Kimiko,

Add to that the fact that OPEC is trying to raise the price of oil by cutting oil production to increase demad, and things really become hard to understand. I am at a loss for a good explanation.

Whitey

 

First check the price drops. The price of oil has dropped more than the price of gasoline so they are actually making more profit.

Second there was no shortage of oil or gasoline. Most of the price run was due to speculators jacking up the price. There was actually an over supply of oil and as ThronyRose explained in one of his threads the refineries were backing up with product that has a short life span.

Finally the oil companies and refineries are always way ahead of the public and government. They rightly figured the democrats were coming into power this fall and ran the prices up while the political opportunity was still there and are now driving them down to avoid getting regulations slapped on them.

I agree with all of this and point out that is the primary reason for backing President Elect Barack Obama's energy plan which centers on moving away from oil.

That and they got burned bad on their greed and got the props knocked out from under them. Everyone took their money and ran.

You got the speculators right but you're still wrong on the supply and demand having anything to do with it. It was speculation, greed and price gouging. All making hay while the political sun shined.

Kimiko brought up a great point about people making up reasons for increases or decreases. Look back at then oil was setting weekly records. Any thing from Venezuela, to pipelines in Nigeria, to increased demand on the part of China and India, Middle East tensions, and a half dozen other excuses were offered as reasons for the price increases. But all of those things and more are still happening toda and the price is plummeting.

 

It's 1.86 a gallon down the road from me! Gotta love it while it lasts!

 

Hey, hey, Mr. Economics is weighing back in with the usual misunderstanding of the market.

Nice to see you.

You haven't got a clue about the whole S & D thing. PSSST, did you look at the comments above yours about OPEC cutting production (supply) because a glut is happening (lack of demand), so they can get the price back up.

 

Yup, it's about $1.89 in Kansas.

When gas prices are high, everyone scrambles to save gas, look for alternative energy sources, and to design more fuel efficient cars. When gas prices come down, we forget about the ever present oil supply probelem we have. We are a reactionary nation, not a planning nation.

 

$1.89 in Cleveland! woohoo :]

 

$2.25 here

 

Btw, either "going green" really worked and we have less of a fuel-dependency OR we secretly are already taking more of Iraq, Afghanistan, and Saudi Arabia's oil.
Just saying...

 

Recession Slams Oil Prices


Recession Slams Oil Prices
By Mark Williams, AP Energy Writer
Manufacturing.Net - November 13, 2008

