolitical issue. IIRC, the OPEC embargo of 1973, was not primarily a cold war phenomenon but rather the rise of economic empowerment against Western supporters of Israel. Economic war, if you will. |
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| N_Jay |
quote:
Originally posted by robrecht
As I said, I don't think I'm gonna discuss Phil Gramm's statement because I think such a discussion would be inevitably partisan.
Interesting. You commented in the general highlighting partisan aspects but refuse to comment in the specific (where you would have choice to include partisan aspects).
quote:
Originally posted by robrecht
The SPR is, of course, strategic, but it's still defensive and minimalist and does not attempt to address the primary geopolitical issue. IIRC, the OPEC embargo of 1973, was not primarily a cold war phenomenon but rather the rise of economic empowerment against Western supporters of Israel. Economic war, if you will.
My mistake, I had thought we had a Strategic Reserve prior to 1973.
I still stand by my position that it should not be used to attempt to correct market fluctuations.
We may need it shortly after the correct oil price bubble bursts.
I could see a situation where the suppliers over-react to the sharply decreasing prices of the bubble burst with insufficient investment causing a short term shortage as the prices near the bottom.
It is unlikely (unless government action disrupts the normal market forces) but is possible. |
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| robrecht |
quote:
Originally posted by N_Jay
Interesting. You commented in the general highlighting partisan aspects but refuse to comment in the specific (where you would have choice to include partisan aspects).
My mistake, I had thought we had a Strategic Reserve prior to 1973.
I still stand by my position that it should not be used to attempt to correct market fluctuations.
We may need it shortly after the correct oil price bubble bursts.
I could see a situation where the suppliers over-react to the sharply decreasing prices of the bubble burst with insufficient investment causing a short term shortage as the prices near the bottom.
It is unlikely (unless government action disrupts the normal market forces) but is possible.
Pointing out that a specific debate is inevitably partisan and therefore refraining here from engaging in the specifics of such a debate is not only consistent but I think also prudent on this fine forum. Especially since I am not trained as an economist to expertly separate the wheat from the chaff.
I sure hope you are right about the bubble bursting. I have been attracted to this view for some time as I've mentioned here previously. But more recently I've also seen some more informed people than myself intelligently reject this view. Can you recommend some proponents who adequately defend this view?
BTW, are you not defending the use of the SPR to help recover from the effects of a bubble bursting ... but not using the SPR to help to burst the bubble? I can see that the there may not be enough reserve to effectively burst the bubble without risking its strategic function. Is your view that recovery from a bubble burst would be much shorter term and therefore not as much of a risk from a military strategic perspective, especially with prices lower ...? |
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| bigdadi |
quote:
Originally posted by robrecht
.... IIRC, the OPEC embargo of 1973, was not primarily a cold war phenomenon but rather the rise of economic empowerment against Western supporters of Israel. Economic war, if you will.
Is it a repeat of 1973 now? |
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| N_Jay |
quote:
Originally posted by robrecht
Pointing out that a specific debate is inevitably partisan and therefore refraining here from engaging in the specifics of such a debate is not only consistent but I think also prudent on this fine forum. Especially since I am not trained as an economist to expertly separate the wheat from the chaff.
If you say so.
quote:
Originally posted by robrecht
I sure hope you are right about the bubble bursting. I have been attracted to this view for some time as I've mentioned here previously.
I don't think it is all bubble, but some is definitely bubble and like all bubbles it will burst.
quote:
Originally posted by robrecht
But more recently I've also seen some more informed people than myself intelligently reject this view. Can you recommend some proponents who adequately defend this view?
What are they rejecting? That there is any bubble, or that it is all bubble? (or did I misunderstand you statement?)
Nope, It is my view, based on what I see in the market combined with how I believe markets function.
I am sure I am not alone in my view, but it is not based off other positions, nor have I sought out those who believe the same as I.
quote:
Originally posted by robrecht
BTW, are you not (now?) defending the use of the SPR to help recover from the effects of a bubble bursting ...
