Why are Oil Prices Still Climbing?

[RedRagTop]

If you had to select from the above, which way do you lean?

[Mac]

Hope you don't mind if I add an option? ;)

-Mac

[Vettefan87]

Yeah just the other day I found out the owner of where I work was making 28 cents a gallon on regular fuels, and mid-grade, and premium he makes even more. Oh well we have it better off then other countries. It just really tickes me off when one morning it can be 2.18 for regular, then that evening be 2.35 :mad .

[Eden72Vet]

I believe speculators are driving up the price of oil. I think OPEC wants to control prices as much as anybody, because they fear alternative energy sources. Once more efficient cars are created that run on alternate, cheaper fuels, their countries will lose revenue.

Just my opinions from my experience in the Energy, Natural Gas markets.

[magoo]

I owned a service station from about 1969 to 1984. Now I know that's goin back pretty far but I was makin $.06 a gal. when I started and $.04 a gal. when I sold. I had no where near the amount of traffic to draw from that there is today. And I still couldn't compete with the new mini mart trend. I had a great repair business to go with it. Try to find someone to check your oil, tire pressure or clean your windshield today. Put my vote on "greed" at all levels.

Mike

[RedRagTop]

Hope you don't mind if I add an option? ;)

-Mac


I'd be happiest to have your input here, Mac. You are topping the sharpest of the sharp in ANY of the vette forums, so I know it'll be valid.
Me, I lean towards the profiteering of the market traders, using ANY possible reason to inject uncertainty into the whole supply/weather/demand situations in order to drive up the shares so that they can endorse the buy high, sell higher strategy. Problem is, we are the ones biting the bullet from this. And I KNOW you realize what this does to all of our infrastructure. Pay up, or what?
No choice without goverment intervention in drastic measures. For example, much like the Mad Cow thing, is Canada unable to supply it's own (1/10 the pop. of the USA mind) with it's own, abundent, cheap supply of oil? After all, these resources are non renewable so whatever we part with will not grow back...

[Mac]

I appreciate your vote of confidence but I'm sure there are others who could shed more light on the particulars of this subject than I can.

There's so much to the oil question, it's hard to plunk it all down. Many of the issues, we've already covered on the Edge but there's a couple of things which I haven't delved into... like what would happen to the relationship between Canada and the Excited States if Alberta decided to slap controls on development, exploitation or shipping of our oil reserves... At present, we're the largest supplier of oil to the market in the United States. Imagine if the tap was shut off...

Unlike the Middle East, Alberta's oil sands aren't as simple to tap as drilling a hole in the ground and pumping away. The processes to extract and separate the oil are relatively costly although research has improved the efficiency of those processes. The burden of the costs of exploration and development are only viable if the cost of oil is high. From that perspective, the high cost of oil acts as an impetus to further development. There’s no question that the oil reserves will someday be extracted. It's been estimated that we're sitting on the second largest oil reserve on the planet.

Given the somewhat adversarial trading relationship between Canada and the USA of late, I wonder how our trading partner would react if the cost of Canadian oil was markedly different between here and south of the border? I can recall one of our prominent Edge regulars commenting on how softwood lumber tariffs were part of the give and take of international commerce. How about some take for Canada instead of always giving?

-Mac

[younggun]

how about not taxing gas! I thought that the government didn't tax nessedies, and were I live if you don't have a car you can go any where. I no this is never going to happen but what about a little brake on the tax, here in Ny tax on everything is horrible, you can barely fill up a whole tank without going to the bank first.

[vett boy]

If more people drove vetts look at the gas saved over suv's.C-5 &6 @28plus mpg.

[Grizzly]

I appreciate your vote of confidence but I'm sure there are others who could shed more light on the particulars of this subject than I can.

There's so much to the oil question, it's hard to plunk it all down. Many of the issues, we've already covered on the Edge but there's a couple of things which I haven't delved into... like what would happen to the relationship between Canada and the Excited States if Alberta decided to slap controls on development, exploitation or shipping of our oil reserves... At present, we're the largest supplier of oil to the market in the United States. Imagine if the tap was shut off...