​

COLUMBUS, Ohio (AP) -- Oil prices swung wildly Thursday following a lead from Wall Street, which sank 300 points before investors flooded back into the market.
Light, sweet crude for December delivery rose $2.08 to settle at $58.24 on the New York Mercantile Exchange. Crude earlier dipped as low as $54.67, a price last seen in January 2007, on reports that the world's biggest economies are in recession and that energy demand has declined to decade-ago levels.
The Dow dropped briefly below 8,000 -- falling more than 300 points -- to retest lows that it hit Oct. 10 before a sharp climb into positive territory. The Standard & Poor's 500 index dropped to 818.69 before staging its own strong rally.
"The main driver is the turnaround in the S&P," said Addison Armstrong, director of market research at Tradition Energy.
There was also chatter about yet another extraordinary meeting by the Organization of Petroleum Exporting Countries to cut production for the second time in less than a month.
"They might actually mean it this time," said Mike Zarembski, senior commodity analyst at OptionsExpress.
"We're still in a downtrend, but even in a downtrend there are up days."
There are serious doubts about OPEC's ability to control prices through production levels. Energy analysts increasingly have come to believe that demand, not supply, is in control of the market.
OPEC slashed production quotas by 1.5 million barrels a day when they met at the end of October.
It had virtually no effect on tumbling crude prices.
Before the rally, crude has fallen 12 percent this week alone under a daily barrage of economic predictions that industries and consumers have cut back on spending. Gasoline prices have fallen nearly 50 percent since hitting a record national average of $4.11 per gallon in July.
While tumbling gas prices are a relief for consumers who have been shaken by job losses and declining home prices, economists now fear that the resulting decline in exploration and production by oil companies will lead to a massive price spike when economies rebound.
On Thursday, the Labor Department reported a larger-than-expected jump in unemployment claims and Wal-Mart Stores Inc., world's largest retailer and a barometer for consumer spending, cut its full-year outlook.
On Wednesday, the price of crude for December delivery fell for the 59th time since the peaking of the July bubble when prices hit a $147 a barrel, with the contract falling an average $1.09 per barrel over the last 88 sessions, according to information complied by trader and analyst Stephen Schork
On Thursday, the Organization for Economic Cooperation and Development said the U.S., Europe and Japan are in a recession, the first time all three have been in a downturn together since 1974-5 when Western nations were under duress from an Arab oil embargo and a severe bear market for stocks.
The Paris-based group said the U.S. economy would contract next year by 0.9 percent, Japan's by 0.1 percent and the euro area by 0.5 percent. It said the gross domestic product was likely to fall by 0.3 percent in 2009 for its 30 member countries, representing democracies with market economies.
For the fourth quarter, the organization said its members would likely see a contraction of 1.4 percent on a year-on-year basis, with the U.S. down 2.8 percent, and Japan and the euro area 1.0 percent lower.
The latest forecasts were a sharp downgrade from June, when it forecast growth of 1.7 percent in 2009 and suggested the worst of the financial crisis may have passed.
Also on Thursday in Paris, the International Energy Agency slashed its demand forecast more than it has in a decade.
The agency now expects global oil demand to average 86.2 million barrels a day this year, nearly flat compared with 2007, and 86.5 million barrels a day next year. The cuts come on top of those already made in the IEA's October and September reports.
Oil demand within the 30 OECD countries now is forecast to fall by 2.7 percent this year and by 1.6 percent in 2009, in the IEA's latest view.
The decline in prices also has battered the economy of several key oil-producing countries.
Russia's equity markets have declined in lockstep with crude, with Urals blend oil — the primary kind produced by Russia — falling below $50 a barrel on Thursday. It was the lowest price for Urals blend since January 2007.
The IEA warned on Wednesday that more than a trillion dollars in annual investments to find new fossil fuels will be needed for the next two decades to avoid an energy crisis that could choke the global economy.
But investment by the oil industry looks increasingly unlikely, at least in the near future.
The Labor Department reported Thursday that jobless claims last week increased by 32,000 to a seasonally adjusted 516,000. That nearly matched the 517,000 claims reported seven years ago, and is only the second time since 1992 that claims have topped 500,000.
The total also was much higher than analysts expected.
Prices at the pump continued to fall, dropping 2.4 cents overnight to $2.178, according to auto club AAA, the Oil Price Information Service and Wright Express.
Prices in some parts of the country were even lower, hitting $1.63 in Kansas City, Mo., and $1.74 in Tulsa, Okla., according to GasBuddy.com, which lets consumers post prices.
The continuing decline comes as crude inventories remained flat in the U.S. last week, while gasoline stockpiles rose much more than expected, according to government data released Thursday.
OPEC, which produces about 40 percent of world supplies, has signaled it may cut production before its next meeting in December on top of a 1.5 million barrel reduction in output quotas last month.
Thursday's pessimistic IEA oil demand forecast could speed up OPEC's decision for another quick production cut.
For the week ended Nov. 7 crude-oil inventories remained at 311.9 million barrels, which is 2 percent above year-ago levels, the Energy Department's Energy Information Administration said in its weekly report.
Analysts had expected a boost of 1.1 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
It was the second consecutive week in which inventory was flat.
In other Nymex trading, heating oil futures fell 4 cents to settle at $1.875 a gallon, while gasoline prices rose 5.4 cents to settle at $1.3024 a gallon. Natural gas for December delivery slid 8.7 cents to settle at $6.318 per 1,000 cubic feet.
In London, December Brent crude fell 38 cents to settle at $51.99 a barrel on the ICE Futures exchange. Prices hit a three-year low of $50.60 earlier in the day.
Associated Press writers Pablo Gorondi in Budapest, Hungary, Alex Kennedy in Singapore, Geir Moulson in Berlin and Pan Pylas in London contributed to this report.

 

It's a combination of investor greed and false-speculation of flow interruption. For instance, if I am a major player in the market AND an oil magnet, with the colllusion of similar players one could drive up the price of oil simply by throwing out a well-placed rumour or worry of a hurricane interrupting oil refining. It is a way for the rich to cash in and that is all. It seems that if the press releases a statement that some Saudi has a cold then the price of oil goes through the roof.