I am not defending the use of the SPR to "recover from the effects of a bubble bursting", I propose we may require it to prevent the supply disruption that could occur in the aftereffects of the bubble bursting.
(Acknowledge this is a fine line here).
quote:
Originally posted by robrecht
.. but not using the SPR to help to burst the bubble?
I don't see how the use of the reserves to lower prices will burst the bubble. I believe it would only extend and increase the bubble much the way the misguided Y2K spending increased the size of the Tech bubble.
quote:
Originally posted by robrecht
I can see that the there may not be enough reserve to effectively burst the bubble without risking it's strategic function.
I can't see how there is enough to even start to address a bubble busting action.
I also don't hear anyone talking about busting the bubble, just "lowering prices", so I don't think they are thinking about it as deeply as you are.
quote:
Originally posted by robrecht
Is your view that recovery from a bubble burst would be much shorter term and therefore not as much of a risk from a military strategic perspective, especially with prices lower ...?
Yes, very short term because it would only be in the event of and for the length of a supply disruption if the market over-reacts to the burst.
Certainly NOT to try to enforce or support some "after-bubble" price level. |
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| N_Jay |
quote:
Originally posted by bigdadi
Is it a repeat of 1973 now?
Absolutely not, because there has not been any supply disruption. |
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| robrecht |
quote:
Originally posted by N_Jay
What are they rejecting? That there is any bubble, or that it is all bubble? (or did I misunderstand you statement?)
First of all, thanks for your PM. I got back from the track a little bit ago and now we're celebrating with some Gin & Tonics so I better not try to speak for others here. Tonic has bubbles and that's about all I care about right now.
quote:
Originally posted by N_Jay
I am not defending the use of the SPR to "recover from the effects of a bubble bursting", I propose we may require it to prevent the supply disruption that could occur in the aftereffects of the bubble bursting.
(Acknowledge this is a fine line here).
Maybe it's the Gin (probably not the tonic) but I'm not sure I grasp the fine distinction you're making here.
quote:
Originally posted by N_Jay
Yes, very short term because it would only be in the event of and for the length of a supply disruption if the market over-reacts to the burst.
Certainly NOT to try to enforce or support some "after-bubble" price level.
Well, if that's all you meant by the fine line, I had no doubt you were referring to the former and not the latter. Still, it does seem like using the SPR to respond to and affect specific market conditions.
quote:
Originally posted by N_Jay
I don't see how the use of the reserves to lower prices will burst the bubble. I believe it would only extend and increase the bubble much the way the misguided Y2K spending increased the size of the Tech bubble.
I can't see how there is enough to even start to address a bubble busting action.
I also don't hear anyone talking about busting the bubble, just "lowering prices", so I don't think they are thinking about it as deeply as you are.
Again, I'm reluctant to speak for others here, but I think some imagine that we could 'flood' the market with sufficient reserves to cause a significant decrease in price to thereby break the speculative cycle of upwardly spiraling prices. If the 'reserves' used were insufficient, it would presumably result in only a very modest effect, and this is what Bush Junior has advocated in the past. Not sure what you mean, but I think the effect supposedly would be the exact opposite of Y2K spending since we'd be increasing supply not demand. |
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| N_Jay |
It must be teh Gin!
quote:
Originally posted by robrecht
Maybe it's the Gin (probably not the tonic) but I'm not sure I grasp the fine distinction you're making here.
Well, if that's all you meant by the fine line, I had no doubt you were referring to the former and not the latter. Still, it does seem like using the SPR to respond to and affect specific market conditions.
I see a significant difference from releasing oil due to a supply disruption, and releasing oil when the market is delivering sufficient oil.
Again, I don't think it would happen, but in case it did, we would need the reserves.
quote:
Originally posted by robrecht
Again, I'm reluctant to speak for others here, but I think some imagine that we could 'flood' the market with sufficient reserves to cause a significant decrease in price to thereby break the speculative cycle of upwardly spiraling prices.
