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Perhaps 60% of today’s oil price is pure speculation
globalresearch.ca — The price of crude oil today is not made according to any traditional relation of supply to demand. It ’s controlled by an elaborate financial market system as well as by the four major Anglo-American oil companies. As much as 60% of today’s crude oil price is pure speculation driven by large trader banks and hedge funds.
grey580- 2719 diggs
- digg it
- BobOki, on 06/09/2008, -23/+309This needs to be front page. This is a semi-decent explanation of why gas prices are so high.
I am tried of the idiots on the supply/demand train. We have more supply than demand, and yet the prices still go up = market manipulation.- tbstudee, on 06/10/2008, -3/+19dugg because I'm tired of them as well.
- snareguy17, on 06/10/2008, -0/+2I'm tried of them.
- rune420, on 06/10/2008, -14/+8I disagree. Investors would have to buy contracts further out in the futures curve unless they wanted barrels of oil dumped on their front lawn, yet the futures curve is still in slight backwardation. How can you explain this if it's all just investors or speculators?
http://data.tradingcharts.com/futures/quotes/CL.ht ...- MisterEX, on 06/10/2008, -0/+16Well, you can store up to 15 barrels of oil on my lawn. Anyone else?
- sublimemm, on 06/10/2008, -1/+2Those aren't ICE Futures...
- rune420, on 06/10/2008, -2/+2http://www2.barchart.com/dfutpage.asp?sym=CB&code= ...
There you go, not that I see how it changes the point I was making.
- rune420, on 06/10/2008, -2/+2http://www2.barchart.com/dfutpage.asp?sym=CB&code= ...
- unreg, on 06/10/2008, -2/+38How do you explain a doubling of the price in the past year without any significant change to the supply / demand equation.
How about a $15 increase in two days, simply because somebody said something?- rune420, on 06/10/2008, -8/+3Or maybe you just need to double check the variables in that supply/demand equation.
Like I said, unless investors are hoarding up physical barrels of oil on tankers out at sea or something like that, I don't see how they could be responsible for driving up the spot price, especially when the forward contracts are cheaper.
My take is that the government just needs a scapegoat, so it goes after commodity investors. And while some of it may be rightly blamed on speculation, I think there are a lot bigger forces at work here than a few pension funds. - unreg, on 06/10/2008, -2/+4You can hoard it simply by not pumping it out of the ground.
Remember, we're talking about future contracts here. Very few people actually take possession of the oil. A use to sell directly to B. Now A sells into a market where the contract passes through the hands of L, M, N, O, P, none of whom are interested in the actual oil, just the profit that can be gained from the contract. Poor B now has to bid against all those other players to get his oil.
I'm not saying that our energy usage is a bit out of whack and some of the pricing is justified by supply / demand. - windowsknockers, on 06/10/2008, -0/+1Money, get away
Get a good job with more pay and you're O.K.
Money, it's a gas
Grab that cash with both hands and make a stash
New car, caviar, four star daydream,
Think I'll buy me a football team.
Money, get back
I'm alright, Jack, keep your hands off of my stack
Money, it's a hit
Don't give me that do goody good *****
I'm in the hi-fidelity first class travelling set
And I think I need a Lear jet.
Money, it's a crime
Share it fairly but don't take a slice of my pie
Money, so they say
Is the root of all evil today
But if you ask for a rise it's no surprise that
They're giving none away, away, away.
- rune420, on 06/10/2008, -8/+3Or maybe you just need to double check the variables in that supply/demand equation.
- CTRaider, on 06/10/2008, -1/+14There was an article I've linked before that stated that the speculators never receive that oil and have no intention too do so when they purchased it. They sell their "incoming" oil to other speculators and buy more on speculation again. They keep the cycle going and continue to drive the price up.
I'll see if I can find the article I've linked before. - oldgal, on 06/10/2008, -0/+2You sell it before it gets dumped on your lawn. When the bubble bursts there will be some huge losses - setting up more need to bail out financial institutions.
- samoan27, on 06/10/2008, -4/+22Finally a real article about the price of oil, none of this "It'll be $10 / gallon by 2012" crap. It's a bubble propagated by fear and those willing to exploit it, anyone who really thinks the price can only go up doesn't need to look too far back in history to know investing in oil isn't a wise long term investment right now.
- MWeather, on 06/10/2008, -8/+2$10 by 2012 is crap? It's doubled in the last 3 years, yet you doubt it can double again in the next 4 despite the dollar getting weaker, middle eastern security looking weaker, and demand continuing to rise?
- bagelmaster, on 06/10/2008, -1/+5Someone has no idea what samoan27 just said. Reading comprehension isn't your forte I'm assuming?
- legendxx, on 06/10/2008, -1/+1A Ron Paulbot preaching the end of the world? NO WAY!?! It's a ***** capitalistic economy. This is what it does. It goes up and comes down. Get used to it and take your tin-foil hat off. The 'unrest' in the mid-east is absolutely NOTHING compared to what this country did to outlast the soviets during the cold-war which lasted 40 years. We've been dealing with unrest for easily the better part of this century all around the world and the situation in Iraq is nothing we haven't seen and dealt with before.
- mooseontheloose, on 06/10/2008, -0/+1I agree. Along with my fortune in tulips and real estate, I'm sitting pretty right now.
- MWeather, on 06/10/2008, -8/+2$10 by 2012 is crap? It's doubled in the last 3 years, yet you doubt it can double again in the next 4 despite the dollar getting weaker, middle eastern security looking weaker, and demand continuing to rise?
- IPublius, on 06/10/2008, -2/+14Market manipulation, yes, but also a supply and demand issue. In this case it is an artificial demand, but when you are trading for something that doesn't exist yet (futures) perception can distort or become reality.
I am not disagreeing with anything that was said in the article. I found it to be very enlightening. I would like to point out though that supply and demand is still very much in effect, something the author mentioned as well.
What needs to be examined is not whether supply appears to be tighter, but what is driving the perception that it is.- oldgal, on 06/10/2008, -2/+1Seems like the supply and demand is based on the contracts (supply of and demand for contracts) as opposed to the commodity. I would assume this demand is based on the perceptions of future supply and demand for the commodity. My guess is that the saber rattling the U.S. is doing with Iran is seriously influencing these perceptions.
- IPublius, on 06/10/2008, -1/+4What is happening in simple terms is that they are effectively taking future orders. It's sort of like a T-shirt maker who has shirts that are ordered ahead of time (futures market) and shirts that are sold in stores (actual demand).
If they are used to putting out 5 shirts a day in the store and start getting orders for one shirt a day, they will have a slight shortening of supply due to increased demand. If the orders bump to two or three, the demand will be much higher than the anticipated supply.
In the world of big oil, the orders (futures) are more theoretical than ordering shirts. They may or may not ever be called on, but because they are there and theoretically represent future demands on delivery, they must be treated like they will actually be called in.
In theory this might be okay, but what actually happens is that since they don't necessarily have to be called in, there is no recourse for faking it. Futures can be raised to whatever level is necessary to affect the market and make a profit. Those who actually do trade in their futures for actual oil are better off as well since they will make a profit on the actual commodity, not just the theoretical stock.
Enough do trade in their futures for actual oil that the system does not fall apart in a blizzard of futures options, but that doesn't actually help increase world supply needs. If Company XYZ buys 2% of the oil for a month, unless they process the oil and put into the public market, the supply available to the public is not changed even though an extra 2% was produced and sold by OPEC. This is what the author was referring to when he stated that the world oil supplies (pumped and barreled and being held) are very high. There is plenty out there. If it is not being made available for distribution though, it doesn't actually help prices go down.
- IPublius, on 06/10/2008, -1/+4What is happening in simple terms is that they are effectively taking future orders. It's sort of like a T-shirt maker who has shirts that are ordered ahead of time (futures market) and shirts that are sold in stores (actual demand).
- known, on 06/10/2008, -0/+1What if Futures trading is banned on Crude oil?
- Devilboy666, on 06/10/2008, -0/+1It's global economics - you can't just ban it.
- oldgal, on 06/10/2008, -2/+1Seems like the supply and demand is based on the contracts (supply of and demand for contracts) as opposed to the commodity. I would assume this demand is based on the perceptions of future supply and demand for the commodity. My guess is that the saber rattling the U.S. is doing with Iran is seriously influencing these perceptions.
- iloveliberals, on 06/10/2008, -3/+7Yes, this needs to be reported to central authority immediately. Central planning must resolve this matter.
- curtisag, on 06/10/2008, -5/+2It's the Government's job to regulate the futures market, they created the damn thing. Commodities are the life blood of a country, unlike stocks.
- ghuytro, on 06/10/2008, -3/+3Because the only possible alternative to unfettered capitalism is a command economy right?
In the Soviet Union, planned economies resulted (among many bad things) in food scarcity and shortages. In the USA, unfettered capitalism results in (among many bad things) a mortgage crisis where millions of middle class Americans lose their houses, their credit, their futures and their dignity.
Somewhere between the two extremes exists an optimal and sustainable equilibrium.
You can't possibly be arguing that the current status quo is either optimal or sustainable.- cosmicv, on 06/10/2008, -1/+5Lol, the USA has unfetter capitalism? Thats the most retarded thing Ive ever heard.
- blackbamboo, on 06/10/2008, -1/+1people did and do not need a mortgage, especially a mortgage where they refinaced and took out all the supposed equity to buy Escalades, tennis shoes, and gold grilles. People do need food.
- IdevInull, on 06/10/2008, -0/+8And like housing this bubble will burst...
- iamchewy, on 06/10/2008, -10/+2Except that the supply of oil is finite.
- IdevInull, on 06/10/2008, -1/+7And so is the supply of houses.
- iamchewy, on 06/10/2008, -7/+0Oh, ldevlnull, you got me there! Now that I think about it, you're totally right. I was a total fool to think that all those real estate developers and construction workers were doing something like, you know, building new houses.
PS, you are an idiot. - iamchewy, on 06/10/2008, -5/+0For those of you burying my original comment, let me clarify. When I said "the supply of oil is finite", I was referring to the fact that oil is a non-renewable resource, of which there is a limited amount in the earth. Whereas new houses can always be built to match (or in the case of the recent housing bubble, surpass) the demand for homes, at some point, oil will start to run out and production will no longer be able to match global needs.
- Demener, on 06/10/2008, -0/+3Land is a finite resource too. Or did that never occur to you?
