Oil Prices Hit Record $66.15 Per Barrel

[Sean]

http://news.yahoo.com/s/ap/20050812/...NlYwMlJVRPUCUl

Crude oil prices remained in record territory after soaring to new highs Friday past $66 a barrel as reports of new U.S. refinery outages rekindled fears that gasoline supplies in the world's biggest consumer would struggle to meet rising demand. A spate of refinery glitches, an unusually active hurricane season in the U.S. and concerns over Iran's decision to resume uranium conversion activities weighed heavily on people's minds, pushing prices upward, analysts said. Tropical Storm Irene was expected to intensify Friday and possibly reach hurricane strength as it approached the U.S. East Coast, forecasters said. Irene's potential threat to land was still uncertain, as its path had shifted east, according to forecasters at the National Hurricane Center in Miami. Forecasters said the storm could strike the coast anywhere from South Carolina to New Jersey. With bullish sentiment unabated and crude prices hitting consecutive highs this week, analysts expect front-month crude contracts to test the $70 a barrel threshold. Light, sweet crude for September delivery gained 23 cents to $66.03 on the New York Mercantile Exchange, after hitting a new record high at $66.15 a barrel in earlier trading. Gasoline was marginally down at $1.9480 a gallon while heating oil was down nearly a cent at $1.8904. In London, Brent crude for September delivery was trading at $65.69 a barrel, up 31 cents. Analysts said gasoline demand, currently at its peak in the U.S. summer driving season, was pushing crude's gains. Last week, U.S. gasoline demand picked up by 1.4 percent from a year ago, according to government data.

Why do you think consumers in the US seem to be un-phased by the climbing prices? Who do you blame for the rise in prices? Is it the lack of refineries? Are the companies full of it when they blame the threat of terror in the Middle East? Will this help encourage alterative fuel source adoption and hybrid car growth?

[monty of ll]

Sean- Good topic but I can't answer your questions. I can offer some of my own questions and comments in response though, which I feel are pertinent to this issue.

I believe that the U.S. is only capable of supplying less than 50% of it's oil consumption demands now. Anybody know for sure what the % is?

Are we supposed to believe that the price is reflected by supply and demand? Remember before the Gulf War when the price was pushed down to something like $14 a barrel for Iraqi oil in order to bankrupt Iraq? That should tell us all that oil is not a commodity that will be traded with any relationship to what it's worth. Opec sets the price and it goes from there so if Opec chooses to set the price at an articifically low price then the commodity won't be traded at over $66.

Anyone have any ideas what that's all about?

Oh, and I think that consumers 'are' phased by the high prices but they are powerless to do anything about it. Except of course those who drive the big gas guzzlers around and they aren't phased because they see the gas bill as quite insignificant. Actually, if one compares the price of gas to the 60's/cost of living, it's still not a bad deal. Cheaper than bottled water!

[tman_ndsu08]

Quote by: Sean Why do you think consumers in the US seem to be un-phased by the climbing prices?

Because it's simply not breaking their banks, yet.

When gas was 1 dollar/ gallon, it would cost $15 to fill up most cars. Now it costs $30. That simply isn't unreasonable, yet.

When it costs $50 to fill up a car, I think you might start seeing things happen.

Who do you blame for the rise in prices?

There is not enough supply, it's as simple as that. Period. I saw something on TV that said that 5 million barrels of gasoline are refined every day and Americans are consuming over 95% of that each day. There simply isn't enough.

Is it the lack of refineries?

I can't officially say no, but I would guess there simply isn't enough oil coming into the refineries to meet gasoline demands.

Are the companies full of it when they blame the threat of terror in the Middle East?

You can blame whoever you want, there isn't enough supply.

Will this help encourage alterative fuel source adoption and hybrid car growth?

I think there is going to be a big push for ethanol in the near future. The problem with ethanol, of course, is that you lose gas milage. So you're really not gaining anything. It's nothing more than a farm subsidy.