Except we don't have the ability to "flood" the market, and no one is talking about "flooding the market".
So, why should anyone think that is the plan?
quote:
Originally posted by robrecht
If the 'reserves' used were insufficient, it would presumably result in only a very modest effect,
Yes, and probably an effect in the wrong direction by increasing demand.
quote:
Originally posted by robrecht
and this is what Bush Junior has advocated in the past.
Where and when was this?
quote:
Originally posted by robrecht
Not sure what you mean, but I think the effect supposedly would be the exact opposite of Y2K spending since we'd be increasing supply not demand.
Either increases the size of the market, when we need the market to shrink to a rational size to not have the bubble burst. (or to try to have it burst it slowly). |
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| robrecht |
quote:
Originally posted by N_Jay
I see a significant difference from releasing oil due to a supply disruption, and releasing oil when the market is delivering sufficient oil.
As I mentioned, so do I. But it's still using the SPR to respond to and affect specific market conditions.
quote:
Originally posted by N_Jay
So, why should anyone think that is the plan?
Who really knows why people think what they do. Ask Qoheleth. Or go ask Alice. Yes, that reference to the Jefferson Airplane must have been the Gin.
quote:
Originally posted by N_Jay
Where and when was this?
I know we've discussed this before. IIRC, it was April 2006 when Bush Junior finally agreed to slow or interrupt the acquisition of planned new reserves in order to affect the market price, 'though he admitted it would be minimal, said something like 'every little bit helps.' You made a big deal out of the difference between that and releasing oil that has already been placed in the reserve. I certainly don't deny the difference, of course, but believe its more a matter of degree rather than principle. Bottom line, Bush Junior tried to affect oil prices by slowing the planned increase in the SPR. Now, I've got to get back to my party. Have a nice night! |
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| N_Jay |
quote:
Originally posted by robrecht
As I mentioned, so do I. But it's still using the SPR to respond to and affect specific market conditions.
Yes, I see how you can say it is a matter of degrees, but I think a disruption is a discernible event that most could agree is different than a simple price change in the functioning market.
quote:
Originally posted by robrecht
Who really knows why people think what they do. Ask Qoheleth. Or go ask Alice. Yes, that reference to the Jefferson Airplane must have been the Gin.
Wishful thinking I would guess.
quote:
Originally posted by robrecht
I know we've discussed this before. IIRC, it was April 2006 when Bush Junior finally agreed to slow or interrupt the acquisition of planned new reserves in order to affect the market price, 'though he admitted it would be minimal, said something like 'every little bit helps.'
I figured that was what you meant, but I do consider it a different type of action.
Personally, I think that buying or not buying oil is such a small event that it had no effect. I think it was more of a concession to people insisting that he "do something".
quote:
Originally posted by robrecht
You made a big deal out of the difference between that and releasing oil that has already been placed in the reserve. I certainly don't deny the difference, of course, but believe its more a matter of degree rather than principle.
I think it is a difference in degree that has a significant difference is in principle.
quote:
Originally posted by robrecht
Bottom line, Bush Junior tried to affect oil prices by slowing the planned increase in the SPR.
From what I remember it was "suggested" by others, and in my view fit the bill for "doing something" to pacify others.
Maybe I'm being generous, but given all else it is as rational than to think he would have done it without encouragement and still stand pat on not releasing oil.
quote:
Originally posted by robrecht
Now, I've got to get back to my party. Have a nice night!
Have one for me.
I'm finishing a document for one of my clients. |
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| robrecht |
quote:
Originally posted by N_Jay
Wishful thinking I would guess.
That's also why I'm hedging my bets about a bubble burst. For example, some of those who propose 'flooding' the market with oil from the SPR are talking about selling half a million barrels of oil a day for 100 days, drawing down the reserve from 97% to 90%. If the Chinese, half of whose oil supply is domestic, have to start paying more for gasoline, maybe their reduced demand there will have a greater effect? I really don't know how to quantify and compare the predicted temporary effects, but the long term increase is still the best bet for some heavy speculators, especially given the steady decline of the dollar and worrisome or at best unknown prospects for some of our financial institutions (eg, even Fannie & Freddie). Some speaking of a bubble burst are really only talking about a correction, eg, $100/barrel by the end of this year but still $200/barrel in the next decade. With the decline of the dollar, oil has become the new gold standard. Is that likely to change?
