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Those Pesky Oil Speculators? - Absent

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Mike

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Well, At Least They Aren't Blaming 'Speculators' For Skyrocketing Oil Prices This Time...

Henry Blodget|February 24, 2012|
Prices on American oil are closing in on $110 a barrel.

The price of Brent oil is already $125.

This in the face of a global economy that is still in the midst of a disappointingly slow recovery.

Yes, the Iran situation isn't helping. But the slope of oil prices was up and to the right long before the latest tensions with Iran.

This is the third time in the last 5 years that oil has blown past $100 a barrel. And this time, as the saying goes, it's different.

The first time oil crossed the $100 barrier, back in 2008, it seemed a bizarre, ridiculous aberration. The culprits, Congress shouted, were "speculators"--evil, rich hedge-fund types who were gambling with everyone else's lifeblood. We just had to clamp down on speculation, Congress roared, and then oil prices would return to their natural level of $20 a barrel.

Some people, thankfully, quietly argued that the oil price spike was the result of natural forces--namely changes in supply and demand. With the rise of China, India, and other huge countries in the developing world, the demand for oil was going up, while the supply of oil was staying pretty much the same. These folks were shouted down by the "blame speculators" crowd, but their voices were at least heard.

Then the global economy crashed, oil prices tanked, and everyone forgot all about that.

Well, now, a few years later, oil prices have again surged through the $100 level. This time, the price rise has been slow and steady--a gradual ramp from the bottom in 2009 (see chart). And, this time, thankfully, there are no more (or at least far fewer) ridiculous attempts to blame the increase on speculators.

And that's good.

What isn't good is that the price rise is likely the result of two factors that are more permanent:
•Ongoing changes in the balance of supply and demand (namely, demand outstripping supply)
•Ongoing destruction of the value of the dollar (read: inflation).

On the first point, many sharp analysts have argued that the changing supply/demand imbalance for oil and other commodities is now permanent, and they have logic in their favor: More and richer people, finite supply. Jeremy Grantham, for one, believes that we are in the early stages of a historic "paradigm shift" that will drive commodity prices into the stratosphere. (See: "GRANTHAM: We're Headed For A Disaster Of Biblical Proportions").

The way to help offset changes in supply and demand is to increase supply (drilling, exploration, alternative energy, pipelines) and reduce demand (conservation, alternative energy)--in other words, the development and implementation of an intelligent National Energy Policy. Congress has only to look in the mirror if they're looking for someone to blame for that one.

On the second point, we would merely say that you can't have your cake and eat it, too.

Specifically, the Federal Reserve cannot continue to inject unlimited amounts of free money into banks with the aim of bailing out the banks and propping up house and stock prices without also propping up other prices.

And although the Fed still wants to pretend that food and energy prices should be excluded from inflation calculations, the price trends of the last decade illustrate that this position is ridiculous.

People have to buy food and energy. And thanks, in part, to the Fed's desire to bail out the banks and prop up stock and house prices, the price of most food and energy keeps going up.

That's inflation, whether the Fed wants to call it that or not.


Read more: http://articles.businessinsider.com/2012-02-24/news/31093905_1_oil-prices-supply-and-demand-price-rise#ixzz1o3bkbz3U
 

TSR

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Mike, You must be watching just one channel that local one in Alabama. Just the other day two were on a talk show both Rep.'s and they were arguing with each other-- one sayiong if the warmongers against Iran would just shutup the price of oil would go down and the speculators would probably suffer a 30% loss while the other was saying speculation is good providing liquidity to the market. This morning Lou Dobbs taslked about the speculation of oil.
 

hypocritexposer

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TSR said:
Mike, You must be watching just one channel that local one in Alabama. Just the other day two were on a talk show both Rep.'s and they were arguing with each other-- one sayiong if the warmongers against Iran would just shutup the price of oil would go down and the speculators would probably suffer a 30% loss while the other was saying speculation is good providing liquidity to the market. This morning Lou Dobbs taslked about the speculation of oil.


If the US was drilling for their own oil, and reducing their dependence on foreign oil, would talk about Iran affect the price as much?
 

TSR

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hypocritexposer said:
TSR said:
Mike, You must be watching just one channel that local one in Alabama. Just the other day two were on a talk show both Rep.'s and they were arguing with each other-- one sayiong if the warmongers against Iran would just shutup the price of oil would go down and the speculators would probably suffer a 30% loss while the other was saying speculation is good providing liquidity to the market. This morning Lou Dobbs taslked about the speculation of oil.


If the US was drilling for their own oil, and reducing their dependence on foreign oil, would talk about Iran affect the price as much?