- iamchewy, on 06/10/2008, -2/+0Yes, Demener, that actually did occur to me. But I also happen to live in New York, have been to cities like Hong Kong, Tokyo and Taipei and realize that people can also build vertically when trying to build in a limited amount of space. Actually you can also technically argue that building materials like rocks and metal are also finite resources, but realistically the world is consuming 87 million bbl/day of oil with an annual growth rate of 1.2%, while the world's remaining oil is estimated at around 1-2 billion bbl. You do the math.
- iamchewy, on 06/11/2008, -0/+0Sorry, I meant to say 1000-2000 billion bbl.
- iamchewy, on 06/11/2008, -0/+0I realize I've jumped into the lion's den here as everyone here burying me down are staunch anti-Peak Oilists, but nevertheless, as my final rebuttal, I'm gonna post these two links:
http://www.econbrowser.com/archives/2008/05/oil_bu ...
http://www.msnbc.msn.com/id/24625005/
- iamchewy, on 06/10/2008, -10/+2Except that the supply of oil is finite.
- pgoetz, on 06/10/2008, -17/+7Look nut jobs, it's actually quite simple. Oil is a very limited resource in high demand. If your whole life depends on something which is clearly going to run out AT SOME POINT, then it stands to reason that emotional speculation will drive the price of this resource way, way up. That's human nature; that's how the markets work; there's no evidence of any kind of conspiracy at work. Period. It's amazing to me that the same people who refer to 911 truthers as nuts immediately turn around and posit some kind of big conspiracy regarding the price of oil; never mind that it's an international business involving thousands of players. Why not sell your hummer and stop griping?
- thund3rstruck, on 06/10/2008, -5/+2Well said. People never cease to amaze in their stupidity. Oil is a non-renewable natural resource that took millions of years to form but only 150-200 years to consume. Oil will run out and it will happen much sooner than people think.
I think we need prices comparable to it's ACTUAL value. Consider how much it would cost to pay a horse drawn (or human drawn) carriage to transport you 20 miles. It would certainly cost much more than $4, yet we pay only $4 to fuel an automobile that same 20 miles and people are complaining?? What's it going to be like in a few decades when there is no oil at all? - oldgal, on 06/10/2008, -1/+4If there were truly a supply problem, there would be lines at the pumps, as there were in the 70s. I don't see this as a conspiracy, I see it as a natural outcome of an unregulated market. If the objective is to maximize productivity, then scarce resources must be managed to insure they are allocated to the right things.
- mrraven200, on 06/10/2008, -0/+1Vast price increases in an item where sunk prices have not increased is immoral period, end of story. Yes we need to prepare for the post fossil fuel future but not through speculative gouging that hurts the poor and middle class. Speculators equal epic fail ultimately even for themselves when the bubble bursts.
- thund3rstruck, on 06/10/2008, -5/+2Well said. People never cease to amaze in their stupidity. Oil is a non-renewable natural resource that took millions of years to form but only 150-200 years to consume. Oil will run out and it will happen much sooner than people think.
- prrudman, on 06/10/2008, -1/+8I work for the trading arm of one of the oil majors and you are correct that the price is mainly driven by speculators in the city. There is a very real difference in the supply/demand ratio though. Global output has been about 35m barrels per day for the last 3 years. Global consumption has been rising though.
- ghuytro, on 06/10/2008, -0/+8I saw "Enron: The Smartest Guys in the Room" on TV last night - first time seeing it.
I wonder about the similarities to what the Enron energy traders were doing in manipulating the California energy crisis.
http://news.bbc.co.uk/2/hi/business/1972574.stm
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2
http://en.wikipedia.org/wiki/California_electricit ...
Here's a tidbit illustrating the kinds of things that went on:
"The transcripts released Thursday, laced with profanity, show Enron traders apparently manipulating California's power market. In other calls, traders complain that their bosses are crooks.
One transcript includes an Enron trader, identified by the utility district as Bill Williams, calling an operator at the company's 52-megawatt Las Vegas power plant on Jan. 16, 2001, and asking that it be taken out of operation the following day.
"We want you guys to get a little creative ... and come up with a reason to go down," he says in the transcript.
The plant ceased operation the next day, as blackouts hit California. " - LordRedSnake, on 06/10/2008, -0/+9Laying the blame at the feet of the 4 Anglo-American oil companies is just absurd. These companies are a fraction of the size of OPEC and other state-owned oil companies that are responsible for the majority of the world's supply of oil. OPEC sets the world price for oil, our so called 'big oil' companies do not.
The other major contributing factor here is the falling value of the dollar and uncertainty in the stock market. Investors are dumping their cash into commodities like oil to hedge against a potential recession. You can call them speculators all you want, but even speculators don't act without incentives. The real exercise here is to determine who is responsible for these perverse incentives.- lamiaconfitor, on 06/10/2008, -0/+2you charge what you can get away with... they may not be 100% responsible, but they were certainly helping.
- LordRedSnake, on 06/12/2008, -0/+1What part of "OPEC sets the world price for oil" don't you understand? And even they do it indirectly by constraining supply. The Oil Ministers don't just say "oh let's charge $137 a barrel today," they meet and determine what production quotas given a specific level of demand will result in maximum profits.
Then the oil is traded in commodities futures markets where an investor says, "oh you're selling that barrel for $135, well i think the market supports $137, so i'll buy it at 135 and sell at 137." At no point is the ExxonMobil CEO stepping in here and setting a price.
Oil executives could go out and try to set the price, selling it for $30 a barrel which will promptly get snatched up in the futures market and resold by private investors for the true market price. So instead of the oil company making that profit, some speculator is. In the end you and I are paying the same price for gas but a different person is making the profits.
In the world of publicly traded companies owned by shareholders, those executives would quickly lose their jobs and never be hired by a reputable firm again as shareholders (you and I and anyone with a 401K, IRA, pension or other retirement account) demand we see maximum profits.
- LordRedSnake, on 06/12/2008, -0/+1What part of "OPEC sets the world price for oil" don't you understand? And even they do it indirectly by constraining supply. The Oil Ministers don't just say "oh let's charge $137 a barrel today," they meet and determine what production quotas given a specific level of demand will result in maximum profits.
- lamiaconfitor, on 06/10/2008, -0/+2you charge what you can get away with... they may not be 100% responsible, but they were certainly helping.
- MWeather, on 06/10/2008, -0/+2"We have more supply than demand"
Where are we storing all that extra oil?- clumsytime, on 06/10/2008, -2/+3I think it's in the ground somewhere. Some people claim they can take it out as needed.
- geddon, on 06/10/2008, -0/+4Bush just said our reserves are 98% full a few weeks ago, but decided against the last 2% given the current oil prices.
- humptyz, on 06/10/2008, -1/+2I forget the exact name, but you're referring to the Strategic Oil Reserve. That's only to be used in case of emergencies. And in any case he didn't voluntarily stop filling it, the Senate forced him to. He was crying about a veto the entire time until he finally relented once he saw the Senate votes.
- kylevonolbert, on 06/11/2008, -0/+2It doesn't exist yet, its in the form of futures.
- mrraven200, on 06/10/2008, -0/+2Yep in the ground. It WILL hit peak if it hasn't already but that's no excuse for gouging people. We need to figure out a way to make a smooth gradual transition to the post fossil fuel future that doesn't screw the poor and middle class. If that involves ekk gasp financial regulations, or even socialism so be it, this gouging ***** IS NOT WORKING. Get that into your head free market Libertarians sometimes your beloved market fails that's what the facts show now much as your wishful thinking would have it be different.
- hotpuck6, on 06/10/2008, -0/+1They are referring to production capacity.
Oil production is artificially stinted to increase prices. Why pump all the oil you can and make the same amount as if you only pump 80% and have prices rise? - MWeather, on 06/10/2008, -0/+1In the ground? So you're saying we have a humongous supply of deuterium for fusion, but we're storing it in the ground?
Hell, there's a glut on gold. See those two birds in that bush? Those are mine. - Thuktun, on 06/11/2008, -0/+1The oil supply chain is very wide. At any stage, we probably have leeway to store product at that stage of the chain.
Also, http://en.wikipedia.org/wiki/Strategic_Petroleum_R ...
Bush didn't decide to stop filling it, either. It was Congress. The Bush White House argued AGAINST stopping those shipments.
http://money.cnn.com/2008/05/13/markets/congress_s ...
Of interest to conspiracy theorists might be the juxtaposition of Bush's recent rhetoric in Israel, his ongoing Middle East policies, his sabre-rattling at Iran, and the obligation documented in the Wikipedia page above to sell petroleum to Israel in case of emergency for five years. Nothing to see here, move along.- MWeather, on 06/11/2008, -0/+1"Bush didn't decide to stop filling it, either. It was Congress. The Bush White House argued AGAINST stopping those shipments."
So 2/3 of Congress voted for it making a veto impossible? Or did he just sign it into law then send his operatives out to Digg to spin it?
- MWeather, on 06/11/2008, -0/+1"Bush didn't decide to stop filling it, either. It was Congress. The Bush White House argued AGAINST stopping those shipments."
- skidooer, on 06/10/2008, -1/+11It's still supply and demand. It's just that the demand isn't based on usage.
- zeromous, on 06/10/2008, -0/+2Egads Intelligence! (dugg up)
We've got a live one here diggers! AttacKKKKKKKKKKKKKKKKKK!- mrraven200, on 06/10/2008, -4/+2The demand isn't based on useage!!! WTF???? Demand IS usage!
And war=peace and ignorance is strength. New speak much? - zeromous, on 06/10/2008, -0/+2Let's re-parse:
Demand isn't based solely on usage. Demand is independent of usage.
I can have demand for 50L of water JUST IN CASE, even though I may not use it. This is called a reserve.... reserves can have demand too, even though its not in use.
Its not double speak, its econ. - Thuktun, on 06/11/2008, -0/+1And in this case, it's demand for OIL FUTURES not oil itself. Sheesh.
- mrraven200, on 06/10/2008, -4/+2The demand isn't based on useage!!! WTF???? Demand IS usage!
- Troy64, on 06/10/2008, -0/+1I think a better explanation is that supply and demand curves are based on the long run. In the short run you can have all kinds of fluctuation for any number of reasons including speculation in the market. However, in the long run those price points cannot be sustained.
- zeromous, on 06/10/2008, -0/+2Egads Intelligence! (dugg up)
- cosmicv, on 06/10/2008, -4/+3Amazing the sheer ignorance of most here of the role speculators play.
Even if they had a huge influence on price (which is debatable), their function serves to reduce the consumption of oil (via increased prices) over what it would have been otherwise, thereby saving the oil for a future time period when it is predicted to have an even greater shortage of supply, thereby lowering the cost of oil in the future.- mbraynard, on 06/10/2008, -1/+5The simple reason why the prices are so high now and in the futures market is that oil is a MUST HAVE. Running short in the first world is unacceptable and the price reflects the Must Have nature of the project. You aren't paying for oil, your paying for the guarantee that oil will be available for purchase.