But in the meantime, I filled up here in rural NJ (where we have lower gas taxes) yesterday for $3.50/gal (after subtracting 10%/gal with my Hess credit card). My own little gas holiday. |
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| robrecht |
quote:
Originally posted by bigdadi
Is it a repeat of 1973 now?
I think that's the fear of what could happen and that fear is driving the market. |
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| N_Jay |
I am not sure the small drop in price due to a .5M barrel addition compared to 20M barrel consumption will make much a difference.
Like any change in supply in a fungible commodity, any lower price will be shared by all, so in effect we will not only be increasing our own demand by lowering prices, we will be increasing world demand.
I hope China removes their subsidy, it will help fix a lot of ills. People don't realize that you can't buy your way to prosperity with efforts like this.
People are so concerned about our trade deficit with China. As long as China is subsidising there economy anything we buy helps us extract some of that subsidy.
Look at it this way.
The more we buy, the more they have to ramp up production.
The higher the level of production, the more fuel they use.
The more fuel they use the larger the total subsidy expense is.
They can't buy oil (or much oil) on the open market with Yuan, so they just have to end up spending the USD and EUR that they bring in.
China is not getting rich on our trade, they are just growing their economy that is going to continue to need to be fed long after the subsidies stop making sense.
It will be interesting to watch over the next 10 or 20 years. |
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| N_Jay |
quote:
Originally posted by robrecht
I think that's the fear of what could happen and that fear is driving the market.
If that were to happen, we better have our SPR ready and not have a wimp in office. |
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| robrecht |
quote:
Originally posted by N_Jay
If that were to happen, we better have our SPR ready and not have a wimp in office.
No one likes wimps, but you also don't want to have a quick-draw cowboy gunslinger shoot himself in the foot. ;) |
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| hondacuraworld |
quote:
Originally posted by bigdadi
Is it a repeat of 1973 now?
If it was, imagine the vehicles we'd be discussing....
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| N_Jay |
quote:
Originally posted by hondacuraworld
If it was, imagine the vehicles we'd be discussing....
Can you imagine if we all traveled as much and at the speed as we do today, in cars that got that THAT kind of gas mileage? |
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| hondacuraworld |
I drove one of these in a 2 door brougham in college. I calculated my fuel mileage at 6.2 MPG mixed driving, with a 429 that admittedly wasn't quite stock ;)
I remember thinking $65 a week in gas is insane!!!!
 |
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| robrecht |
| Just take a look at what Motor Trend's 1974 Car of the Year. |
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| hondacuraworld |
I remember when the Renault Alliance made that list.....
I find it funny to watch reruns of the Streets of San Francisco and watch the police try to perform "high speed" maneuvers in those big clumsy Galaxies, and actually catch the criminals! Those things sway like a hippo on roller skates :22: |
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| tangotango99 |
quote:
Originally posted by rockman19762001
Two important events will happen by the end of September. One the Olympics will be over, and the election cycle will end in India. It is believed by many that after these take place, both countries will stop subsidizing the price of gasoline and diesel within in their borders. Once this happens the crazy no holds bar consumption of oil by both countries will dry up and drive down the price of oil. This is the only thing that is going to drop the price of oil, slow the consumption by China and India.
I guess I will have to unload my PTR stocks very soon:( |
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| robrecht |
quote:
Originally posted by robrecht
The SPR is, of course, strategic, but it's still defensive and minimalist and does not attempt to address the primary geopolitical issue. IIRC, the OPEC embargo of 1973, was not primarily a cold war phenomenon but rather the rise of economic empowerment against Western supporters of Israel. Economic war, if you will.
quote:
Originally posted by bigdadi
Is it a repeat of 1973 now?