I'm not against drilling but you just can't turn the oil co.'s loose without any oversight/regulations as they, like most of us, are plauged by a desire to make more sometimes ignoring at what expense. In short-greed.
I'm not so sure of the amount of easily accessible,easily refineable, petroleum we actually have here in the US. If by the time it was obtained and processed what would the price have to be. Today on Lou Dobbs a spokesman said the average cost of a barrel of crude at the time it was placed in the drum was $70. $105-110 on the world market :shock: , seems like quite a markup.
 

hypocritexposer

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TSR said:
hypocritexposer said:
TSR said:
Mike, You must be watching just one channel that local one in Alabama. Just the other day two were on a talk show both Rep.'s and they were arguing with each other-- one sayiong if the warmongers against Iran would just shutup the price of oil would go down and the speculators would probably suffer a 30% loss while the other was saying speculation is good providing liquidity to the market. This morning Lou Dobbs taslked about the speculation of oil.


If the US was drilling for their own oil, and reducing their dependence on foreign oil, would talk about Iran affect the price as much?

I'm not against drilling but you just can't turn the oil co.'s loose without any oversight/regulations as they, like most of us, are plauged by a desire to make more sometimes ignoring at what expense. In short-greed.
I'm not so sure of the amount of easily accessible,easily refineable, petroleum we actually have here in the US. If by the time it was obtained and processed what would the price have to be. Today on Lou Dobbs a spokesman said the average cost of a barrel of crude at the time it was placed in the drum was $70. $105-110 on the world market :shock: , seems like quite a markup.


What are the existing regulations and do they need to change?


"Today on Lou Dobbs a spokesman said the average cost of a barrel of crude at the time it was placed in the drum was $70."

So 65% is eaten up by costs before the oil company even gets the oil in a barrel? what costs are incurred afterwards?

cost to whom, the oil companies?

The majority of the cost is associated with royalities, drilling, regulations ect


that's why oil companies profit so little compared to other industries.....
 

Steve

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gastax.jpg


“For every gallon of gasoline, diesel or finished products we manufactured and sold in the United States in the last three months of 2010, we earned a little more than 2 cents per gallon. That’s not a typo. Two cents.”

with a large increase in gas prices at the pump...

they're now raking in 7 cents per gallon of profit..




is that gouging?
 

TSR

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hypocritexposer said:
TSR said:
hypocritexposer said:
If the US was drilling for their own oil, and reducing their dependence on foreign oil, would talk about Iran affect the price as much?

I'm not against drilling but you just can't turn the oil co.'s loose without any oversight/regulations as they, like most of us, are plauged by a desire to make more sometimes ignoring at what expense. In short-greed.
I'm not so sure of the amount of easily accessible,easily refineable, petroleum we actually have here in the US. If by the time it was obtained and processed what would the price have to be. Today on Lou Dobbs a spokesman said the average cost of a barrel of crude at the time it was placed in the drum was $70. $105-110 on the world market :shock: , seems like quite a markup.


What are the existing regulations and do they need to change?


"Today on Lou Dobbs a spokesman said the average cost of a barrel of crude at the time it was placed in the drum was $70."

So 65% is eaten up by costs before the oil company even gets the oil in a barrel? what costs are incurred afterwards?

cost to whom, the oil companies?

The majority of the cost is associated with royalities, drilling, regulations ect


that's why oil companies profit so little compared to other industries.....

Profit so little and yet they are the most profitable entities in the history of the world. The man on Lou Dobb's point was- that oil could be selling for a lot cheaper price which would lower the price of gasoline.
 

Steve

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from last year..

03/10/2011

The Congressional Research Service (CRS) showing that the United States’ combined recoverable natural gas, oil and coal endowment is the largest on Earth.

Russia comes in as a close second with recoverable fossil fuel reserves, followed Saudi Arabia, China, Iran and Canada.

According to the new report, an updated version of a 2009 paper, the United States’ resources are larger than Saudi Arabia, China and Canada, combined. The report estimates that the U.S. has 163 billion barrels of recoverable oil and enough natural gas to meet the country’s demand for 90 years.

The CRS report is being made public at a time when oil and gas prices are skyrocketing and the Department of Interior is embroiled in a battle with oil companies over offshore drilling. Last week, Interior Secretary Ken Salazar and Michael Bromwich, Director of the Bureau of Ocean Energy Management, Regulation and Enforcement, appealed a court decision that ordered them to act on five pending drilling permits.

yet we waste money on solar panels and wind turbines imported from China...
[/quote]
 

hypocritexposer

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TSR said:
hypocritexposer said:
TSR said:
I'm not against drilling but you just can't turn the oil co.'s loose without any oversight/regulations as they, like most of us, are plauged by a desire to make more sometimes ignoring at what expense. In short-greed.
I'm not so sure of the amount of easily accessible,easily refineable, petroleum we actually have here in the US. If by the time it was obtained and processed what would the price have to be. Today on Lou Dobbs a spokesman said the average cost of a barrel of crude at the time it was placed in the drum was $70. $105-110 on the world market :shock: , seems like quite a markup.