Unlike the Middle East, Alberta's oil sands aren't as simple to tap as drilling a hole in the ground and pumping away. The processes to extract and separate the oil are relatively costly although research has improved the efficiency of those processes. The burden of the costs of exploration and development are only viable if the cost of oil is high. From that perspective, the high cost of oil acts as an impetus to further development. There’s no question that the oil reserves will someday be extracted. It's been estimated that we're sitting on the second largest oil reserve on the planet.

Given the somewhat adversarial trading relationship between Canada and the USA of late, I wonder how our trading partner would react if the cost of Canadian oil was markedly different between here and south of the border? I can recall one of our prominent Edge regulars commenting on how softwood lumber tariffs were part of the give and take of international commerce. How about some take for Canada instead of always giving?

-Mac


Being from the Excited States I think perhaps Canadians would do well to consider the prospects of a decreased number of American dollars in their economy.

I don't want to start a fight here, but this nonsense about how much energy the U.S. uses, and for that matter, practically everything else is just that, nonsense. I really believe that the rest of the world does not understand that few more dollars for gasoline is really not going to change how we do things. If it did, a two ton pickup truck would not be the best selling vehicle in America

Our economy has moved from the production of things to the production of ideas. Let the rest of the world produce things, there's lots of money in it, our money. Even our so called poor have cars, wristwatches and dvd players.

And if you do decide we are not your best partner, remember it is a lot more trouble to send 40 tons of wheat to Europe than it is for us to send a Kenworth up there to pick it up and bring it back.

I have spent some wonderful times in your country and have found your citizens to be equally nice. I would hate to see world's longest unguarded border and all that that means in terms of trust and friendship ruined by some Canadians feeling that they are becoming the 51st state.

[Mac]

That didn’t take long, did it? :(

It’s interesting you should mention trust and friendship. A big part of our friendship is our trading partnership. Trading partnerships are supposed to be exactly that- partnerships. If one partner attempts to control every aspect of every transaction, that’s not a partnership- that’s economic blackmail.

That’s why I disagree so strongly when the US persists in levying softwood lumber tariffs despite ruling and ruling which say such tariffs are contrary to NAFTA and WTO agreements. Same thing with the supposed mad cow non-crisis; protectionist policies designed to garner and protect marketplace... economic blackmail.

The economies of the USA and Canada are inexorably linked on many levels. In other words, what would hurt Canada would inevitably hurt the Excited States. In some items, we compete so trade disputes are more or less inevitable but if only one partner in this relationship deals in bad faith... and it isn’t Canada. We honour our agreements; et tu, Uncle Sam?

Do you think anyone else would be interested in our oil? Do you think we couldn’t find other markets for our products if we had to? Canada competes very well globally... which is why our biggest trading partner gets a little nervous and likes to bluster about how much it could hurt us if the flow of the almighty Greenback was interrupted.

Grizzly, instead of starting a fight, why not end one? The US needs to reexamine it’s stance on conflicts like the softwood lumber dispute & the mad cow scare.... and start honouring it’s agreements & commitments.

-Mac

[Grizzly]

That didn’t take long, did it? :(

It’s interesting you should mention trust and friendship. A big part of our friendship is our trading partnership. Trading partnerships are supposed to be exactly that- partnerships. If one partner attempts to control every aspect of every transaction, that’s not a partnership- that’s economic blackmail.

That’s why I disagree so strongly when the US persists in levying softwood lumber tariffs despite ruling and ruling which say such tariffs are contrary to NAFTA and WTO agreements. Same thing with the supposed mad cow non-crisis; protectionist policies designed to garner and protect marketplace... economic blackmail.

The economies of the USA and Canada are inexorably linked on many levels. In other words, what would hurt Canada would inevitably hurt the Excited States. In some items, we compete so trade disputes are more or less inevitable but if only one partner in this relationship deals in bad faith... and it isn’t Canada. We honour our agreements; et tu, Uncle Sam?

Do you think anyone else would be interested in our oil? Do you think we couldn’t find other markets for our products if we had to? Canada competes very well globally... which is why our biggest trading partner gets a little nervous and likes to bluster about how much it could hurt us if the flow of the almighty Greenback was interrupted.