Or maybe a reprise of 1998? After 1973, the next time we saw oil at $11/barrel was 1998, when we find this provocative statement of Osama bin Laden, as Congress was reminded a couple of months ago:
"Mr. Chairman, Members of the Committee, about ten years ago, Osama bin Laden stated that his target price for oil is $144 a barrel and that the American people, who allegedly robbed the Muslim people of their oil, owe each Muslim man, woman, and child $30,000 in back payments. ... I would like to impress upon this Committee that $144 a barrel oil will be perceived as a victory for the Jihadist movement and a reaffirmation that the economic warfare component of its campaign against the West is a resounding success. ..." Link
Why is this holy a**hole still alive? |
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| netman88 |
I think have oil drilling is a solution to hedge the oil price increase.
If we don't do it, the other oil countries will be pulling our tails again.
I know about the issues with it but we need to leverage.
SPR, well.. even if we tap it, it's temporary so I doubt it would do any good. |
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| robrecht |
So no release of oil from the SPR,* but crude is down another couple of bucks today, trading at $123/barrel--that's halfway to $100/barrel from the high of $147 earlier this month. Temporary or long-term correction, bubble burst, anyone care to forecast? Will the dollar recover its 2001 value? That would already put us around $67-73/barrel, using the Euro as a comparison.
*231-157, but short of 2/3 required even with 37 Republicans supporting. |
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| robrecht |
quote:
Originally posted by robrecht
So no release of oil from the SPR,* but crude is down another couple of bucks today, trading at $123/barrel--that's halfway to $100/barrel from the high of $147 earlier this month. Temporary or long-term correction, bubble burst, anyone care to forecast? Will the dollar recover its 2001 value? That would already put us around $67-73/barrel, using the Euro as a comparison.
"IF the dollar continues to strengthen and the political situation (regarding Iran) improves, then the long-term prices will be about 78 dollars," [OPEC President Chakib] Khelil told reporters in Jakarta ... Link
There's a couple of Hess stations in New Jersey with 87 selling for under $3.75/gal today, which with my 10% off Hess card comes to $3.37. Gotta go for a long drive in my rotary to buy some more of this cheap gas. |
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| N_Jay |
quote:
Originally posted by robrecht
"IF the dollar continues to strengthen and the political situation (regarding Iran) improves, then the long-term prices will be about 78 dollars," [OPEC President Chakib] Khelil told reporters in Jakarta ... Link
There's a couple of Hess stations in New Jersey with 87 selling for under $3.75/gal today, which with my 10% off Hess card comes to $3.37. Gotta go for a long drive in my rotary to buy some more of this cheap gas.
This is terrible!!!!
How the hell can things correct themselves without the intervention of Congress?
This must not be allowed!!!!
And in other news:
There was a report of record profits among US steel manufacturers.
The management is being congratulated for the revival of a strategic US industry and cautioned the continued success will bring threats of "windfall" profits taxes. |
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| macphanatic |
| Instead of releasing the SPR, Congress needs to curtail irresponsible oil speculation. There are a lot of paper traders driving up oil prices without the intent of ever taking possession of the oil they trade. These people get rich by artificially inflating the cost of oil. |
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| robrecht |
quote:
Originally posted by N_Jay
This is terrible!!!!
How the hell can things correct themselves without the intervention of Congress?
This must not be allowed!!!!
And in other news:
There was a report of record profits among US steel manufacturers.
The management is being congratulated for the revival of a strategic US industry and cautioned the continued success will bring threats of "windfall" profits taxes.