Hybrid cars might become more popular in the future if gasoline prices continue to increase to extreme levels. In order for it to be worth the price of the expensive hybrid car, gasoline prices must be much higher than they are now.

[jose]

The diesel engine was origanally designed to run on peanut oil,many people are now recycling thier used cooking oil into Bio diesel,which is really simple to do
Making BioDiesel
- It’s a Piece of piss http://www.schnews.org.uk/diyguide/h...ebiodiesel.htm
i dont think its demand thats pushing up the price but rather the futures dealers betting on a possible
sanctions war with Iran

[brent6339]

Sorry, just testing to see if anything will post since I have been having difficulty getting started.

I don't think Americans will be phased too much, at least not until the proce climbs above $3 a gallon. Let's face it, people in this nation love their automobiles and that is unlikely to change. The current price for hybrids is not justified given the current prices. You would be better of with a fuel efficent car like a Honda Civic.

In terms of blame, the factors are complex. I think the current spike in oil prices is largely a result of hype, not supply and demand. Right now the stock market is producing paltry returns and there are many investors rushing to buy oil since they are seeking greater returns. Granted, there is a much greater demand, but the numbers we are seeing right now a bit inflated. This is very similar to what we are seeing with the housing markets right now. There is a need for housing, but the spike in that market is currently being driven by speculation, just like with oil. However, the housing bubble will bust, but I do not think that oil will drop below $50 a barrel ever again. China and other emerging markets will drive the price of oil up even more over the next decade. The passage of the energy bill shows that oil is here to stay and alternative fuel sources will have to wait. The bill demonstrates that the U.S. has no intentions of becoming dependant on foreign sources of oil. U.S. policy seems geared towards sucking the rest of the world dry, then commanding the market using our own domestic sources of oil.

[PatrickHenry]

Quote by: brent6339 The bill demonstrates that the U.S. has no intentions of becoming dependant on foreign sources of oil.

Like we aren't already?

[brent6339]

Well let me clarify, the U.S. has no intentions of remaining dependant on oil, or becoming totally dependant on foreign oil. We were far more dependant during the late-70s when we had no real oil reserves. The energy bill will provide massive tax breaks to oil companies that retool and build new facilities to tap domestic oil sources (part of the reason so many people are investing in oil right now). Maybe this is not the best direction to take, but it sure to reduce our dependance long-term.

[monty of ll]

Patrick- We can only shake our heads and wonder why so many people are so uninformed about the future of U.S. oil consumption.

http://www.nrdc.org/air/transportation/gasprices.asp

"America's oil habit not only pinches our pockets and fuels OPEC's rising profits, but it also threatens our economy, national security and environment. According to the Department of Energy, the United States currently uses nearly 20 million barrels of oil a day, importing 55 percent of it. We spend more than $20 billion each year on oil from the Middle East. Twenty years from now, U.S. consumption will rise to 28.3 million barrels of oil a day, with 70 percent of it imported. This heavy reliance on foreign oil makes America increasingly dependent on some of the least stable, undemocratic countries in the world."

Ahhhh, maybe they just don't care. Or more probably they think that sites such as this one are just a commie plot to show that the U.S. really cares about M.E. oil. Why every good American should know, the U.S. is visiting in the M.E. because it wants to harvest Iraq's cabbage crop all for itself!

[brent6339]

As I stated before, consumption will increase dramatically, prices will go up, and oil is trading at price inconsistent with it's true value. I also stated that U.S. policy is geared toward sucking the world dry before tapping all the resources of this nation. So that we should agree on. However, our dependance of oil is actually less than it was 25-years ago, make no mistake. Your figures you are using are only good if we continue down the path we are on. They are not reflective of recent legislation designed to soften our dependance so as to not cause such a disruption to our economy. We are to blame for this crisis since so many people seem hell bent on driving such massive SUV's. How can anyone who drives an SUV really be angry about oil prices, it is partly their fault.

[SteveA]

This article shoud be renamed to:

Dollar hits record low of 1/66th a barrel of oil

[PatrickHenry]

Quote by: SteveA This article shoud be renamed to: Dollar hits record low of 1/66th a barrel of oil

Very observant, Steve. Dollars are only numbers in a semi-controlled database. (Bank accounts)

Crude oil is real money.