This country and others would happily pay $10 a gallon if the alternative was not enough oil to meet the daily needs. $10 a gallon is painful; shortages are lethal.
The prices aren't high because people are greedy. Imagine if you had a job but you weren't allowed to have sick days. If you ever didn't show up, you were executed. How much would you demand as compensation for this job relative to a job that did have sick days and no threat of execution?
You might actually request enough money so you could have ten extra guys as backups to stand in for you. It gets expensive. So you are likely charging many multiples of a typical salary.
Same thing with oil.
Be smart. Drill domestically. Remove the artificial constraints on alternatives (like nuclear).- cosmicv, on 06/10/2008, -0/+1I agree with most of your statements and it doesn't appear your contradicting anything I said. My point was to highlight the service that oil speculators produce, which is essentially the balancing of costing over time.
- mbraynard, on 06/10/2008, -0/+1I replied to you because I was at least in harmony with some of your sentiment and wanted to build on it.
- Herostratos, on 06/10/2008, -0/+1"Amazing the sheer ignorance of most here of the role speculators play."
I agree. Observing a debate about economics is one of the best arguments against democracy you can find.
- mbraynard, on 06/10/2008, -1/+5The simple reason why the prices are so high now and in the futures market is that oil is a MUST HAVE. Running short in the first world is unacceptable and the price reflects the Must Have nature of the project. You aren't paying for oil, your paying for the guarantee that oil will be available for purchase.
- VogonPoet, on 06/10/2008, -2/+4Dot-com bubble, more and more dot-coms created till bubble collapses.
Housing bubble, more and more houses built until bubble collapses.
Oil speculation bubble, less and less oil is produced/exported until bubble collapses?
Is that how you think this going to turn out? Put your money where your mouth is and go short on some 2010 futures. If you're right you'll make bank. If you're wrong I'll be there collecting your money. - BESTenemy, on 06/10/2008, -4/+5 I call *****. Oil stock trade is primarily a paper market - the kind that rarely produces physical delivery. Meaning - if you buy shares in oil mining or refining, they don't ship barrels of oil and gas to your door. What you do, is you bid on the prices going up, forcing the supplier to sit on the reserves. While that is happening, as a result of such speculation, the prices go up, but the reserves also increase.
In reality all the reserves today are at a 5-year low, which indicates speculation is not the cause of price hikes.
Also, if speculation was to blame, it would be in all oil-tied asset trades, such as mining, where more than 50% of extraction costs are based on the cost of fuel. However that is not happening. Those that point a finger at speculators are playing a blame game while trying to divert the attention from the monetary policy makers.
Financial Times has reported the current extraciton to be at 85 million barrels while the consumption is at 86 a day. If that's not an indicaiton of a supply/demand problem, then I don't know what is. We're eating through 1m barrels a day of our strategic reserves, just to meet the demand. - FelixdaaHack, on 06/10/2008, -1/+1windfall profits tax on all oil speculators!
- mbraynard, on 06/10/2008, -0/+1Profits in the hands of the oil companies is the best solution for the energy crisis because the are the most efficient investors in developing more efficient oil development, more oil extraction, and better alternatives to oil.
- vawksel, on 06/10/2008, -0/+1The sad thing is, there's a better chance of getting Bush impeached than there is these private oil companies to stop artificially setting the price to whatever they want.
We need completed production quality alternatives that don't include the oil companies anywhere in the entire chain from start to the final mile that you car goes down the road when you hit the pedal.
When that happens, oil will get VERY cheap, but then we won't need it anymore either. - Pawlzors, on 06/11/2008, -0/+0 supply / demand is not resposible for the price going up ? Oh yeah we don't have 2.3 Billion asian asking for oil. "DUH"
- CrypticSkeptic, on 06/11/2008, -0/+1I stopped reading the article after they used the word crucial twice in the first sentence. Poor writing style.
"First, the crucial role of the international oil exchanges in London and New York is crucial to the game." - linagee, on 06/11/2008, -0/+1It's more than 60%! Nobody in the gasoline supply chain needs to be making a single penny! That guy who turns together the oil drilling rods? He should be making $0.50/hour!
- tbstudee, on 06/10/2008, -3/+19dugg because I'm tired of them as well.
- Albo23, on 06/09/2008, -24/+158***** speculators, get a real job.
- netdroid9, on 06/10/2008, -4/+41They do have a real job, speculatively speaking.
- rolf, on 06/10/2008, -4/+22Speculators have been around for a long time in many industries. They are usually get crushed by a crash after a huge run-up.
Although, as a solution, I would say that the only ones who can speculate are those who will take actual delivery of the crude.
I don't see a reason for people who never plan on taking delivery to be able to bid. That isn't free market; you are not a buyer or seller: just a leech.- popfrogs, on 06/10/2008, -0/+9"Although, as a solution, I would say that the only ones who can speculate are those who will take actual delivery of the crude."
That's how it was before Enron lobbied the CFTC to slightly deregulate oil futures trading. - Skooma714, on 06/10/2008, -1/+3Yeah, they should work in dead-end low pay soon to be outsourced jobs like everyone else.
Get it whilst the getting is good I say.
(I do not even have so much as a CD account) - dukeeeey, on 06/10/2008, -2/+3you have to sell to someone that can take delivery. Yeah sure you can bid up oil futures for months in advance, but who cares about future months ? Someone HAS TO TAKE DELIVERY, which will cause a sell off and price drop.
thus ends the speculation argument bs
people just don't have a ***** clue how the system works
It's amazing how when oil goes down its supply and demand, yet when it goes up it's the evil speculators ..
Production has been totally flat for 3, nearly 4 years now, that's why we have increased prices. - serpentor, on 06/10/2008, -1/+2This logic is nonsensical. Speculators should only be able to bid if they can take delivery? If that were the case, there would be no speculators in wheat, corn, rice, oil, gas, soy, etc etc. Speculators play an important role of adding liquidity and aiding in price discovery and "normalization". Removing speculators who can't take delivery (the vast vast majority of speculators in all markets) would cripple these markets..
- popfrogs, on 06/10/2008, -0/+9"Although, as a solution, I would say that the only ones who can speculate are those who will take actual delivery of the crude."
- cookingboy, on 06/10/2008, -3/+6Yeah, and that word "Perhaps" in the title means the author has absolute certainty and does not speculate...
- shoook, on 06/11/2008, -0/+1Perhaps 60% of all speculative assumptions could possibly be interpreted as inconclusive. Although this may be possible the results are still unclear and we will probably never know for sure.
- XanderDee, on 06/10/2008, -2/+28Question why do speculators buy oil?
Answer: The Federal reserve is printing money like crazy and diluting all money in existence so speculators want to protect their wealth form debasement.
Question how can we stop the speculators from increasing the price of oil?
Answer: The Federal Reserve must raise interest rates to a high enough % so that people like me would move our money into bonds and not oil.
Question so why are they not doing that?
Answer: If the fed raised interest rates, big name banks would go under as more people would default on their home and the $600 Trillion ($600,000,000,000,000) derivatives market will explode, taking down retirement funds, investment banks world wide.
Question so what is the solution?
Answer: Print money until rapid inflation sets in to raise home prices, this starts with commodities once "speculators" make enough "currency" they move the "currency" back into houses and other deflating assets.- curtisag, on 06/10/2008, -0/+3Yes, thank you for laying out the truth of what's going on here. But let us not ignore the loophole in trading commodities that is allowed here. The only people trading oil futures contracts should be people expecting to receive the oil at delivery.
- XanderDee, on 06/10/2008, -0/+1That was the reason the futures market was created however in order to spread risk from the producers the oil contracts need to be sold to someone.
That someone is speculators and users. The futures market has buy limits like gold and silver so it is number of speculators that see what the Fed is doing and protecting them selfs. Fear not they will jump ship and move to gold an silver soon.
- XanderDee, on 06/10/2008, -0/+1That was the reason the futures market was created however in order to spread risk from the producers the oil contracts need to be sold to someone.
- shakbhaji, on 06/10/2008, -0/+1Aww, I was waiting for a punch line...
- diggimator, on 06/10/2008, -0/+2Ron Paul for president.
- curtisag, on 06/10/2008, -0/+3Yes, thank you for laying out the truth of what's going on here. But let us not ignore the loophole in trading commodities that is allowed here. The only people trading oil futures contracts should be people expecting to receive the oil at delivery.
- ptheroux, on 06/10/2008, -2/+5I you analyze the situation logically, speculators are actually consumers' best friend. Speculators make money by buying when prices are low and selling when they are high, or in reverse order, by short selling when prices are high and buying when they go down. In so doing they put upward pressure on prices when they are low and downward pressure on prices when they are high. This means that even if it is not their intention, when a speculator tries and succeeds at making a profit, they actually are making prices more stable.
If speculators are continuing to buy oil at $130 a barrel, it is because they think it will sell for more in the future. If they are wrong and prices actually go down, they will lose their shirts and everyone here on Digg can take joy in their misfortune. If the speculators are right and oil prices go even higher in the future, the speculators will make their profit by selling at the higher price, and consumers will benefit from more oil being dumped on the market at a time when prices are high and oil is more in demand.- carlosglz, on 06/19/2008, -0/+1I understand your logic, but I think what is happening here is out of control GREED. The real estate market took a *****, so now these leeches need some other area of the economy to balloon up and make money from so they can sit on their fat asses all day. Speculation should not be allowed in areas that have an effect on people's everyday lives... like food, water and energy.
- CrypticSkeptic, on 06/11/2008, -0/+1I stopped reading the article after they used the word crucial twice in the first sentence. Poor writing style.
"First, the crucial role of the international oil exchanges in London and New York is crucial to the game."
- grey580, on 06/09/2008, -19/+38Tell all your friends guys please. Everyone needs to know. It needs to be Main Stream news.
- iloveliberals, on 06/10/2008, -3/+3It has been in the mainstream news for some time now...in fact, outside of digg, it's pretty well known.
This kind of speculating on commodity prices is something that's performed by free people in a free society. We must ask central authority to eliminate this freedom. Join me, comrade.- ThugThrasher, on 06/10/2008, -0/+3As much as it hurts me to say this, being mostly libertarian, if you let ALL aspects of a free market run COMPLETELY free, then there is the potential of screwing everyone but the rich.