Well, (at least some members of) Congress did tell the President that he did not have their authorization to attack Iran. And don't forget that in May Congress did stop the filling of the SPR starting as of this month. It was the further measure to actually release oil from the SPR that failed the other day. The big question will be the value of the dollar. Might have to work on enormous deficit and pursue realistic foreign policy to do some good there. Politically, Congress needs good executive leadership, not exactly what the framers had in mind perhaps, but seems to be the case. Biggest issue is the decline of the dollar, down nearly 50% against the Euro from it's high point in 2001. Enormous deficit. Perceived and actual effectiveness of our foreign policy. What else do you think can address that? Of course, more drilling would help as well, but that's hardly the only issue. |
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| robrecht |
quote:
Originally posted by macphanatic
Instead of releasing the SPR, Congress needs to curtail irresponsible oil speculation. There are a lot of paper traders driving up oil prices without the intent of ever taking possession of the oil they trade. These people get rich by artificially inflating the cost of oil.
I wouldn't isolate the role of speculators too much. They're betting on the future price, but they're not just shooting craps. They're trying to predict actual external scenarios. The West Texas Research Group (WTRG) makes a very strong case that the laws of suppy and demand have the biggest effect on oil price when there are not major external factors like war and rumors of war. There needs to be more surplus to better manipulate and stabilize supply. The US gave up on this and OPEC took over as best they can. But they can't control Iran much better than we can. For more detail, see this link. |
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| N_Jay |
quote:
Originally posted by macphanatic
Instead of releasing the SPR, Congress needs to curtail irresponsible oil speculation. There are a lot of paper traders driving up oil prices without the intent of ever taking possession of the oil they trade. These people get rich by artificially inflating the cost of oil.
Any ideas how to do that?
Are our laws more lax than other countries?
What would prevent the traders from just moving operation to another country? |
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| bigdadi |
In China, currently the situation is 2000 shoe factories were closed, down from 7000. The rest of 5000 shoe factories are not having enough orders for the labors. it is because the USA people simply buy less stuffs shifting money to high price fill-ups, energy price.
I think it won't take long for oil price goes further down. |
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| N_Jay |
quote:
Originally posted by bigdadi
In China, currently the situation is 2000 shoe factories were closed, down from 7000. The rest of 5000 shoe factories are not having enough orders for the labors. it is because the USA people simply buy less stuffs shifting money to high price fill-ups, energy price.
I think it won't take long for oil price goes further down.
I understand China is limiting car use and factory operation in and near Beijing to cut down pollution for the Olympics.
I always laugh when people talk about China as a serious competitor to the US.
Just wait till they stop subsidising oil!
We will end up sending food to quell the riots. |
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| robrecht |
Greenspan knows a thing or two about markets:
"The recent fall in the price of oil is primarily the result of investors unwinding speculative positions that helped drive up oil prices earlier this year, Alan Greenspan has told the Financial Times.
The former Federal Reserve chairman said speculation was "importantly responsible" for the rapid move up in oil prices in late 2007 and early 2008.
But he said this was "good speculation" of the kind that ultimately moderates a change in prices, and not "bad speculation" of the bubble-creating kind.
Greenspan said financial speculation in oil was unlikely to resume in the near term and "there is little prospect of a renewed spike in oil while cyclical weakness continues".
If he is right, central banks around the world need not worry about the risk that oil prices might rebound in the absence of a positive surprise on global growth. All other things being equal, this would imply a looser path for monetary policy.
Greenspan said that while the long-term rise in oil prices was "wholly a physical phenomenon", financial speculation influenced the "timing and profile" of price increases.
"Financial speculation did play a significant part in the rapid increase in oil prices," Greenspan said.
From 2004 onwards financial investors identified a one-time opportunity to profit from the expected increase in the price of oil caused by pressure of mounting demand on constrained supply.
"It was classic stabilising speculation," he said. "It brought forward the price increase that would have otherwise taken place over a much longer period of time, reducing demand sooner and ultimately cutting the top off the intermediate peak price."
Many experts reject the idea that financial speculation played a significant role in driving up oil prices, arguing that it did not affect the underlying balance of supply and demand for oil.
Greenspan disagrees. He said the data suggested that financial investors from 2004 onwards built up a large net long position in crude oil futures.
The counterparties to their net long positions were owners of oil inventories, who in effect sold forward some of their existing stock of oil.
