Oil Prices

vicupstate · May 22, 2008, 01:17:20 PM

Quote from: Charleston native on May 22, 2008, 12:29:16 PM
Yeah, those higher energy standards from good ol' Jimmuh sure prevented long lines at the gas station and calmed people from panicking as gas prices rose.

Let's look at the overall big picture. Supply is constrained due to the federal government's idiotic policy to not drill and not explore for more domestic production of oil and gas, demand is up, and the value of the dollar has fallen. All of those facts are creating a perfect storm of price increases.

As indicated earlier, profit margin is a true indicator of price gouging. However, I notice that nobody even remotely cares about other "necessities" being priced out of our asses. Case in point, what about cell phone service? Isn't that deemed a practical necessity for the modern world? While the highest profit margin for any oil company was Exxon Mobil at 43.3%, cellphone service carrier Alltel had 57.2%, for example.

OK, maybe cell phones can be considered a "luxury". What about regular phone service with the telecom industry? Bellsouth = 59%, Qwest = 59.2%, Sprint = 60.7%. How about tech companies like Microsoft, Google, and Intel? I believe that you would have great difficulty even posting here without their services. Gross profit margins? 81.4%, 69.3%, and 62.5% respectively.

Notice that the majority of the people who constantly complain about oil companies are the ones who have an environmentalist agenda. I think if you're going to convict companies for excessive prices for profit, you should at least have consistency in your argument.

Carter's energy standard's where put in place AFTER the energy crisis. It was in response to the 'crisis' that OPEC artifically created. However Carter had the foresight to realize a genuine crisis would eventually occur. Low and behold, we are there. I guess you should at least know some history, in order to have some consistency in your argument.

If we had kept those standards, we would be independent of foreign oil, just as Brazil is today, and would have been for a couple of decades.

Supply is no more constrained domestically than it has been long BEFORE this current situation.

I guess you don't have a problem with drilling off the coast of Charleston or Jacksonville? What is good for ANWR is good for everywhere else right?

Charleston native · May 22, 2008, 02:24:16 PM

Yes, vic, I believe that drilling off our coasts would be acceptable, as long as the distances of platforms were out of coastline view. That can be accomplished.

Uh, BTW, there was a second oil crisis in 1979, headlong during the Carter administration. Bungling relations with Iran added to it. Dephasing of price controls prolonged the crisis, and Carter never set price controls on imported oil, causing the aforementioned long lines at the gas station. Nevermind that when Reagan repealed Carter's energy standards and eliminated price controls on domestic oil, prices for oil and gas decreased considerably.

Yeah, here we are, alright, as our nation is continuously inhibited from using its own resources by do-gooders like the peanut farmer, directing us to install solar power panels, wear sweaters, and turn down the thermostats. Bandaids instead of real solutions. I love it.

RiversideGator · May 22, 2008, 03:42:12 PM

Quote from: vicupstate on May 22, 2008, 01:02:10 AM
Quote from: RiversideGator on May 21, 2008, 11:28:08 PM
Supply is constrained in the US at least because government refuses to allow the exploration for and drilling of oil in much of the US.

'That can't explain the run up in prices. That was the case 6 months ago, 12 months, 5 years ago, 10 years ago. The supply has not been 'newly' constrained, the demand has risen dramatically.

That is like saying I have stomach pains because I don't wear bigger trousers after gaining weight. Did the pants cause the pains or the weight gain?

Too bad Raegan repealed the higher energy standards put in place by Jimmy Carter. We would be foreign-oil free by now. Not to mention no need for foreign oil, means no excuse for wars for oil.

Supply has not increased while demand has. That is a classic cause of higher prices. Couple this with a weaker dollar and, since commodities are traded in dollars, oil goes through the roof. Also there is a third cause which is speculators drawn into this mess as a hedge against inflation.

BTW, your Reagan comment is laughable. Reagan's policies of deregulating the economy and the oil industry gave us the incredibly low oil prices we all enjoyed for over a decade until quite recently. Time to drill more, defend the dollar and drive out the speculators. It is as simple as that.

RiversideGator · May 22, 2008, 03:45:20 PM

Many still expect the oil prices to reduce though (although others expect increases). Read this article for more:

QuoteOil's perfect storm may blow over

By Ambrose Evans Pritchard
Last Updated: 3:28pm BST 22/05/2008

The perfect storm that has swept oil prices to $132 a barrel may subside over the coming months as rising crude supply from unexpected corners of the world finally comes on stream, just as the global economic downturn begins to bite.