Now, I think things should be allowed to run free MOST of the time, but when situations become as bad as this and the free market begins screwing everyone who is not rich on a necessity (and yes, in most parts of the US today, cars are a necessity, so gas is a necessity...it's how our society is set up and until things change a bit, it's how it will stay) then the government SHOULD step in and regulate in order to keep the economy from collapsing to nothing. I lose my libertarian values in situations like this...sorry.- ledskof, on 06/23/2008, -0/+0Just remember that "Free" markets are built by governments using the tools of governance, like laws, regulations, trade agreements and the like. You cannot have a free market without a system of ownership. You cannot have a civil society without the government doing things like providing for the common good. I personally think we should raid washington and forcibly install President Paul, go back to original intent and start over from go and reset all this crap. I want my civil liberties back. We need someone with some balls to set things back to rights.
This problem is not unlike that which happened to silver and later to natural gas. we have a brutal dictator in the white house who is no less guilty of using his position of power to leech wealth and stability from the middle class than Clinton was for sticking it to that intern.
The difference? There's enough to put the Bush in the poky for a long time.
Obama called for the regulation of this market but he's going to move money out of things we need right now, like the space program. In times requiring more innovation, NASA is not one of the programs you want to cut.
He's a lot more promising than that pan fried bush clone on the other side though. he's gonna quit the race I think. Who knows who the R's will have to vote for, but I would be surprised if McCain actually ever really tried to win in November.
- ledskof, on 06/23/2008, -0/+0Just remember that "Free" markets are built by governments using the tools of governance, like laws, regulations, trade agreements and the like. You cannot have a free market without a system of ownership. You cannot have a civil society without the government doing things like providing for the common good. I personally think we should raid washington and forcibly install President Paul, go back to original intent and start over from go and reset all this crap. I want my civil liberties back. We need someone with some balls to set things back to rights.
- ThugThrasher, on 06/10/2008, -0/+3As much as it hurts me to say this, being mostly libertarian, if you let ALL aspects of a free market run COMPLETELY free, then there is the potential of screwing everyone but the rich.
- aladrin, on 06/10/2008, -1/+2Why, what will you do about it? Stop buying gas until they become reasonable? I don't think so.
You should ALREADY be trying to reduce your reliance on oil, but since so much our of society is based on it now, it's nearly impossible. Finding out that there's a conspiracy won't change that or make it easier to reduce usage. - minorthreat, on 06/10/2008, -1/+2main stream news? I never use the word "duh" in response to an article, but I think it is justified here.
- xBDVx, on 06/10/2008, -0/+3A) it is. It was even mentioned in the Time 100 issue in the article about the Saudi Oil Minister. B) There's nothing we can do about it. Market forces will eventually kick in, the bubble will burst, and this time next year our taxes will probably be saving the speculator's 'poor' sorry asses.
- ledskof, on 06/23/2008, -0/+0Wrong. We've been here before. We just have to fix this little Enron gift and move on.
We still have to fix our dependence on oil though!
Prereqs:
- Patent protections for new technologies owned by oil companies? Gotta fix that.
- Increase funding for research and development
- End Iraq occupation and begin a real mitigation of the terror threats that exist.
- ledskof, on 06/23/2008, -0/+0Wrong. We've been here before. We just have to fix this little Enron gift and move on.
- Crimsoneer, on 06/10/2008, -1/+3An opinion is not news.
- FrozenKetchup, on 06/10/2008, -1/+3You're not my friends guys, buddy pal
- phike, on 06/10/2008, -2/+1This is wrong. Speculation has very little to do with the price of oil, for speculators can not actually keep millions of barrels of oil in inventory. This is an excuse for the rapid increase in oil. Ever think about supply and demand?
SUPPLY: In 2008, drillers had to double amount of oil rigs to produce the same amount of oil we produced in 2007.....In other words, supply is cut in half.
DEMAND: Risen in the United States every year, and at exponential rates in developing countries. The average U.S. citizen uses 35 barrels of oil per year. The average Chinese and Indian citizen uses 3 barrels of oil per year. What do you think is happening to demand?- ledskof, on 06/23/2008, -0/+0Er. Have you been asleep this whole time? They are buying futures, not oil. If they had to take delivery of the oil, this problem would be reduced.
- iloveliberals, on 06/10/2008, -3/+3It has been in the mainstream news for some time now...in fact, outside of digg, it's pretty well known.
- FrankHope, on 06/09/2008, -20/+29Oil Speculation and Israeli Sabre Rattling:
Israeli Minister Shaul Mofaz triggered the largest one day dollar gain in the price of oil in history with his remarks that attacking Iran is "unavoidable". Did oil speculators have advanced warning that he was going to make such a statement? Ask Congress to investigate.
http://digg.com/political_opinion/Oil_Speculation_ ...- kaelyiesta, on 06/10/2008, -0/+1"Did oil speculators have advanced warning that he was going to make such a statement?"
I think this story shows precedence for such behaviors from our government:
http://digg.com/business_finance/Our_gas_shortage_ ...
That article is about not only the legal influence of speculators, but outright corporatist style influence of our government to help specific individuals and businesses.- FrankHope, on 06/11/2008, -0/+1Great article. In Business Week no less. So much for the old supply and demand causing the rise in oil and gas prices. It's just speculation and profiteering, pure and simple. Congress should definitely be investigating.
- kaelyiesta, on 06/10/2008, -0/+1"Did oil speculators have advanced warning that he was going to make such a statement?"
- eggballs, on 06/09/2008, -12/+8It is most important to realize that we as consumers have no absolutely power to change any of this.
That, or no one cares enough to join forces and try.- duggdowncatisad, on 06/10/2008, -1/+2Cheney? Is that you?
- junk, on 06/09/2008, -4/+77Stories like this remind of the "I drink your milkshake.." scene in There Will Be Blood. Except... the analysts' straws go in to the future, none of what they are sucking is real and they don't sleep in their private bowling alleys as much.
- bosssmiley, on 06/10/2008, -1/+8Dang. It's scary how much sense your comment actually made.
- craighoxton, on 06/10/2008, -0/+7There Will Be Blood: "drainage"
Hedge fund industry: "leverage"
- perspicuity777, on 06/09/2008, -11/+11This is, I guess, the result of policy by ideology rather than policy by competence and intelligence.
"Regulation is bad!"
"Okay, lets get rid off it, we'll all be better off."
flip side of the story-
"Hey - what happened to all those politicians we conned into de-regulating everything so we could screw everyone and earn zillion dollar bonuses?"
"Looks like they got voted out."- 55mph, on 06/10/2008, -1/+4Don't discount the effect the weak dollar is having on oil prices. The producers, who buy our government debt, realize that US currency dilution is happening at a near frenetic pace. Although M-3 is no longer reported, some estimate it to be near 20% per year for the past two years.
Besides, if you were obligated to buy our debt due to standing agreements, you would want the additional revenue of higher oil prices to hedge the bond purchases as devaluation of the currency continues unabated.
Is there anyone here who thinks a 10 year Treasury Bond yielding 3.5% is a good investment?- sesstreets, on 06/10/2008, -1/+1*raises hand*
- sylvok, on 06/10/2008, -0/+1Depends on compeating rates. If I had to choose between the US and Zimbabwe I would choose the US
- philhatesyou, on 06/10/2008, -1/+1The price of a barrel of oil is 10x what it was in 1999. If you think the dollar has fallen anywhere near that amount, then you're even dumber than you look.
- 55mph, on 06/10/2008, -0/+1I didn't say the declining dollar is the only reason for higher oil prices. It's certainly a factor.
- 55mph, on 06/10/2008, -1/+4Don't discount the effect the weak dollar is having on oil prices. The producers, who buy our government debt, realize that US currency dilution is happening at a near frenetic pace. Although M-3 is no longer reported, some estimate it to be near 20% per year for the past two years.
- StingingNettle, on 06/10/2008, -9/+13Where else are they to put all that money? You can think the central banks for this, all of those dollars have to go somewhere. 60% does seem high, I'm not sure if I believe that number.
- domokunt, on 06/10/2008, -0/+13FYI Oil was at almost $50 PB a year and a half ago.
- iloveliberals, on 06/10/2008, -6/+5The dollar was worth more back then too. Those were the days.
- saigumi, on 06/10/2008, -1/+6The dollar value did not drop 63% since last year. Learn about scale and percentages.
If the value of a dollar falls say 5%, then oil should be 5% more, not be nearly 3 times as expensive.
- saigumi, on 06/10/2008, -1/+6The dollar value did not drop 63% since last year. Learn about scale and percentages.
- iloveliberals, on 06/10/2008, -6/+5The dollar was worth more back then too. Those were the days.
- ledskof, on 06/23/2008, -0/+0I think the 60% is low because the numbers in the report are old. I'll put it this way... the price of oil is not moving with supply and demand. It's moving with political posturing and speculation.
- rockon1122, on 06/29/2008, -0/+0It's now been calculate to 70%
- domokunt, on 06/10/2008, -0/+13FYI Oil was at almost $50 PB a year and a half ago.
- rzxc, on 06/10/2008, -9/+49By lowering interest rates and giving money to banks, the Fed has allowed this to happen. People expect inflation. They must invest in things that will not lose value during an inflationary period. (e.g. oil and food). Of course, that raises the price of oil and food. Inflation becomes a self-fulfilling prophecy. Also, lowering interest rates substantially below the EU's forced investors to move their dollars into the Euro, which has killed the dollar, and therefore raised the price of oil and food. Many people thought that a slowdown in the U.S. economy would result in a worldwide slowdown, which would cause the EU to lower interest rates. That hasn't happened. Actually, I wouldn't be surprised if all the money that went into Europe actually helped its economy. Of course, the real loser is the consumer who has to pay more for gas and food. The Fed does seem to understand what it has done. Today, I heard that the Fed may raise interest rates. Also, Secretary Paulson said that we might intervene in the currency markets.
- 10scott10, on 06/10/2008, -9/+5erm, no. this has happened because they deregulated the industry.
- HorusHeresy, on 06/10/2008, -0/+12I don't know why you are being dugg down. Inflation is directly correlated to money supply and lowering interest rates/running the printing press constantly adds to the money supply. In many parts of the world, the gas prices haven't gone up by a ton, because of the fact that the euro, among other world currencies are climbing against the US currency. The Euro has doubled.
- richmomz, on 06/10/2008, -1/+13At least there's someone out there that gets it... it's INFLATION! Not speculators, or gas guzzling SUVs, or the war or peak oil... etc. The problem is that our currency has lost more than half its value in the last 10 years. Take a trip to the grocery store and think back at what things USED to cost in the 90s. You will find that most items have doubled or tripled in price in the last decade, and it aint because of people speculating on Lucky Charms futures. Look at health care costs (triple). Look at tuition (triple, if you're lucky). House prices (depending on where you are, roughly double what they were in the 90s, even after the bubble burst).