In order to compensate, the owners of oil inventories stepped up their acquisition of new oil. "This showed up as a significant rise in the stock of usable crude - that is, oil inventories over and above that needed to keep the pipelines, tankers and refineries operating."
Increasing demand
Over the past year, he said, owners of inventories continued to bid for oil, but their attempts to replenish their owned stocks were largely thwarted by increases in demand from China and other emerging economies.
Greenspan said financial investors began to unwind their net long positions in July to realise capital gains amid indications of slowing global growth, removing the upward pressure on oil.
This reinforced the "demand destruction" caused by high prices sustained for long enough to allow consumers and businesses to change their behaviour.
However, Greenspan said the underlying supply/demand balance suggested "we will not go back to $80 or lower". Once the current economic downturn was over, "oil could go back to $150 or higher" unless oil producers significantly increased their capacity.
But he said: "Future price increases will probably be stretched out over a longer period of time than the increases from mid-2007 to mid-2008."
http://www.gulfnews.com/business/Bu...e/10236581.html |
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| tangotango99 |
quote:
Originally posted by robrecht
Greenspan knows a thing or two about markets:
"The recent fall in the price of oil is primarily the result of investors unwinding speculative positions that helped drive up oil prices earlier this year, Alan Greenspan has told the Financial Times.
The former Federal Reserve chairman said speculation was "importantly responsible" for the rapid move up in oil prices in late 2007 and early 2008.
But he said this was "good speculation" of the kind that ultimately moderates a change in prices, and not "bad speculation" of the bubble-creating kind.
Greenspan said financial speculation in oil was unlikely to resume in the near term and "there is little prospect of a renewed spike in oil while cyclical weakness continues".
If he is right, central banks around the world need not worry about the risk that oil prices might rebound in the absence of a positive surprise on global growth. All other things being equal, this would imply a looser path for monetary policy.
Greenspan said that while the long-term rise in oil prices was "wholly a physical phenomenon", financial speculation influenced the "timing and profile" of price increases.
"Financial speculation did play a significant part in the rapid increase in oil prices," Greenspan said.
From 2004 onwards financial investors identified a one-time opportunity to profit from the expected increase in the price of oil caused by pressure of mounting demand on constrained supply.
"It was classic stabilising speculation," he said. "It brought forward the price increase that would have otherwise taken place over a much longer period of time, reducing demand sooner and ultimately cutting the top off the intermediate peak price."
Many experts reject the idea that financial speculation played a significant role in driving up oil prices, arguing that it did not affect the underlying balance of supply and demand for oil.
Greenspan disagrees. He said the data suggested that financial investors from 2004 onwards built up a large net long position in crude oil futures.
The counterparties to their net long positions were owners of oil inventories, who in effect sold forward some of their existing stock of oil.
In order to compensate, the owners of oil inventories stepped up their acquisition of new oil. "This showed up as a significant rise in the stock of usable crude - that is, oil inventories over and above that needed to keep the pipelines, tankers and refineries operating."
Increasing demand
Over the past year, he said, owners of inventories continued to bid for oil, but their attempts to replenish their owned stocks were largely thwarted by increases in demand from China and other emerging economies.
Greenspan said financial investors began to unwind their net long positions in July to realise capital gains amid indications of slowing global growth, removing the upward pressure on oil.
This reinforced the "demand destruction" caused by high prices sustained for long enough to allow consumers and businesses to change their behaviour.
However, Greenspan said the underlying supply/demand balance suggested "we will not go back to $80 or lower". Once the current economic downturn was over, "oil could go back to $150 or higher" unless oil producers significantly increased their capacity.
But he said: "Future price increases will probably be stretched out over a longer period of time than the increases from mid-2007 to mid-2008."
http://www.gulfnews.com/business/Bu...e/10236581.html
Mr Gloom & doom aka Al Greenspan is just trying to up-stage Bernake with his gloom&doom comments.He not to long ago presided over a great economic period but his arrogance and poor judgement to up the interest rate spiral down the economy. |
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| robrecht |
quote:
Originally posted by tangotango99
Mr Gloom & doom aka Al Greenspan is just trying to up-stage Bernake with his gloom&doom comments.He not to long ago presided over a great economic period but his arrogance and poor judgement to up the interest rate spiral down the economy.