Grizzly, instead of starting a fight, why not end one? The US needs to reexamine it’s stance on conflicts like the softwood lumber dispute & the mad cow scare.... and start honouring it’s agreements & commitments.

-Mac

I find that the smaller of the two partners in a deal often raises the issue of economic blackmail. If Canada can complete globally and I have no doubt that it can, why does it submit to what you call economic blackmail? It seems to me to be just accepting terms of the deal.

I am not familar with the softwood issue but would mention the mad cow business. Having grown up on a farm, I can think no more catastrophic incident then having your product suspected of being deadly. This is one of those things that raises emotions to beyond any level of reason. I wish there was an easy answer/cure but there isn't except isolation.

I am curious about the softwood issue and will do some investigating.

..............................Griz

[RedRagTop]

Didn't Bush just butt in on Canada's plan to sell oil to China, claiming that Alberta oil was part of the USA's energy strategy? Rather presumtuous, no?
And what aboot this whole idea of sending that pot-seed guy from Vancouver to the States to face life imprisonment for an offense that wouldn't get him jail time up here? Can the US just reach into our country and dictate policy now?
The marina where I keep my new boat (it has an L-98 in her :) ) has several members from Ohio, Michigan etc. and they seem like very nice people. It's the policy of the US government I tend to eschew, not the citizens...

[tomtom72]

This is just MHO. The oil spot market just like any futures' market is driven as much by fact as by what buyers & sellers "feel" is going to happen. Humans are doing the buying & selling. Humans can be greedy, or just want max ROI. No one has looked for new sources because the present supply was enough to keep everything in line. When the demand from the developing countries like PRC & India & South Amer. caught up with the existing supply things changed. It's not just U.S. demand; it's also everyone else's need that has spiked oil prices. OPEC had a vested interest in stable oil prices but did a lousey job of anticipating future demand from those other places, not that they could do anything about that future demand. OPEC's cheap supply curbed exploration so now when the traders see no new supply to them it's time to make $ with the existing supply. Traders know how long it takes to bring additional supply to market so they are making money on the real supply plus any imaginary ghosts under the bed. It's part fact & part snake oil salesmanship. That is they way any market works, fact & fiction or fact & perception.

JMHO, Tom

[RedRagTop]

Well put.
It makes me a bit concerned that the leader of the most powerful country on earth is in the oil business, though...

[jrose7004]

Kind of tough to pay these higher gas prices when you read about record profits for the oil companies!

[RedRagTop]

Exactly! Also, the banks, the insurance companies, all crooks!

[RoadReady]

Where is the choice for All Of The Above ? :mad

[RedRagTop]

It's open for mutiple votes...

[tomtom72]

The price we pay for retail gas is driven by the same forces that drive the crude oil spot market. So ofcourse refiners are making a huge profit, it's just a logical extension. The refined spot market works just like the spot crude market.

In the same breath we will always be assailed by these types of headlines about the spot market prices. Remember that the real long term outlook is in the futures contracts looking six months out, not in the spot market. The prices reported daily are the spot market, which make for better news copy. A truer gauge of these prices are found by looking to the longer term delivery contracts. These prices are not as news worthy because they are boring hence they don't get much reporting. Hype sells newspapers and drives 6PM news ratings.

The only reason that spot markets exist is for the speculator in commodities, trading on a minute by minute basis...everyone makes $$$. No one is being a crook, the free market is well we all know about that.

When the price of a barrel of crude gets to the point of making exploration profitable then we will have more supply. That will not affect the price of a gallon of refined product if refinery capacity doesn't keep up with demand for that product. You see that the market & pricing is not one demensional. There are also the man made factors that go into pricing. It's just not simply a yes or no answer. The market economy model never was.

Tom

[Mac]

If Canada can complete globally and I have no doubt that it can, why does it submit to what you call economic blackmail?
Part of it is fear of loss of market and fear of change. Part of it is the lack of intestinal fortitude of our Liberal government. Our economy is smaller and more resource based; therefore (the government believes) less tolerant of disruption. If both trading partners were complying with the terms of the deal, there would be less of an issue. How much of that is government versus business?