 

Funny you should bring that up because the joke's on you isn't it tenguy. Surely you remember OPEC INCREASING PRODUCTION during the record run on oil prices. And that they clearly stated they were increasing supply under protest to try and stem the speculators because supply was adequate and additional supplies would more than likely result in a glut and a drop in prices.

Now lets have our usual deal that you usually refuse and back out on when you do. If I go look up those statements and can prove what I'm saying will admit you are wrong?

 

To me this is a perfect example of what Kimiko said earlier on this thread. Anytime something like this happens its like everyone gets together and makes up a bunch of excuses for it and then when the situation changes they just come up with another bunch of excuses that either hide or completely contradict their other excuses.

This is also my assessment and experience when it comes to the price of oil and oil companies.

 

Bush did it. :excited:

 

In a way, and I wonder if you know how right you are. First, anyone with any common oilfield sense knew when you put the Oilfield Chairman of the Board and CEO (Bush/Cheney) in the White House the boom was on.

I've said this before and at least one other forum member at one time backed it up. The oilfield knew the US was going into Iraq even before Bush/Cheney were officially sworn in. And everyone ought to know what's good for Saudi Arabia is great for the Bush family interests.

 

Try to concentrate on what I am posting here, okay??

The idea that an entity can force high prices on a freely traded commodity is seriously flawed.

Without a buyer, the commodity has no value, without a seller, there cannot be a purchase. The seller represents "supply" the buyer "demand", in any scenario that you wish to make, the mere existance of a completed trade encompasses the laws of "supply and demand". It is a primary basis of free trade and capitalism.

If a seller inflates the price beyond what the buyer is willing to pay, the result is usually a surplus of inventory at the seller, which is excess supply. If the buyer has needs exceeding the sellers ability or willingness to supply, you have a shortfall in supply.

The whole system works best when there are many suppliers and many buyers of the commodity, then the entities have alternative choices with whom to do business. This keeps the price and availability fairly steady, the real fluctuations are then caused by forces beyond the control of the buyer or the seller.

Today, with oil, we have a slightly different scenario, on one side we have a powerfull cartel OPEC, who controls the production of a significant part of the commodity. On the other side we have markets competing for the commodity, expanding demand in Asia and an unflagging demand in the "developed" world, which when coupled mean an increase in future demand.

There are short terms conditions that can effect the price of a commodity, one is when those who speculate in the future "Supply & demand" see an opportunity to profit from the excess or the shortage of a commodity. This is corrected as the real supply and demand is reached.

Whether it is an actual situation or a forecasted situation, the price asked and the price paid, depend on the perceived supply and demand ratio.

 

You just keep babbling this bullshit hoping someone is going to believe it, but you ought to try it on someone else because I know better. To believe this supply and demand bullshit when it comes to oil you have to over look the fact that during the record run on oil there was speculation on 20% more oil then actually existed. You have to over look the very observable trend of offering different excuses for the rise in the price of oil and the contradiction that those have no effect now. And as I stated in my earlier post you have to overlook the fact that OPEC actually increased production for the sole purpose of stemming the run the speculators were making and accurately predicted the glut we have no. And finally you have to overlook the very real fact that consumption has only decreased a fraction which pointed to what I have been saying for close to a year that at the present time there is no shortage of oil.

Oil has been a monopolized essential resource and not by OPEC who are mere partners in the game but by our international oil companies, the governments they purchased and the public they have managed to brainwash like yourself.

And finally we have a president that I think not only understands that but opposes it, sees our doom in it and is going to do something about it. Because we've just had a president and vice president that sure as hell understands it but spearheaded the efforts to rip off the American Public and the world at large to the greatest extent in history.

PS Are you going to take the deal or not tenguy?

 

$1.73 here in Ohio yesterday. Haven't checked today.

 

I guess I will just have to agree that we disagree.

You can only see a political/corporate conspiracy, you chose to ignore the dynamics.

While I merely am attempting to explain WHY and HOW,


it happens.

 

I tend to agree you are simply delusional when it comes to this topic and because of your entrenched dogmatic views of the alleged free market economy really can't see that no such thing exists which is especially true when it comes to oil.

 

The hole in the logic of your observation is large enough to fly a 747 through.

What happened in the last couple of months??? The market corrected itself, as it will do again.

Just go on with your mistaken notions, I promise not to further attempt to educate you. In the mean time I'll just continue to exploit folks like you in the market.