What are the existing regulations and do they need to change?


"Today on Lou Dobbs a spokesman said the average cost of a barrel of crude at the time it was placed in the drum was $70."

So 65% is eaten up by costs before the oil company even gets the oil in a barrel? what costs are incurred afterwards?

cost to whom, the oil companies?

The majority of the cost is associated with royalities, drilling, regulations ect


that's why oil companies profit so little compared to other industries.....

Profit so little and yet they are the most profitable entities in the history of the world. The man on Lou Dobb's point was- that oil could be selling for a lot cheaper price which would lower the price of gasoline.


you are comparing % profit to units sold.


If Apple sold as many Ipads as Exxon sells barrels of oil, which company would profit more?

Which company is providing an essential to economic growth, and stability, and which company takes more risk?


which type of company needs to build up their reserves, so they can incur more expense in future years for Research and development? I have explained previously that an oil company's profits will ggo up and down, depending on the amount of exploration etc that they do. Do you want them to search for additonal reserves and develop technology to extract oil effciently or not? How about leases? If they are spending on leases this year, to "rent" the land from private owners this year and begin drilling next year, will their profits show an increase in % next year? How will you perceive this increase in profits?

If they spend Billions this year for exploration and then not so much next, will their profits show an increase?

Should farmers/ranchers profit more for providing an essential and taking on more risk?
 

TSR

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I am simply telling you what the analyst said on Lou Dobbs, the other analyst didn't disagree.
 

hypocritexposer

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TSR said:
I am simply telling you what the analyst said on Lou Dobbs, the other analyst didn't disagree.


So they were involved in additional exploration this year and their costs will increase or decrease next?


Why don't you do a little investigating instead of taking the word of someone on Fox News?
 

Steve

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TSR said:
hypocritexposer said:
TSR said:
I'm not against drilling but you just can't turn the oil co.'s loose without any oversight/regulations as they, like most of us, are plauged by a desire to make more sometimes ignoring at what expense. In short-greed.
I'm not so sure of the amount of easily accessible,easily refineable, petroleum we actually have here in the US. If by the time it was obtained and processed what would the price have to be. Today on Lou Dobbs a spokesman said the average cost of a barrel of crude at the time it was placed in the drum was $70. $105-110 on the world market :shock: , seems like quite a markup.


What are the existing regulations and do they need to change?


"Today on Lou Dobbs a spokesman said the average cost of a barrel of crude at the time it was placed in the drum was $70."

So 65% is eaten up by costs before the oil company even gets the oil in a barrel? what costs are incurred afterwards?

cost to whom, the oil companies?

The majority of the cost is associated with royalities, drilling, regulations ect


that's why oil companies profit so little compared to other industries.....

Profit so little and yet they are the most profitable entities in the history of the world. The man on Lou Dobb's point was- that oil could be selling for a lot cheaper price which would lower the price of gasoline.

the culprits are not the US oil companies.. Saudi oil is worth about $20 at the most.. Iranian less..
cheapest oil to extract comes from Saudi Arabia and costs $2 a barrel.


if we could drill and buy Canadian oil, we would be less dependent on their price gouging..


but for the sake of the argument..

What is a fair amount of profit per gallon?

or should I ask... .How much should they lose per gallon?
 

TSR

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I feel like many Rep's as well as Dem.'s I have heard lately, some of whom were no longer in Congress. The consensus was take out all speculation and establish a true baseline for the value of a barrel of oil. I agree.
 

hypocritexposer

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TSR said:
I feel like many Rep's as well as Dem.'s I have heard lately, some of whom were no longer in Congress. The consensus was take out all speculation and establish a true baseline for the value of a barrel of oil. I agree.


so if you agree, then you can explain how to sett the baseline, correct?


How will the baseline be set?


How will the baseline for corn be set?
 

TSR

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One step at a time: First lets get rid of speculation. Then we'll consider the baseline.
 

hypocritexposer

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TSR said:
One step at a time: First lets get rid of speculation. Then we'll consider the baseline.

so you can't explain it, can you?


Would you like the buyers of grain to set the price, instead of the "speculators"?
 

Larrry

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You can not take speculation out of the economy.

Speculation is a human action that is present in everything you do. From the minute you wake up till the minute you go to sleep you are in the process of specualtion.

Do you speculate on what the price of food, fuel, insurance, vehicles etc.
 

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