[SteveA]

Quote by: PatrickHenry Crude oil is real money.

Thanks. You can tell a real economist from a brainwashed one by seeing whether they talk in tanigble value or etherial economic indicators

[CallousGiant]

I thought the rise in oil prices was due to the rapid economic growth of some 3rd and 2nd world countries such as China....

As more countries are growing, they need oil, so the demand rises, so the prices rise.

Isn't that the reason?

[SteveA]

Quote by: CallousGiant I thought the rise in oil prices was due to the rapid economic growth of some 3rd and 2nd world countries such as China.... As more countries are growing, they need oil, so the demand rises, so the prices rise. Isn't that the reason?

Yes, oil has its own markets with demands but you can also look at housing or metal markets or almost anything we have to compete globally and you'll see a similar effect.

There's a common demoninator (literally) in all these - the dollar.

Here, check out metal prices.

www.metalprices.com

The reason why is because the dollar is at most paper and at least bits in a computer and occasionally it's based upon nothing of any tangible value.

As long as noone takes advantage of the good faith we've extended to the value of a dollar, people play fair and trade physical value for physical value and the dollar is trusted to remain tradeable for these things but the dollar can just as easily be abused and someone can print up money and buy all our hard labor for mere paper (or changed numbers on a bank statement).

Back when we were tied to gold, you couldn't just "print up" more money and things remained relatively flat without inflation. But as soon as they began dropping the requirement to have it attached to anything tangible, we began seeing ice cream no longer 5 cents.

Someone might say that's just inevitable because of inflation. Nope. Significant inflation doesn't happen when you're working with things of real value.

If you look at housing prices over time, they've shot up. If you look at gold prices over time, they've shot up but compare the two against each other and you'll find that more or less, the same amount of gold 70 years ago still buys someone a home and there is little effect of inflation.

We were already warned about this too by the founder and the reference in the Constitution to Congress coining currency and regulating the value was only referencing the legal exchange rate (for purposes of public finances) between gold and silver coins at the time. If someone pays a public debt in gold or silver, the ratio of what they are worth needs to be determined if they are to be used interchangibly.

They had to pass a law and literally make it illegal to trade gold in order to get people to use the dollar. They promises to allow people to be able to exchange the dollars back for gold at some point (the Gold Standard) but then they reneged on this deal and effectively stole most of it (and later allowed people to own gold, just not use it for trade).

Anyway, as soon as they reneged on letting people exchange their money for a fixed amount of gold, the dollar began dropping in value, and still does to this day. It drops faster when they create more dollars and don't take them back out of circulation, or when people feel less confident in its value and try to get rid of theirs. Look back at most any currency in history and if it wasn't physically based on something rare or valuable, it's likely almost worthless today except for collectors. The dollar will go that way someday as well, but likely they'll just make some other law and force people to trade something else (the value of this currency would likely be the "ability" to not go to prison if you used it).

[bishop]

Quote by: sean Why do you think consumers in the US seem to be un-phased by the climbing prices? Who do you blame for the rise in prices? Is it the lack of refineries? Are the companies full of it when they blame the threat of terror in the Middle East? Will this help encourage alterative fuel source adoption and hybrid car growth?

global oil supply is on the decline. the lack of refining capacity explains why oil is priced differently in different parts of the country, but it does not answer why oil prices have been increasing. instability in iraq is a better excuse, yet it still does not answer why prices are increasing... keep it simple - it's all about supply and demand. global supply is growing much faster than in years past, and will continue to do so. meanwhile, it's been quite a long time since a new oil well has been discovered.

tell ya one thing, steve... high oil prices certainly has NOTHING to do with our currency being fiat.


if americans wanted to help push ourselves towards alternative energies, they could invest in those companies. we also need a lot of federal support in installing the necessary infrastructure to move off of oil. hydrogen is a viable alternative to energy for cars, but we don't have any refueling stations. maybe companies will take advantage of the tax breaks offered to them, but that isn't likely to happen fast.. buying fuel efficient cars willl negate some of the impact of high oil prices for the short term.