Everyone is pointing fingers everywhere except where the problem actually is: the Dollar.- Bravesguy18, on 06/10/2008, -2/+3Why does it always have to be one big problem that is to blame? Everyone always wants to nail it down to one issue. Sometimes things are more complicated than what you learned in ECON 101.
- DaviDaviDaviD, on 06/10/2008, -5/+2Please don't refer to Europe as one country.
- dafunkmonster, on 06/10/2008, -0/+1You can't forget about all the news outlets constantly screaming "OMG GAS SKYROCKETING". That in itself makes prices go up, even if prices would have otherwise dropped.
- jdubdub, on 06/10/2008, -11/+58The only problem with the oil bubble, compared to the housing bubble, is that this bubble is seriously pissing off the whole world every single day they fill up... I think that if this continues, global revolution is nigh.
- ChromaVita, on 06/10/2008, -13/+1If its anything like the action that bikers and trukers are taking, it's going to involve using up even more gas to drive slower than everyone else to make a statement. But trust me guys, it's going to help. Don't think about it for to long.
- Pittance, on 06/10/2008, -0/+15Going slower uses less gas. Unless you do 5mph. Going 50mph is much more efficient than 70mph. Even over the same distance. So what statement are they making again?
- skidooer, on 06/10/2008, -8/+4I disagree. The commodities boom has made higher incomes easily available to anyone who wants to invest. The added income can offset any increased cost at the pumps.
It's really only a problem if you aren't playing. So, why aren't you playing?- justastatistic, on 06/10/2008, -0/+4A majority of people are consumers of oil. Not speculators. So it's a problem for pretty much everyone who doesn't benefit from speculating.
- skidooer, on 06/10/2008, -3/+2That's my the point. Start speculating on some of these things if you are concerned about where the prices are heading.
- Ravatar, on 06/10/2008, -0/+2I dunno, let's start with the tens of millions of people living around or beneath the poverty line or on a fixed income that are being DEMOLISHED by these increasing commodity prices. When you have an extra $14 per month in liquid income, and commodities go up $80, the least of your worries is investing in the commodity market.
- Acolyte357, on 06/10/2008, -1/+3"It's really only a problem if you aren't playing. So, why aren't you playing?"
***** you buddy, some of us don't have the money to be "playing". - mrraven200, on 06/10/2008, -1/+2What aren't I playing? Because I am paying the rent, buying food, and putting gas in the tank, leaving about 15 bucks in my wallet at the end of the week. Out of touch much *****!!!!!!!!! Hint not everyone has spare tens of thousands of dollars laying around to "play" with. People like you should FORCED to work some place like Wal Mart for 6 months to see how the 30% of the population who are wage slaves ACTUALLY live.
- disappointment, on 06/10/2008, -2/+0Get a better education and a better career.
Those are within your reach... if you just wanted them - mrraven200, on 06/11/2008, -1/+2disapointment I could easily be a web developer but you know what even if I get that job it still doesn't solve the main problem that SOMEONE is going to be shoveling the ***** and getting paid nill for that job. Screw people like you who exploit people for their labor then laugh and sneer at the victims. There is a LOT of rage in the country at this point you exploiters etter hope your next bubble is in bullet proof vests because not everyone on the angry left is anti 2nd amendment...
The next click you hear just might be someone with abolt action rifle *****!
- disappointment, on 06/10/2008, -2/+0Get a better education and a better career.
- justastatistic, on 06/10/2008, -0/+4A majority of people are consumers of oil. Not speculators. So it's a problem for pretty much everyone who doesn't benefit from speculating.
- ChromaVita, on 06/10/2008, -13/+1If its anything like the action that bikers and trukers are taking, it's going to involve using up even more gas to drive slower than everyone else to make a statement. But trust me guys, it's going to help. Don't think about it for to long.
- RadioVibes, on 06/10/2008, -12/+5I'm just amazed that these speculators have not been assassinated yet.. I mean they gotta be pissing off SOME of the wrong people crazy enough to take matter into their own hands and deal a real final solution.
- CanIGetAWitness, on 06/10/2008, -0/+9People would of thought the same thing for the Enron Traders, but some of them are among the richest people in the world. I remember seeing a billionaires list and a former Enron Trader was one of them.
- ultragush, on 06/10/2008, -17/+18the oil is a form of taxation, another redistribution of wealth. they've picked it carefully, they've picked it because it has become so important in our world as it is what puts the food on our table, and this is just the watchword for human suffering.
its a way of bringing humanity to its knees, so when the chips/id-cards/socialism/whatever comes along the people won't fight against it.
its hard for those shadowy men to get any more power directly, regardless of money. humanity is proud and fierce still, but the last of our energy is being drained away, the rest of it sacrificed in the name of entertainments, mass media, senseless wars and fears and
suffering is coming. much suffering.
fight for anarchy, fight for democracy, or whatever it is. just fight against this money craze. we must from this lacivious queen break off, this green gorgon, ***** MONEY! LET THEM HAVE THEIR MONEY "our money" and let them see what to think of it when the engine of the world is collapsed.
luckily there are many hands involved, and iran could be the greatest friend of freedom that exists yet... indirectly. we must not be allowed to try and "do something" with iran.- Pittance, on 06/10/2008, -11/+6"fight for anarchy, fight for democracy," my idiot-meter is going off the scale.
- thespiff, on 06/10/2008, -5/+4If lack of oil brings you to your knees you were already pretty close to the ground to begin with. Buy a ***** bike.
- IRDrew, on 06/10/2008, -1/+0So you think international transportation of food and other commodities could be done just as easily with a bike? Alright...
- thespiff, on 06/10/2008, -0/+3Grow your vegetables in the backyard.
- Marijuana, on 06/10/2008, -1/+1Well said.
- andy314159pi, on 06/10/2008, -0/+3You are actually complaining about capitalism itself. Ownership of the commodity, no matter how important, is at the heart of capitalism. They are well within their rights, in a capitalist society, to choose the value of the oil that they own by curtailing supply.
- mrraven200, on 06/10/2008, -0/+4Yeah socialist Sweden is one vast slave farm and they have 666 tattooed on their foreheads and bow before big brother every day. Paranoid much?
- Mookie5, on 06/10/2008, -0/+3I'd have supported ultragush here, but including socialism in the id tags part of the post smacks of ignorance. I think he meant Facism.
- ultragush, on 06/11/2008, -0/+1no i actually meant socialism. i can recall the image in my mind's eye as I wrote it down... all men given jobs by the state, forced to work how the state wants, in return for the right to live. surely they would be happier with that as that would give them even more control, a new feudal system. ultimate control. serfdom. the end.
- mrraven200, on 06/16/2008, -0/+1You are thinking of Soviet style Communism. Go google democratic European socialism and try again. And no I don't necessarily believe in every tenet of European style socialism but it's a LOOOOONG way from the U.S.S.R. I assure you. Hint Sweden has private companies like Saab and Volvo, a market, AND provides education and health care for all people. Stop getting all your news from conspiracy sites like infowars.com. They are good for SOME things, but not everything.
- ultragush, on 06/11/2008, -0/+1no i actually meant socialism. i can recall the image in my mind's eye as I wrote it down... all men given jobs by the state, forced to work how the state wants, in return for the right to live. surely they would be happier with that as that would give them even more control, a new feudal system. ultimate control. serfdom. the end.
- nydwarf, on 06/11/2008, -0/+2Dude you need to loosen your tin foil hat.
- HotSaucePanCake, on 06/10/2008, -2/+11I agree, what is really sad is driving shouldn't be for the rich only... And i guarantee the rich are just as fkn pissed.
- 1randomguyO8, on 06/10/2008, -2/+21Don't worry higher oil prices just means:
1) More money for OPEC nations
2) More profit for Oil companies
3) High cost of fuel
4) Higher cost of food
5) Higher cost for other forms of travel
6) Inflation on everything else.
7) Less economic growth/stagnation
8) Devaluation of shares.
9) Protests/blockades/riots
10) More incentive to fight for oil
Did I miss anything out?- HotSaucePanCake, on 06/10/2008, -1/+5Actually you bring up interesting points, there is a threshold when oil becomes no viable anymore and a huge amount of investment will be made in alternative fuels / transportation.
I hope it happens, because once you start that wheel rolling, once you have the deep pockets of wall street working together to bring about a new industry, we will finally see OPEC eat it.- Waiting2awake, on 06/10/2008, -1/+13Who is going to make those investments when big Oil and Finance have all the cash?
I remember a few years ago when oil was at $50US/Bar , and study after study done from both pro and con sides said that renewable energy simply wasn't viable until oil hit between 60-70 a barrel.
Here we are, renewable tech has only come down in price and up in efficiency and oil is $120-$130US a barrel - and study after study is telling us we are "almost" there.....
Then you figure out who owns all the rights and patents on these renewable energy things and they are primarily oil companies.
All of a sudden it appears that they are merely using the renewable energy thing as a carrot moves an ass. They have the rights, and it is in their best interest to keep those techs away from general consumption...
- Waiting2awake, on 06/10/2008, -1/+13Who is going to make those investments when big Oil and Finance have all the cash?
- IPublius, on 06/10/2008, -0/+3You forgot:
11. ???
12. Profit!
- HotSaucePanCake, on 06/10/2008, -1/+5Actually you bring up interesting points, there is a threshold when oil becomes no viable anymore and a huge amount of investment will be made in alternative fuels / transportation.
- Pittance, on 06/10/2008, -8/+3Rich people dont give a damn. They have money to burn. Driving isnt just for the rich. If gas prices double and you cant afford to drive, then your budget is way too tight. Carpool or something. Make friends or buy a 5-year old civic or something.
- paintpro, on 06/10/2008, -1/+2Money to burn! Hey its a pun!
I can say that fuel prices have hurt the rich. I mean, I had to buy a smaller BMW than I wanted! Can you believe that!
- paintpro, on 06/10/2008, -1/+2Money to burn! Hey its a pun!
- krusader3z, on 06/10/2008, -0/+3Gas prices don't impact the rich like you suggest.
- 1randomguyO8, on 06/10/2008, -2/+21Don't worry higher oil prices just means:
- 1randomguyO8, on 06/10/2008, -2/+12Isn't it possible to get rid of the speculators? I'm sure OECD countries would like to do that but OPEC are having a field day at the moment and so are these people working in the oil/finance industry.
It kind of sucks how they are manipulating the whole worlds economy and leeching off billions of consumers. Also retarded finance institutes predicting $150~200/barrel doesn't ***** help eithor.- duggdowncatisad, on 06/10/2008, -2/+19Two can play this game.