The forces behind the meteoric price rise this spring are slowly receding. Nigeria has boosted output by 200,000 barrels a day (BPD) this month, making up most of the shortfall caused by rebel attacks on pipelines in April.
Why oil could soon come barrelling down
Keep the motors running: increased oil production from countries such as Brazil, Sudan and Azerbaijan is helping satisfy rising global demand for the fossil fuel

The Geneva consultancy PetroLogistics says Iraq has added 300,000 bpd to a total of 2.57m as security is beefed up in the northern Kirkuk region.

"There is a strong rebound in supply," said the group's president Conrad Gerber.

Saudi Arabia is adding 300,000 bpd to the market in response to a personal plea from President George Bush, and to placate angry Democrats on Capitol Hill - even though Riyadh insists that there are abundant supplies for sale.

Non-OPEC oil production growth

Like the rest of Opec, the Saudis blame "speculators" for running amok, pushing paper contracts into the stratosphere.

The ever-diminishing reserves of oil in the earth's crust will doubtless drive crude prices to much higher levels over time - provided no new technology such as nuclear fusion abruptly changes the picture - but that will not stop cyclical ups and downs along the way.

The world's finely balanced market for crude has been creeping into surplus for several weeks. Opec's monthly report says that demand this quarter will average 85.75m bpd. Supply was 86.8m bpd in April. The fresh output from Nigeria, Iraq and Saudi Arabia may push it significantly further into surplus.

The signs are already surfacing in global inventories. Opec says that stocks held by the OECD club of rich countries are above their five-year average, with "comfortable" cover for 53 days' use. US stocks have edged up for the last four months, though they fell last week.
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While it is widely reported that output from the non-Opec trio of Norway, Britain, and Mexico has relentlessly fallen, it is less well known that a clutch of other countries are gradually filling the breach.

The US Energy Information Agency says non-Opec supply will edge up by 600,000 bpd over coming months as Brazil, Azerbaijan and the Sudan raise production. By next year, the US itself will be producing enough extra oil to shave its import needs.

OPEC surplus crude oil production

None of this has been enough to curb the buying frenzy this spring. Goldman Sachs has warned that prices could reach $200 in a final spike, and even the bears at Lehman Brothers say there may be enough momentum to keep the boom going until Christmas.

It is unclear whether hedge funds and investors piling into futures contracts have now become the driving force in a speculative bubble. The Bank of England said yesterday that they were not a factor.

Lehman's latest report - Is it a Bubble? - says commodity index funds have exploded from $70bn (Â£36bn) to $235bn since early 2006. This includes $90bn of fresh money. Energy takes the lion's share. Every $100m flow of investment money into oil lifts crude prices by 1.6pc, it said.

"We see many of the ingredients for a classic asset bubble," said Edward Morse, Lehman's oil expert.

This week has seen a dramatic surge in oil contracts dated as far forward as 2016. Futures have moved higher than the spot price, a rare event known as "contango". This can cut both ways: either as a sign of an impending supply crunch years hence; or that the futures market has become unhinged from reality.

What we know is that the International Monetary Fund has cut its forecast for world growth for 2008 three times since last autumn to 3.7pc, and the United Nations is predicting just 1.8pc - technically, a global recession. The major oil forecasters have halved their estimates for crude demand growth to 1.2m bpd.

The bulls say that the US housing crash and spreading contagion in Britain, Spain and Japan do not matter much for oil in the changed world of rising Asia.

The US added just 7pc of crude demand growth from 2004 to 2007, compared with 34pc for China, 25pc for the Middle East and 17pc for emerging Asia.

Goldman Sachs argues that fuel prices in most of these countries are held down by state controls, insulating demand from the effect of any global downturn.

But this could change. Egypt - the most populous Arab country - has just raised petrol prices by 40pc. Rumours swept China yesterday that Beijing was preparing to lift fuel prices. While the Chinese government is unlikely to risk protests in the lead up to the Olympics, the jitters are a reminder that Asian states will have to take action sooner or later to wean their societies from subsidies.

Almost all emerging nations have to slam on the brakes in coming months to curb inflation before it starts spiralling out of control. Inflation has hit 30pc in Ukraine, 22pc in Vietnam, 8.5pc in China, and double digits across most of the Gulf.

The countries that account for the most of the growth in oil demand over the last two years are almost all nearing the limits of easy economic growth.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/22/ccoil122.xml

RiversideGator · May 22, 2008, 04:23:17 PM

More on the energy problems we face:

QuoteEnergy and the Executive
By PETE DU PONT
May 19, 2008

This election is notable in many ways. For the first time since 1952, neither the president nor the vice president will be his party's presidential nominee. For the first time since 1960, a sitting U.S. senator will be elected president. And for the first time ever, if the Democrats win, the next president will be female or black.