Having grown up on a farm, I can think no more catastrophic incident then having your product suspected of being deadly.
The problem is... BSE isn't out of control and it never has been in North America, nor will it be. Our food inspection policies (both sides of the border) worked and everyone acknowledges as much. The isolation was about protection/enhancement of market share, not protection of consumers. After analyzing Canada's food inspection procedures, the US government was ready to reopen the border when the Cattlemen's Associate got an injunction keeping it closed. Doesn't that sound like the profiteering to you? Drive your competitor out of business by injunction and what happens to his market share? It doesn't just disappear.

I am curious about the softwood issue and will do some investigating.

..............................Griz
Here's a good primer...
http://en.wikipedia.org/wiki/US_-_Canada_softwood_lumber_dispute

Sorry about quasi-hijacking the thread but we're talking about the same thing... the trading relationship between Canada and the USA. Oil is a resource commodity and the USA has, as RedRagTop stated, indicated they consider Canada as part of their long-term energy supply. Don't read too much into that. That doesn't mean the Excited States will be stomping across the border to assume control anytime soon. I'm sure Dubya considers other sources as part of the overall package as well. Canada, as a sovereign nation, needs to do a better job of looking out for it's future. Unfortunately, under Liberal rule, that isn't likely to happen anytime soon.

-Mac

[Dakota kid]

What about taxes........:crazy

[RedRagTop]

Dammit! Will you people stop driving up oil prices?
How much money do Bush and his Texas cronies really need, anyway?

Oil prices hit $62.69



By GILLIAN WONG

2005-08-08 07:50:00






SINGAPORE (AP) - Crude futures rose to a new high Monday, reaching nearly $63 US a barrel in Asian trading, as the U.S. government announced the closure of its embassy and consulates in Saudi Arabia due to security threats and on continued concerns that earlier shutdowns of U.S. oil refineries would reduce supply.

[The Drakester]

Liberals are blaming the Right. Conservatives are blaming the Left. Most add in the supplier's greed or the trader's greed but not many want to blame the user of petroleum products - that would be us!--

The simple fact is that supplies are down and demand is up. Traders will not pay more than they have to - speculators make their money on betting correctly. If they offer $63 a bbl for January crude and something happens and prices soar - they make out big time. If they fall they are screwed!

In reality, on an inflation adjusted basis, gas is cheaper than it was in the early 80's. You want to really see high prices go to say, Iceland where it is ~$6 a gal.

[invinceablevett]

I want MAC to become our new Prime Minister !

This FREE-TRADE thing is Bogus !!!!!!! How come there is only one black convertible C6 for sale in our neighbourly listings?...;) ........Life's not fair!

Getting back to gas prices......it's all taxes up here $ 1.084 (CAN.) per litre that equals $3.25 (US) per gallon...........ouch!!!!.When I was visiting R.I I paid $2.45(U.S.) per gallon this summer.

I live 2 blocks away from work,and my rentals are all in a 4 mile radius :D That's one way to cut gas costs.

[Mac]

Naw... I'm too honest to stand for office. In order to succeed in politics, it seems like you have to be crooked enough to sleep in a spiral staircase without getting cramps. :eek

-Mac

[AUSSIEVETTEMAN]

Hey Guys,

Your Corvette Brothers in Australia are paying up to $1.15 (AU) per litre for premium unleaded! :mad :(

That equals around $4.31 (AU) per gallon or $3.20 (USD).
Someone run a gas hose from LA to the east coast of OZ! ;LOL

:beer

Tony

[RedRagTop]

I want MAC to become our new Prime Minister !

This FREE-TRADE thing is Bogus !!!!!!! How come there is only one black convertible C6 for sale in our neighbourly listings?...;) ........Life's not fair!

Getting back to gas prices......it's all taxes up here $ 1.084 (CAN.) per litre that equals $3.25 (US) per gallon...........ouch!!!!.When I was visiting R.I I paid $2.45(U.S.) per gallon this summer.

I live 2 blocks away from work,and my rentals are all in a 4 mile radius :D That's one way to cut gas costs.

Same here, 3 blocks from work so I don't even drive most days. Plus, I got a 20 cents per litre discount card with my new Silverado so that helps now that I drive 100 klicks to the marina.
Thing is, the new 5.7L boat sucks 'er down pretty good and heating season is coming.
Anyone who claims Bush and friends isn't making a killing off this is in denial...