[monty of ll]

brent, you said: "I also stated that U.S. policy is geared toward sucking the world dry before tapping all the resources of this nation. So that we should agree on."

No brent, I'm sorry but I don't think we can agree that the U.S. is sucking the world dry before tapping it's own resources. You would have to show me some proof of that claim! Where you may be getting confused is in the fact that there is much oil remaining in the world today but it's not cheap oil. In fact it's estimated that the amount of oil remaining is almost infinite but unfortunately it's not accessible and considered to never be accessible at a cost that would warrant it's extraction. I'll wait for your proof on the above.

You said: " Your figures you are using are only good if we continue down the path we are on. They are not reflective of recent legislation designed to soften our dependance so as to not cause such a disruption to our economy."

Well brent, they can legislate all they want but it's not going to make any difference where the boots meet the ground. (or the gas hits the tank) In fact some of the legislation which has taken place has been shown to be of no consequence at all in reducing U.S. dependence on foreign oil. Check the stats and you will find that the consumption rate is steadily increasing. Maybe a good little project for you would be to find a graph which shows the increase in oil consumption in the U.S. over the last fifty or so years.

But I will wait for you to provide me with some examples of legislation which you believe has made an appreciable difference.

You said: "However, our dependance of oil is actually less than it was 25-years ago, make no mistake."

Well you can be sure that I 'won't' make the mistake of believing that! That's silly brent.

You said: " They are not reflective of recent legislation designed to soften our dependance so as to not cause such a disruption to our economy."

You are going to have to explain what you are talking about there. One thing for sure is that you aren't suggesting that oil consumption will be reduced because you have already stated that it will increase!

Another thing for you to consider is the fact that there is no energy source that can take the place of oil for the U.S. In fact nuclear energy can't even make up for a lack of oil in the future. And that is especially true on account of nuclear energy not being developed soon enough to make a sizable difference.

You've got some homework to do brent!

[monty of ll]

bishop, you said: " hydrogen is a viable alternative to energy for cars, but we don't have any refueling stations."

That's one of the reasons but it's also pie in the sky because we don't have a cheap method of making hydrogen. Nulcear maybe in the future but only to a degree will it be a fix for the lack of petroleum.

[bishop]

it's currently 4 times more expensive to make hydrogen than gasoline.. however, this is brand new technology - and just like previous technologies, future advancements will lower production prices. the biggest problem with hydrogen as it is, is that the current method of production requires the use of natural gas - another finite resource. researchers have found a new way to produce hydrogen fuel without using natural gas, but right now it's in the early stages of development. the government has decided to act like a corporation when it comes to hydrogen research.. they're withholding funding until it becomes clear that this new method proves to be viable. each method will alter the way that refueling stations are designed.


that aside, there've also been promising advancements in cold fusion research. i posted about this development in the science forum. and we already have the infrastructure in place to handle that change.

[Chris]

Quote by: tman_ndsu08 When it costs $50 to fill up a car, I think you might start seeing things happen.

it does in SUVs

Quote by: tman_ndsu08 I think there is going to be a big push for ethanol in the near future. The problem with ethanol, of course, is that you lose gas milage. So you're really not gaining anything. It's nothing more than a farm subsidy.

Also if we were all to switch to ethanol, the land use we would need to create it would be too much.

[bishop]

ethanol destroys your engine as well..

tman's right, ethanol production is only possible thanks to the massive agriculture subsidies we dole out every year.. it almost takes as much input energy to produce an equivalent amount of ethanol energy... check it:

http://zfacts.com/p/60.html

gotta love how the federal government essentially directs what farmers can grow, and who they can sell to - just as if this was collectivism under stalin.. they don't let farmers compete in a free market, so they use taxpayer money to subsidize ethanol production - despite the fact that ethanol is pure shit for an oil substitute..