We are also at a fork in the policy road, for any of the three major candidates would lead us in very different directions on major public policy issues, from spending and taxation on the one hand, to international relations and the war on terror on the other.

Equally critical will be their direction on how we generate the energy America needs. Over the past 20 years, have our presidents and Congresses allowed us to drill for the additional offshore oil available to fuel our economy and reduce imports? No. Have they encouraged the building of nuclear power plants that would generate pollution-free energy? No. Are they now supporting the building of coal-fired power plants to generate the electricity our economy needs? No.

We have an abysmal national energy policy, and as our population grows and our economy expands, energy needs will increase. From 1980 to 2006 America's annual energy usage increased from 78 to 100 quadrillion British thermal units, and the figure is estimated to grow to 118 quadrillion BTUs by 2030. If our regressive energy production policies continue when the next administration takes office, our economy and the personal lives of Americans will be severely affected.

* * *

We have failed to increase our country's crude oil production. Domestic oil production has declined, to 1.9 billion in 2007 from 3.1 billion barrels in 1980, while imports increased to 3.7 billion barrels from 1.9 billion. We now importing about 60% of the oil we use.

One reason for the imports is that our public policy has forbidden offshore oil drilling for much of the estimated 85 billion barrels of recoverable oil and 420 trillion cubic feet of natural gas (an 18-year supply) that are on the Outer Continental Shelf, and another 10 billion barrels of oil in Alaska. Together they could replace America's imported oil for about 25 years, but the first President Bush issued a directive forbidding access to a significant portion of the Outer Continental Shelf. President Clinton extended the restriction through 2012 and vetoed legislation that would have allowed drilling in Alaska.

So America has large amounts of oil and gas, but our efforts to extract it have been significantly reduced by the federal moratorium on drilling. America remains the only nation in the world that has curtailed access to its own energy supplies/ Meanwhile China will soon begin drilling for oil off Cuba and in Venezuela.

Among the worst antienergy policies we have experienced was President Carter's 1980 "windfall profits tax" on oil companies, which reduced domestic oil production by between 3% and 6% and increased imports by 8% to 16%. Yet last week Majority Leader Harry Reid and 20 other Senate Democrats introduced a similar 25% tax.

We have failed to allow the construction of new nuclear power plants to add to the 104 that we have in operation. Nuclear power is clean and efficient, but no new nuclear plant construction has been granted permits in the past 30 years. By contrast, China plans to build 40 nuclear power reactors in the next 15 years -- two or three each year.

Nor are we fully using the huge coal resources America has. We have in the past, but an effort to prohibit them has become the environmentalists' goal. NASA climatologist James E. Hansen said last month that "building new coal-fired plants is ill conceived," and that it is time "for a moratorium on coal now with phase-out of existing plants over the next two decades." The phase-out is under way: Of the 151 coal-fired plant construction proposals in 2007, more than 60 have been abandoned as the result of environmentalist pressure. And last month Gov. Kathleen Sebelius of Kansas vetoed a bill that would have allowed the construction of two new electricity generators at an existing coal fired power plant -- because they would emit greenhouse gasses.

We have also pursued new energy policies that turn out to be mistaken. Ethanol is perhaps the best example, with congressional enactment of ethanol subsidies -- 51 cents a gallon for production of it, and a 54-cent-a-gallon import fee to keep competitive, less expensive and more environmentally friendly ethanol out of America. Congress in 2005 required 7.5 billion gallons of ethanol to be produced by 2012; and then in 2007 upped that to 36 billion gallons by 2022. President Bush enthusiastically supports subsidized ethanol, and Barack Obama believes there should be a 65-billion-gallon ethanol mandate. Only John McCain wants to end ethanol subsidies and import fees.

Ethanol was a bad idea from the start, for as The Wall Street Journal recently reported, producing one gallon of ethanol requires 1,700 gallons of water (primarily to grow corn). The journal Science recently found that "corn-based ethanol, instead of producing a 20% savings, nearly doubles greenhouse emissions over 30 years."

* * *

The good news is that an effort to reverse all these antienergy, antigrowth policies is beginning. Earlier this month Sen. Pete Domenici (R., N.M.) introduced the American Energy Production Act to expand offshore oil production, establish a leasing program to get to Alaska's untapped 10 billion barrels of oil, and support the construction of new oil refineries. The last is a particularly good idea, for it has been 30 years since we have built one in the United States.