[jrose7004]

Did I just hear that oil hit $64.90 a barrel!

[Johan]

Wait until you have to pay $6.15 per gallon, like I did earlier today...

[81kix]

I checked off all of them, WWlll is already here and has been here since 911.
WWl and WWll they had to change daylight savings time and they are doing it again.

Janine

[jrose7004]

Some guy today was ranting and raving about the reason why the gas prices are so high is because we're all still driving SUV's and if we all drove electric cars or hybrids the demand would go down and so would prices! I heard enough and told him that if demand went down prices would go up to make up for the lost profits the oil companies!:crazy

[wallyknoch]

One word answers the question, GREED!


Obviously there is not any shortage. A favorite statement. If there was, where are the long lines. This is COMPLETE BS. :mad

[RedRagTop]

One word answers the question, GREED!


Obviously there is not any shortage. A favorite statement. If there was, where are the long lines. This is COMPLETE BS. :mad

I understand the arguments relating to supply/demand economics but also contend that speculators use any excuse, no matter how remote, to drive up share prices in order to cash in on the commodity increases. If there are no valid factors, they exaggerate or create reasons to make things sound worse and drive up the prices. Nobody lies about factors that would result in a lowering of commodity prices, right?

[Edmond]

As for me, I cut down on everything. With gas prices up, I'm not buying anything unless I absolutely need it and I eat out less and less.

I think all of us know that there are cars out there that don't need gas to run. Everyone knows it, even the big oil and car companies. But that technology will never see the light of day because they would go out of business.

[grapeknutz]

It's definitiely supply and demand we are using more and China's economy is now on the up swing and that translates to more fuel demand. Also here in the USA we do not have enough refineries to make what we need. So if anyone is to blame it's the NIMBY's and enviromentalists that is causing the high prices. ( off soap box)

[Eddie 70]

I voted greedy speculators. Oil companies are making record money right now. Why not, the pres is one that stands to benefit from the high oil prices too.

[RedRagTop]

It's not only the suspension of production that's causing concern, it's the fact that we could see potential damage to the platforms, which would cause longer disruptions to production," said energy analyst Victor Shum of Texas-headquartered Purvin & Gertz in Singapore.

"It looks like the perfect storm to drive prices up," he said.

Katrina grew from a smallish storm threatening Florida into a menacing hurricane in a matter of days.

On Friday, the Nymex crude oil contract fell more than a dollar to $66.13 a barrel as many traders took profits on forecasts that Katrina would likely little affect U.S. refineries and production facilities in the Gulf of Mexico.

"But then the storm reloaded over the weekend, gained strength and set on a path toward the oil facilities," Shum said. "The people who sold on Friday are probably kicking themselves now

[RedRagTop]

It IS the speculators taking profits I tells ya. ANY little thing to drive up the price, shrug off anything that would lower it. This thing has to be brought under control...

Crude-oil prices rise to US$68 a barrel amid tension over Iran, Nigeria



2006-01-20 14:14:00





Oil traders shout transaction during early trading activity on the floor of the Merchantile Exchange in New York, Wednesday Jan. 18, 2006. Crude oil prices gained as traders worried that possible sanctions against Iran and unrest in Nigeria could threaten global oil supply. (AP Photo/Bebeto Matthews)
WASHINGTON (AP) - Oil prices climbed to $68 US a barrel Friday in jittery trading influenced by the Iranian nuclear dispute, unrest in Nigeria and new threats of terrorist attacks in the United States by al-Qaida.

Worries about possible supply disruptions are now far more important to the market psychology than actual supply levels, analysts said.

"The market is just gripped with anxiety about Iran," said oil broker Andrew Lebow of Man Financial in New York.

"It's also concerned about Nigeria, where we actually have lost barrels. And we've also lost export barrels from Russia because of cold weather in Siberia that is driving up demand."

That said, Lebow added that the market is "completely decoupled" from the fundamentals of supply and demand.


On Thursday, energy traders brushed off a U.S. government report that showed rising domestic inventories of oil and gasoline and sent crude futures to their highest close in four months.

[vett boy]

I love it !! I've owned oil stocks for years.Come on Mobil !!