I PREDICT THAT BY THE END UP SUMMER, OIL WILL GO DOWN TO $20 A BARREL.- joshhan, on 06/10/2008, -0/+6DIGG HIM UP!!! :)~
- 1randomguyO8, on 06/10/2008, -0/+4Exactly. If forbes, bloomberg or whatnot came out and said "we predict our will fall below $110/barrel by the end of the year. Wouldn't it be nice if that sliced off a couple dollars, instead of adding $5.
But I'm guessing MAYBE they have their reasons why not to do it. Maybe they don't won't like an idiot if their pridictions are wrong and loose credibility.
- iloveliberals, on 06/10/2008, -1/+0Countries have been known to try to get rid of groups of people they don't particularly like. See Germany, et al. I believe there are underground groups you may join that share your common interests.
- Terr01, on 06/10/2008, -0/+1Uhm... Not really, except by changing the system.
It's sort of like talking about "getting rid of gamblers". Sure, there are some professionals, but the vast majority of gambling isn't done by some sort of gang or shadowy cabal.
- duggdowncatisad, on 06/10/2008, -2/+19Two can play this game.
- johnj21, on 06/10/2008, -5/+61Other proposed headlines for this story:
60% of taday's oil price is 80% speculation
Perhaps 60% of today's oil price is pure speculation, but that's just speculation- Hypermarkalan, on 06/10/2008, -1/+4Studies have shown that 60% of the time, speculation works every time.
- snareguy17, on 06/10/2008, -0/+2Ta..ta..ta...tadaay juniah.
- rgodfrey, on 06/10/2008, -0/+1I believe for the math to work it would be 75% of today's oil price is 80% speculation.
- domokunt, on 06/10/2008, -2/+6We've had a credit fueled asset boom, real estate and stocks are now falling so the credit machine pumped money into commodities instead, then when most commodities hit a peak in march speculators pumped money into oil instead, causing the price to go vertical.
- radink360, on 06/10/2008, -8/+26I've been saying this all along. It's all BS. There's no ***** shortage. It's all made up by the powers that be to make billions and billions of profits.
- unreg, on 06/10/2008, -0/+6There's a perceived shortage. It one of those we know someday well into the future we'll have a problem so were going to price it into today oil.
It's like knowing that on July 30th, 2019 you're going to be missing a sock, so the socks we sell you today are going to cost a little more. - Rudigity, on 06/10/2008, -1/+1"to make billions and billions of profits." lol
- disappointment, on 06/10/2008, -0/+0True, but an insatiable demand can make prices skyrocket. Just as it is today.
Until we see global oil demand decrease, for whatever reason, the price can and will continue to increase.
- unreg, on 06/10/2008, -0/+6There's a perceived shortage. It one of those we know someday well into the future we'll have a problem so were going to price it into today oil.
- Chimbles, on 06/10/2008, -3/+7There is nothing "perhaps" about it, as it is a fact. There is a clear separation and independence of the supply of this product and it's world market... economic marvel. However I suspect this is not the only product in history to be valued independently of the factual supply, and demand but by perceived supply and demand. What makes such a discrepancy possible is the fact that crude, or the resulting product of, is in a large part an inelastic commodity.
- mrraven200, on 06/10/2008, -0/+1That's actually pretty smart. Now what do we DO about that?
- nydwarf, on 06/11/2008, -0/+1But the big problem is that this is not a renewable product, it will in fact run out someday and no one really knows when.
- pintomp3, on 06/10/2008, -6/+8same goes for the food "shortage".
- cowsgonemadd3, on 06/10/2008, -4/+3No thats real and its because of too much rain and too little rain plus the dumb politicians who go for ethanol from corn.
- quail20, on 06/10/2008, -1/+5Actually BBC World Service did a piece about food commodities and oil commodities. They spoke about the fact that there are issues with crops in certain regions that should raise prices overall. But there's also giant conglomerate hedge funds buying futures and driving prices beyond crazy. Prices should have gone up but not by 200% to 300% like it has in some locales. The radio piece mentioned several interesting bits. Hedge funds bought in 2007 double the world's annual production of winter rye (not positive on the crop), which is something that's just crazy. And they mentioned that the US HAD 10% OF IT'S CORN HARVEST LAST YEAR GO UNUSED. And yet corn prices are going through the roof.
- skidooer, on 06/10/2008, -1/+1There's also the problem of food being sold well below the cost of production. Perhaps we've finally seen the "reset" we should have saw years ago? I hope so. Extremely low food prices are not good for anyone.
- brbeaird, on 06/10/2008, -6/+12I have a strong suspicion that this article speaks truth. You know something is up when OPEC starts holding special meeting because even they think the prices are way too high.
- scamper22, on 06/10/2008, -1/+4They have to.
They know they get the blame when oil prices go up.
If it's not them, its the bloody oil companies.
Meanwhile the banks and large investment firms are the ones driving up the prices.
Heck, Saudi has been saying for a while the price of oil does not meet reality.
- scamper22, on 06/10/2008, -1/+4They have to.
- Dorian822, on 06/10/2008, -5/+5If anyone has a clear shot at these analysts, I say take it. To hell with the consequences.
- sciencebzzt, on 06/10/2008, -14/+4If you adjust for inflation (by looking at the price of oil via the price of gold) oil has been steady for years. Oil has only been going up in terms of the dollar.
a chart for learning
LEARN MOAR- sciencebzzt, on 06/10/2008, -1/+1http://img.photobucket.com/albums/0803/zzzing/oilg ...
thats the chart
http://www.agiweb.org/workforce/Currents-007-OilBy ...
thats the learn more- unreg, on 06/10/2008, -0/+2Big hole in your whatever
Gold is a commodity also. What your chart illustrates is that commodity prices tends to rise and fall together. Big surprise.
BEEN SCHOOLED
- unreg, on 06/10/2008, -0/+2Big hole in your whatever
- Andrewticus, on 06/10/2008, -1/+3Wow! Concrete evidence of causality!
Too bad everyone is jumping on the anti-capitalist bandwagon. They miss gems of information like Sciencebzzt's chart in favor of speculation about price speculation. According to everything that I have read about economics, the only "powers" that control the cost of oil are supply, demand and the value of the legal tender. So far we're seeing a creeping incline in demand (China and India's growing consumption rate, especially) coupled with staggering inflation (mainly on the USD, which is the trade currency for oil).
Essentially, the speculator theory states that all commodities (cocoa, copper, gold, corn, oil, etc.) are being artificially inflated, which means that the bubble will eventually burst. That should be interesting.
I prefer to go with the evidence and historical signposts. This is clearly inflation. - unreg, on 06/10/2008, -2/+1LEARN SPELLING
- sciencebzzt, on 06/10/2008, -0/+1you've never heard the internet expression learn moar? it was on purpose
- sciencebzzt, on 06/10/2008, -1/+1http://img.photobucket.com/albums/0803/zzzing/oilg ...
- craighoxton, on 06/10/2008, -7/+15Thanks hedge funds! Because of your insatiable greed (which they call "generating alpha") and the complicity of financial market infrastructure (investment bank-run prime brokers, powerless regulators, clueless ratings agencies) and offshore centres who act as financial flags of convenience where these funds are domiciled for tax purposes (the Caribbean mostly), you've driven up commodities prices across the board - the Third World feels the pinch now, but it'll follow-through to the Developed World later.
And for what? Just so your Lamborghini has another coast of wax, your trophy girlfriend has firmer ***** and you can to-up your escape fund for when you tire of finance you can set up an artisan bakery in a trendy part of New York/London and get your pal at Wallpaper! magazine to write about it.
Unplug your Bloomberg machines and take a look around...- scamper22, on 06/10/2008, -3/+2It's called playing with money.
That's what New York, London... all do. What's humorous of course is that these are also the most socialist places in their countries. They want to make money doing nothing... just playing with money. Their government act the same way. They don't want to produce anything, invent anything or provide any useful service... just play with money and give handouts to their 'anti-poverty' groups. - negative3, on 06/10/2008, -0/+1Trying to put someone that doesn't care about you down because they can throw money around seems silly to me.
If they CAN be selfish *****, then why shouldn't they be?
Maybe you should trash talk the people that give them that opportunity.
- scamper22, on 06/10/2008, -3/+2It's called playing with money.
- sciencebzzt, on 06/10/2008, -10/+5oh noes, if there were only some way to profit from this...like some sort of exchange where people could put their money and it would grow corresponding to the growth of oil companies. oh well.
- saigumi, on 06/10/2008, -1/+4Wow.. like Wall Street. How smart...
http://moneycentral.msn.com/investor/charts/chartd ...
Look how Exxon Mobil's stock has SHOT UP because they are making THREE TIMES as much selling a barrel of oil.
Maybe someone needs to help me with my math, but the stock is up a whopping 2 points from last year from 86 to 88. Wow.. that is like 1.5% increase. But oil has trippled.- irishmi6, on 06/10/2008, -0/+3But it is the speculators and the brokers making the money out of this.
The oil companies only make money from oil that exists and that is still the exact same amount as last year. Production numbers haven't changed.
- irishmi6, on 06/10/2008, -0/+3But it is the speculators and the brokers making the money out of this.
- AWBoy666, on 06/10/2008, -0/+1Thank you for the one comment in this whole thread with some semblance of logic and reason behind it.
Everyone has access to the same futures and cash flows from them.....GO BUY SOME. Hedge funds and investment banks are making their money specifically because they are willing to take a RISK with their money. If the price of oil had gone down, they would have lost billions as opposed to making billions.
And they don't trade nearly as much as this article says in unregulated securities. They are impossible to value so you cannot put them on your asset sheet. They avoid them as much as possible.
And if the markets are so unregulated, how does the writer of this article have such intimate knowledge of who the big traders are? Think about that one for a minute..... - pappyblueribs, on 06/15/2008, -0/+1Exactly...if we can't piss and complain 'em to death, maybe we can actually make a profit off the situation.
FSENX and FSESX are two Fidelity Sector mutual funds, meaning that they invest in a particular area. In this case, they are Energy and Energy Services. I'm not saying to invest in these two funds, just trying to point out that there are many areas to invest in (either funds or individual stocks) that profit from the situation.
You either help yourself and your family (increase your assets, lower your expenses) or you don't.
Now, back to the complaining...
- saigumi, on 06/10/2008, -1/+4Wow.. like Wall Street. How smart...