The May 11 New York Times contained a surprisingly sensible lead editorial: "The time has come to rethink ethanol. . . . Specifically, it is time to end an outdated tax break for corn ethanol and to call a time out in the fivefold increase in ethanol mandated in the 2007 energy bill."

So perhaps America is beginning to rethink its flawed energy policies. And so it must, for our challenge is to remain competitive in a growing global economy, and that requires feeding the engines of growth with more energy. Our next president must advance drilling for offshore oil, building nuclear power and clean coal fired plants, and developing other energies such as solar and wind power. Otherwise America's people will miss future opportunities and slip backwards economically, and our country will become far worse off than it is today.

http://online.wsj.com/article/SB121105403544501297.html?mod=opinion_journal_political_diary

Midway ® · May 22, 2008, 10:48:29 PM

Quote from: vicupstate on May 22, 2008, 05:42:58 PM
Quote
Too bad Raegan repealed the higher energy standards put in place by Jimmy Carter. We would be foreign-oil free by now. Not to mention no need for foreign oil, means no excuse for wars for oil.

Quote
Supply has not increased while demand has. That is a classic cause of higher prices. Couple this with a weaker dollar and, since commodities are traded in dollars, oil goes through the roof. Also there is a third cause which is speculators drawn into this mess as a hedge against inflation.

BTW, your Reagan comment is laughable. Reagan's policies of deregulating the economy and the oil industry gave us the incredibly low oil prices we all enjoyed for over a decade until quite recently. Time to drill more, defend the dollar and drive out the speculators. It is as simple as that.

Your comment on Reagan has nothing to do with MY comment on Reagan. I don't support price controls, they are always a disaster, as Mr. Nixon proved. I criticized Reagan for eliminating FUEL EFFICIENCY standards. Consuming so much energy from foreign sources makes us vulnerable in national defense. It also funds our enemies. As a national security issue, a reduced dependence on foreign oil is justified IMO.

As for government deregulation, Reagan also deregulated the S&L industry and a multi billion dollar taxpayer-funded bailout was required. Didn't work out so well did it?

'Drive out speculators' sounds like market controls to me, whatever happened to free markets?

You can't be right because you disagree with the conclusions of "gatorworld".

Oil is down $2.00, everything is OK. Now go home.

Never mind that it's up $30.00, it went down $2.00.

There's nothing to see here, everybody go home.

Coolyfett · May 23, 2008, 01:00:54 AM

Quote from: willydenn on May 05, 2008, 05:47:51 PM

Why shouln't oil companies keep thier own money? They earned it. They are publicly traded which means many "regular americans" own it. Maybe you should buy a few shares........if you don't have some already?

How does one go about buy shares in gas?? What is the price for a share?

Driven1 · May 23, 2008, 01:12:53 AM

here are some of my favs to play this...

XOM, CVX, RRC, CHK, NOV

just open an acct & buy at any online discount broker/dealer.

Driven1 · May 23, 2008, 01:24:35 AM

cooley, check these out...

nat gas
http://finance.yahoo.com/q?s=rrc (i like it under $70)
http://finance.yahoo.com/q?s=chk (i like under $52)

oil
http://finance.yahoo.com/q?s=nov (under $75 is good)
http://finance.yahoo.com/q?s=PBR (under $70 is good) - combines the power of Brazil with oil

RiversideGator · May 23, 2008, 10:21:13 AM

You purchase stock in the companies that sell gas.

RiversideGator · May 23, 2008, 10:22:02 AM

Quote from: Coolyfett on May 23, 2008, 01:00:54 AM
Quote from: willydenn on May 05, 2008, 05:47:51 PM

Why shouln't oil companies keep thier own money? They earned it. They are publicly traded which means many "regular americans" own it. Maybe you should buy a few shares........if you don't have some already?

How does one go about buy shares in gas?? What is the price for a share?

You purchase stock in the companies that sell gas. See Driven's list above.

RiversideGator · May 23, 2008, 10:23:55 AM

More in ANWR here and the true effect drilling would have on the area:

ANWR = MA+NJ+RI+CT+DE; Footprint = 1/6 Dulles

ANWR's frozen desolation looks like:

QuoteANWR's 10.4 billion barrels of oil have become hostage to the planet's saviors (e.g., John McCain, Hillary Clinton, Barack Obama), who block drilling in even a tiny patch of ANWR. You could fit Massachusetts, New Jersey, Rhode Island, Connecticut and Delaware into ANWR's frozen desolation (see bottom picture); the "footprint" of the drilling operation would be one sixth the size of Washington's Dulles airport (see top picture above, click to enlarge).

~George Will

http://mjperry.blogspot.com/