How does your analysis of the crude oil market differ from Greenspan's? The biggest variable I see at this point is the value of the dollar. Maybe a little less demand over the short term, maybe a little more supply, and hopefully no major wars. |
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| tangotango99 |
quote:
Originally posted by robrecht
How does your analysis of the crude oil market differ from Greenspan's? The biggest variable I see at this point is the value of the dollar. Maybe a little less demand over the short term, maybe a little more supply, and hopefully no major wars.
There have been anxieties about the steadiness of production coming from Russia, Venezuela, Nigeria and Iraq.I will agree with you on the value of the dollar.What do you mean by "hopefully no major wars"?. Russian act of aggression against Georgia had zero affect on oil prices,it was not a major war but keep in mind Geogia is part of a major pipeline to the west. |
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| robrecht |
quote:
Originally posted by tangotango99
There have been anxieties about the steadiness of production coming from Russia, Venezuela, Nigeria and Iraq.I will agree with you on the value of the dollar.What do you mean by "hopefully no major wars"?. Russian act of aggression against Georgia had zero affect on oil prices,it was not a major war but keep in mind Geogia is part of a major pipeline to the west.
Oil is currently up over $4 today, in part because of fears that there is no sustainable cease-fire. So far, no loss in supply that was not able to be made up with diversion through parallel pipelines. A major war in this context would be very loosely (and rather circularly) understood as a significant and sustaiined interruption in oil supply. |
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| robrecht |
While some spot prices have been below $100/barrel for a week or so, Thursday, Friday after hours, and again today futures were trading briefly at $99.99 a barrel. This despite OPEC claiming earlier this week that they would cut production by 500,000 barrels/day to the level that they had previously claimed they would limit production.
How low do people think crude oil will go?
On a related note, Notre Dame just recovered a 2nd fumble in about 10 minutes, the first stopping Michigan from scoring, and running with the 2nd to an ND touchdown. 35-17. Woo-hoo! |
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| bigdadi |
| I think oil will go to as low as 75.00/barrel. |
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| robrecht |
quote:
Originally posted by bigdadi
I think oil will go to as low as 75.00/barrel.
This is very realistic. I like to look at it from two perspectives.
Even apart from the dynamics of the oil market, if we just look at the decline in the dollar since 2001, we would already be below that price if the dollar can continue its recent gains and eventually regain it's 2001 values. For example, if the value of the dollar were to regain 2001 levels (using the Euro as the comparator), oil would currently be trading at $55-$60/barrel.
Movement in the dollar since early July of this year now only accounts for about 18% of the price difference in oil since July's high point. Prior to this past week, the changes we were seeing in the cost of oil were about 1/3 due to strengthening of the dollar and about 2/3 dynamics of the oil market itself. In the past few days, we've been seeing even more of a change in actual oil market dynamics so I'm not surprised that OPEC is paying more attention.
Unfortunately, the third perspective is to realize that much of the change in the oil market dynamics (and the strengthening of the dollar) is merely reflecting decreased world demand for oil due to a larger global economic downturn.
EDIT: Revised calculations with oil futures trading below $92/barrel (9/15 11pm). |
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| robrecht |
quote:
Originally posted by bigdadi
I think oil will go to as low as 75.00/barrel.
Closed below $75/b today! :awais:
Too bad it's because of drastically reduced demand projections based on our miserable global economy. :8: |
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| bigdadi |
quote:
Originally posted by robrecht
Closed below $75/b today! :awais:
Too bad it's because of drastically reduced demand projections based on our miserable global economy. :8:
Gasoline price per Gal. goes down too slow. |
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| N_Jay |
quote:
Originally posted by bigdadi
Gasoline price per Gal. goes down too slow.
Why?
Yes, I know it is slower than you like. |
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