- brownfallleaves, on 06/10/2008, -3/+25
speculating on speculation- RizzoFrank, on 06/10/2008, -2/+0ejaculation
- muckemuck, on 06/10/2008, -17/+13buried... speculators didn't cause this.. the falling dollar did. Speculators are certainly in the mix, but they aren't the root of the problem.
Compare this: http://www.upload.mn/view/h6juty1psgm0ys22hu69.jpg to the chart in the article.
As the dollar drops in value it takes more of them to buy the same barrel of oil.
Take any other commodity like corn, wheat, gold, silver, etc and see how much of each it takes to buy a fixed amount of oil and you'll end up with something like this:
http://www.upload.mn/view/qrmkum0ugjteofagx39a.jpg
where red and blue lines show how many Euros and Dollars it takes to buy oil, and the purple shows the amount of oil you can buy with one ounce of gold. Notice that the purple line is almost flat meaning the value of oil and gold have remained fairly flat while the value of the dollar compared to them has plummeted.- gubatron2, on 06/10/2008, -0/+5you're right that it ALSO has to do with the price of the dollar.
But we know that OPEC always tends to speculate to make the most out of their oil.
We've seen alternative energy bubbles in the past whenever oil prices spiked, also after each oil price spike we've seen the world gone to recessions.
This has been the craziest price spike ever.- dreesemonkey, on 06/10/2008, -1/+2If this is the craziest price spike ever then there is another cause, I tend to agree that it has to do more with the falling dollar than anything. Oil isn't causing the dollar to fall, it's the war and borrowing insane amounts of money from China.
- unreg, on 06/10/2008, -0/+17The dollar plays a part in it. But since the dollar has fallen only about 10-25%, why has a barrel of oil quadrupled?
- krc1, on 06/10/2008, -0/+2"Notice that the purple line is almost flat meaning the value of oil and gold have remained fairly flat while the value of the dollar compared to them has plummeted."
Uhhhh....the price of gold has tripled since '01.- muckemuck, on 06/10/2008, -0/+1The price of gold in DOLLARS has tripled... because the value of the dollar has dropped that much.
- younggator, on 06/10/2008, -0/+1correlation does not imply causality.
1) your graphs have no statistical backing. at the very worst they don't account for serial correlation and your analysis is screwed, at the very best you don't provide any sort of correlation figures (which still grants you nothing in the way of causality)
2) http://www.econbrowser.com/archives/2007/10/does_d ... for real analysis - nydwarf, on 06/11/2008, -0/+1The Dollar went down but the Euro went up so why do Europeans pay more for gas than Americans do? More by a mile.
- nickvdk, on 06/11/2008, -0/+0You're wrong. Im in Australia and we currently have a very strong dollar. We also have very high gas prices.....
- gubatron2, on 06/10/2008, -0/+5you're right that it ALSO has to do with the price of the dollar.
- manstein01, on 06/10/2008, -5/+6Funny, but when housing prices were (and still are) based largely on speculation and borrowing, few people were complaining.
Oh, and if the US wasn't ear high in debt, investors would not be jumping to oil as a hedge against inflation. We have no one to blame but ourselves.- drmangrum, on 06/10/2008, -0/+4People weren't complaining because there was easy money to be had with shady terms to make it affordable. The housing market eventually ballooned to the point where you HAD to take a mortgage for far more than you should just to afford a home that met your needs. Then the bubble burst. Homes are now equalizing. They are still over valued, but another 6-9 months and they should be back where they are supposed to be.
- quail20, on 06/10/2008, -1/+4Lots of people don't own a house or want to own a house. The housing bubble never affected them directly. For those who were affected directly it was a commodity that they were purchasing. Their dream was to sell in a couple of years and make $50K or more.
When it comes to oil, few people own it and trade it like a commodity. But EVERYONE does have to consume it, either in their cars or in the goods that are transported. Lately the prices at the local gas stations have fluctuated in such a way that it feels that pricing is based more on emotions than common sense. A gas holding facility with less than 20% of its capacity being used catches fire and prices at my local pump jump eight cents. Goldman Zachs announces it's POSSIBLE for pricing to hit $5 and the prices jump ten cents. Hurricane season starts and the cost jumps once again.
What irritates me is that all of these things were occurring in the late 90's -- oil traders claiming that gas would go to over $2 a gal (which it didn't do at the time), hurricanes, minor fires at refineries, etc. But the pricing never jumped around as crazy as it does now. Even the weak dollar and increased demand in Asia doesn't fully explain things. It feels too much like there's someone messing with pricing the way California was messed over by Enron in the 90's.
- WBWB, on 06/10/2008, -6/+75Great article. I'm not surprised to see Morgan Stanley named as one of the giant banks that are ***** things up. They're the assholes who last Friday predicted that oil will reach $150 by July 4 "due to demand in Asia" and thus caused it to go up $11 to $139. By the end of the day the gas stations where I live had jacked the price 22 cents. ***** you, Morgan Stanley and all other speculators.
- iloveliberals, on 06/10/2008, -8/+1Wanna really f*ck with Morgan Stanley and other speculators?
Stop buying oil.- Codwhy, on 06/10/2008, -1/+4oh, and wait, stop buying food too
oh and yeah, "F*ck* them by not letting your kids take the bus to school.
oh wait, i guess they cant go to school at all because the transportation takes oil.
Shut the ***** up iloveliberals.
- Codwhy, on 06/10/2008, -1/+4oh, and wait, stop buying food too
- iloveliberals, on 06/10/2008, -8/+1Wanna really f*ck with Morgan Stanley and other speculators?
- joe122370, on 06/10/2008, -1/+12just wait and see what happens in epic failure we call Congress this week. They are actually talking about adding another $2 per gallon in taxes to, get this "stop global warming"! Plus they are talking about raising taxes on the oil companies and windfall profit tax. Guess who's going to pay for that? not the oil companies, they'll just raise the price on the consumer! Stupid f'n politicians!
- kaegogi, on 06/10/2008, -6/+3Our elected representatives will do what the mob howls for. People are hurt a bit due to the price of oil and they want blood, oil company blood. The spineless, pandering pols, like Obama and Pelosi, will improve their popularity by slapping on a windfall tax that will get passed straight to you and me. Companies don't pay taxes...why can't anyone figure that one out?
- Codwhy, on 06/10/2008, -1/+1corporate tax?
- kaegogi, on 06/30/2008, -0/+0...yes? And who do you think ends up paying for corporate taxes? When determining product price points do you think taxes are not taken into consideration?
- DrDigg, on 06/10/2008, -1/+3I'm not going to pretend to understand global economics, but won't increasing the price of gas (by adding a tax) decrease demand and eventually decrease the price of gas (and decrease our reliance on foreign oil)?
- nydwarf, on 06/11/2008, -0/+1What if they created a windfall taxation situation where anything the oil companies haul in after a certain amount gets taken away completely? Then they would have no incentive to try and make more buy raising prices.
- kaegogi, on 06/10/2008, -6/+3Our elected representatives will do what the mob howls for. People are hurt a bit due to the price of oil and they want blood, oil company blood. The spineless, pandering pols, like Obama and Pelosi, will improve their popularity by slapping on a windfall tax that will get passed straight to you and me. Companies don't pay taxes...why can't anyone figure that one out?
- tufftugg, on 06/10/2008, -10/+2 I work in the Oil Industry...ching, ching
- saigumi, on 06/10/2008, -1/+2I work in agriculture. Be sure to let me know when you buy your next box of cereal and I'll be sure to charge you $100 for the previously $3 box. You know, speculation from the other customers on this pack makes the price that high...
- PhilliesBlunt, on 06/10/2008, -0/+4Eat a fart
- Ryanr14, on 06/10/2008, -0/+1haha or a dick with fart juice on it
- Boarhead, on 07/18/2008, -7/+1All this math is making my head hurt...
- mrgreenjeans9, on 06/10/2008, -0/+10as someone said in an earlier story about this subject; the speculators lost their shirts in the subprime mess (they made) so they have to make up the loss somehow
- spunkmyer, on 06/10/2008, -3/+21Oil jumped back $3 bucks for far this morning from losses from yesterday when both Merrill Lynch & Co. and Citigroup Inc. both saying oil will go up. Self fulfilling prophecy here folks. Talk to your congress rep and get them to move on the commodity market review and close the enron loophole.
- HorusHeresy, on 06/10/2008, -2/+0How about we just let the National Oil Companies set the spot price of crude.
- brstilson, on 06/10/2008, -2/+5Sex Panther crude oil: 60% of the time it works...every time
- beakerwimp, on 06/10/2008, -0/+19FTA: A June 2006 US Senate Permanent Subcommittee on Investigations report on “The Role of Market Speculation in rising oil and gas prices,” noted, “…there is substantial evidence supporting the conclusion that the large amount of speculation in the current market has significantly increased prices.”...The Senate report was ignored in the media and in the Congress...
Every now and again it would be awesome if public servants served the public for a bit. - thedogfatherx, on 06/10/2008, -0/+6I'm feeling something big will be going down. Or.......every country besides the oil big wigs are just ***** for a long long time.
- gubatron2, on 06/10/2008, -9/+4Al Gore:
"SHHHHHHHHHH!
Don't say anything and spoil our solution to global warming!, high oil and gas prices are the only thing the average morron will care about in the end" - tinkafoo, on 06/10/2008, -0/+18The price of oil is driven by speculation? They just now figured this out?!
Okay kids, what did we not learn from Enron?- saigumi, on 06/10/2008, -0/+7Take the money and run? Screw whoever you can and then let the tards defend you saying "Well, that is capitalism."?
- wynja, on 06/10/2008, -0/+4Oh snap, they caught me. Time to fake my death and retire to a tropical island. Honey make sure to cremate me within 5 hours of my reported death. Thanks a bundle.
- ramilehti, on 06/10/2008, -11/+5If you take into account the recent fall of the dollar and inflation and take into account th real supply/demand mechanics involved in the market place you will find that this article is a load of crap.
World's oil production has peaked. And sure there are speculators driving up the price of oil.
But the supply side is also struggling to keep up with demand.
Speculators do what they do because the supply is diminishing.
It is only natural. It might be true that the current market setup only fuels the speculation further but it certainly does not change the underlying cause of it.- DrJohnson78, on 06/10/2008, -0/+0***** speculator!
- FairDinkumMate, on 06/10/2008, -10/+22100% of this article is speculation that 60% of today's oil price is speculation.
FTA - "In June 2006, oil traded in futures markets at some $60 a barrel and the Senate investigation ESTIMATED that some $25 of that was due to pure financial speculation".
It then takes this one ESTIMATE from 2006 to extrapolate(with NO FACTS or DATA to support this extrapolation either!) "That would mean today that at least $50 to $60 or more of today’s $115 a barrel price is due to pure speculation".
NO - That would mean that IF that 2006 estimate was correct & IF the value of speculation per barrel increased significantly(to keep the same percentage) & excluding ANY other factors then today's price of $115 a barrel COULD be made up of $50-$60 speculation.
He then goes on to LIE about supply & demand. “Over the past couple of years global crude oil production has increased along with the increases in demand; in fact, during this period global supplies have exceeded demand, according to the US Department of Energy “
REALLY? According to the US Energy Information Administration(US Gov't Official Energy statistics):
2006 global production(in millions of barrels per day) was 84.60 while consumption was 84.62 = a net undersupply of .02 or 20,000 barrels per day.
2007 global production(in millions of barrels per day) was 84.60 while consumption was 85.40 = a net undersupply of .8 or 800,000 barrels per day.
2008 global production(in millions of barrels per day) was 86.60 while consumption was 86.61 = a net undersupply of .01 or 10,000 barrels per day.
SOURCE: http://tonto.eia.doe.gov/cfapps/STEO_Query/steotab ...
So it looks to me that supply hasn't exceeded demand since 2005! Hardly the “past couple of years” the author refers to.
It drives me absolutely nuts that this was written not by a blogger with a view to push, but by someone claiming to be a “journalist” writing as part of an independent research and media group of writers, scholars, journalists and activists. I have SERIOUS doubts about his 'independence' and will be spending a little time having a look.
Seriously, I have seen better researched & presented arguments in Digg comments than this guy makes in this article!- FairDinkumMate, on 06/10/2008, -0/+6OK. Here we go. The author of the article is F. William Engdahl. He has been pushing this agenda for 30 years!
"Oil is not a fossil fuel but is produced underground by unknown materials, conditions and forces deeper down in the Earth's core." - Engdahl, F. William, A Century of War: Anglo-American Oil Politics and the New World Order, London: Pluto 2004, rev. ed., 303 p., ill.
Here is his 'official' site: http://www.engdahl.oilgeopolitics.net/ - xDibblerx, on 06/10/2008, -2/+3Number can't be true otherwise it would've been like the early 70's and gas stations would have had "No Gas Today" signs on their pumps for the last 3 years. If demand was higher than production where were the lines?
- FairDinkumMate, on 06/10/2008, -0/+1Did you look at the link? http://tonto.eia.doe.gov/cfapps/STEO_Query/steotab ...
At the bottom it lists inventories. These have reduced over the 2 years by 182 million barrels just in the US & OECD(it doesn't list the figures for the other oil supplying countries).
- FairDinkumMate, on 06/10/2008, -0/+1Did you look at the link? http://tonto.eia.doe.gov/cfapps/STEO_Query/steotab ...
- spinchange, on 06/10/2008, -1/+4Your points are well taken, but in pointing the production/consumption numbers, I notice that the net undersupply fell quite significantly from 2007 to 2008 - even to below 06 levels. This demand drop coincides with the largest spikes in the price per barrel. Surly there are many other factors involved (China, the falling dollar, etc), but despite a net undersupply, US Demand fell quite considerably at a time when the price of oil rose most appreciably. What do you make of that? (a sincere question, not a 'challenge')
- variable42, on 06/10/2008, -1/+2US demand is no longer the main driving force for oil. Now it's Brazil, Russia, India, China, and all the other emerging markets.
http://www.bloomberg.com/apps/news?pid=20601109&si ...- spinchange, on 06/10/2008, -0/+1According to that story, emerging market / global demand increased by 4.4% while US demand contracted by 2% - A net global gain of 2.4% -- how does that account for a nearly 100% spike in the price in the same time-frame?
Increasing global demand and finite supply constraints are definitely the underlying factors, but I am convinced there's a little more to these high prices than we know. There is very little transparency in the commodities futures markets and a few well known "loopholes" in the regulations that allow investment banks and their clients to invest in oil in ways that are effecting it's price. The "oil story" may fundamentally be one of supply & demand, but in a deregulated investment environment, that's also clearly an impetus for more speculative investment dollars to chase after it artificially pushing the price up even higher, and thus the perception of demand.
Chief economist of Goldman Sachs says last Friday's Price jump, "not fundamentals"
http://money.cnn.com/news/newsfeeds/articles/djf50 ...
- spinchange, on 06/10/2008, -0/+1According to that story, emerging market / global demand increased by 4.4% while US demand contracted by 2% - A net global gain of 2.4% -- how does that account for a nearly 100% spike in the price in the same time-frame?
- variable42, on 06/10/2008, -1/+2US demand is no longer the main driving force for oil. Now it's Brazil, Russia, India, China, and all the other emerging markets.
- Acolyte357, on 06/10/2008, -0/+1uhm, why the ***** did you start your cute graph at 2004? Looking back to 1994 the only thing that graph shows you is that the energy producers have become more accurate of predicting the World Consumption.
"http://www.eia.doe.gov/emeu/steo/pub/contents.html ..."
"Gasoline prices are expected to continue to rise from $3.98 per gallon on June 2 to a monthly average price peak of $4.15 per gallon in August. This forecast reflects a sizable narrowing of refiner gasoline margins from those of last year *****because of weakness in gasoline demand******and growth in ethanol supply."
OPEC
http://tonto.eia.doe.gov/cfapps/STEO_Query/steotab ...
Take note of the Table labeled "Surplus Crude Oil Production Capacity"
http://www.eia.doe.gov/emeu/steo/pub/gifs/Fig5.gif
"I have seen better researched & presented arguments in Digg comments than this guy makes in this article!"
I agree with you here, unfortunately your post is not one of those.
- FairDinkumMate, on 06/10/2008, -0/+6OK. Here we go. The author of the article is F. William Engdahl. He has been pushing this agenda for 30 years!
- beervolcano, on 06/10/2008, -6/+4Honesty, is anyone surprised? Looking out for one's own interests first and foremost is human nature. Naturally, profiteering happens when the opportunity comes along.
- mrraven200, on 06/10/2008, -1/+1And if the lower class starts looking out for interests by lynching the speculators what then genius? Beer Volcano much?
- sandiegodude, on 06/10/2008, -5/+18I'm up over 200 bucks a week now in gas. It's killing me. What I used to funnel to savings from each paycheck now goes into my commute. This is getting ridiculous. Its not like I drive a gas hog, I just have a 45 minute commute in each direction every day, and unfortunately its at odd hours, so I can't use San Diego's (*****) Mass Transit options. Gas prices are up to 4.50 a gallon here in cali and still rising. Its ***** awful. If the prices keep going up, I'm going to need a raise just to keep making it to work, as I'm teetering on "breaking even" at this point because of goddamn fuel costs!
- jjgasp, on 06/10/2008, -1/+9Nothing personal, but you could move. Live where you work or work where you live. I think over the next twenty years, the "suburbs" will greatly devolve.
- lukemann, on 06/10/2008, -3/+6Maybe he can't sell his house because the market is crap. Not everyone lives in their parents basement.
- skidooer, on 06/10/2008, -3/+4Then he can bring his work to his home.
Or maybe he has a friend that lives closer to work that will let him stay during the workweek.
There should be tons of options if he's at all creative.
- skidooer, on 06/10/2008, -3/+4Then he can bring his work to his home.
- Hypermarkalan, on 06/10/2008, -1/+4Yeah. I know that's a long term solution, but it always amuses me when the reply to "I can't afford gas" is "Well, you should move." That's a way for the guilty party to absolve his or her self from the debacle. "Well, guess it's your fault 'cause you don't live in the right place. We shouldn't change policies because of your stupidity."
But it does make sense, because, you know since the person is having a hard time filling his or her tank then incurring all the expenses involved in selling a house and moving all personal possessions should just be no problem.- clumsytime, on 06/10/2008, -2/+4Sorry, I feel no remorse for the idiots who bought a house three years ago. People tried to convince me to buy and I knew it was a bad idea. Boo-hoo, your "investment" didn't pan out the way you planned...tough *****. You caused your long ass commute by trying to buy something far away from your job so you could get it cheaper, I don't feel sorry for your ass. You should have known better than to buy an overpriced house. 40 mile commutes are retarded too.
- lukemann, on 06/10/2008, -3/+6Maybe he can't sell his house because the market is crap. Not everyone lives in their parents basement.
- cowsgonemadd3, on 06/10/2008, -0/+3And this right here is a prime example of what needs and what will change in America. Jobs being more centralized and people getting jobs closer to home. Get another job that pays less and make more because of gas savings.
- lukemann, on 06/10/2008, -3/+0Yeah we can build little shanty towns for these people to live in like the rest of the world has. I don't think we're heading towards your Utopian future.
- dsmx, on 06/10/2008, -0/+5I would argue that if your job doesn't pay you enough to cover the drive to work then you should get another job.
- sandiegodude, on 06/10/2008, -2/+6Oh, I wish it were all that easy.
I live where the housing is cheaper. This wasn't a problem back when I got my house because gas prices were lower. I can't afford the 700,000 dollar housing prices in San Diego near my work. As far as getting a different job closer to home? I live in a sleeper community, the only jobs to be had there are retail and some light industrial. I work in high tech (have a computer science degree) so unless I want to go work at Best Buy as a geek squad guy (which I can pretty much guarantee you will pay about 20 dollars an hour less than what I'm paid now) I'm stuck where I'm at. Also, thanks to the California housing bubble burst, I can't just up and sell without taking a HUGE hit. I'm stuck, for better or worse. I'm thinking what I may have to do is take a 2nd job near my house (hello, Best Buy, are you hiring for nights and weekends?) if the gas prices get much worse.- clumsytime, on 06/10/2008, -2/+6Maybe you shouldn't have bought an overpriced home. Wait, let me guess, you figured it would appreciate forever? It's possible to RENT in the city, you know. If you don't like the idea of renting, perhaps you should move to a different state and a smaller city with more affordable housing options.
The people who bought houses in the suburbs 40 miles from their job in the city have no one but themselves to blame. In fact they are part of the reason for this whole mess. I'm glad to see everything starting to make sense.- lukemann, on 06/10/2008, -6/+1We can't all live in our parents basements like you do.
- osurephil,
- clumsytime, on 06/10/2008, -2/+6Maybe you shouldn't have bought an overpriced home. Wait, let me guess, you figured it would appreciate forever? It's possible to RENT in the city, you know. If you don't like the idea of renting, perhaps you should move to a different state and a smaller city with more affordable housing options.
- jjgasp, on 06/10/2008, -1/+9Nothing personal, but you could move. Live where you work or work where you live. I think over the next twenty years, the "suburbs" will greatly devolve.
