Just an FYI for all those people out there feeling the pain....

I know everyone feels it's the oil companies, or is the Middle East or any other myriad of issues that is causing the price increase of just about every product that we purchase. Just keep in mind, that our way of life, is a living flowing beast that is affected by varies factors. Most importantly, though, the increased price in those goods although is linked to our fuel prices....the greater factor is our current economy.

The US Dollar is weak against the currencies of other countries. The whole fiasco with the real estate market is partly to blame. But another factor is the fact that the feds have continuously lowered rates in order to try to keep our economy a float. It was a short term fix that didn't take into consideration of the long term consequences. With lower rates, foreign markets are less likely to invest into the American dollar causing it to weak, thus causing inflation. Also the fact that we import more than we export has a net negative effect and the only way to fix the current state and current pinch that we all feel is the strengthening of our currency.

It's not just one factor that affects us; it's multiple factors.

 

Currency is maybe 15%, oil speculators are about 15%, supply and demand is the rest. India and China are growing quickly due to all the crap we buy from them.

However, consider yourselves lucky. Oil is $135 a barrel now. The president of A large Russian oil comapany sees it doubling in a few years to $250 a barrel. Expect $8 a gallon gasoline soon.

Complaining about it won't change it.

 

I live in alberta canada. Fort Mac is the booming oil place here and we still have pretty high gas prices. So currency doesn't affect it too much. We are paying 1.33$/Litre. I'm not sure what that is in gallons

 

In addition, foreign companies are trying to buy up American companies/brands because the weak dollar. Foreign companies can buying power in the states is much stronger than what it has been in the past. There is the potential of being servants in our own country. Anyone hear about the proposal from InBev to purchase Anheuser Busch.

 

Tossing in my 2 cents, I visit portugal every so often to see family and they have been paying like 2.50 per liter for ages. they just adapted they have smaller cars more Bikes and mopeds

it be nice to see gas back @ .57 cents per liter

 

I thought the squeeky wheel gets the grease?

Your answer of speculators is wrong (if i recall you dabble in that market). Speculators have driven the price to these new highs. supply and demand has not increased to 60% of the market, that would be speculators % points.

2003 2004 2005 2006 2007 2008
oil brl $25 50 60 60 99 136

world 69 million 72 7373 8084
consuption barrels per day

fuel $1.53 1.83 2.24 2.38 3.03 4.60
prices per gallon

Supply and demand accounted for 2003 until early 2007.

Now 2007-2008 crude jumped 30+, fuel ran up 1.50+ a gallon and all that for 4 million barrels of oil????

THATS A SPECULATOR MARKET NOT SUPPLY IN DEMAND!!!

 

Although I do respect your opinion...you are wrong. You believe that there is a linear relationship between supply and demad and prices but like so many things, straight lines don't work.

Example:

Daily production of oil is maybe 88 million barrels per day. Demand is maybe 86 MBPD. These are estimates I use. If given this relationship and oil cost $135 per barrel then we can't assume if demand drops 2% then price will drop 2%. The drop may be 6%.

If oil demand drops 10% then oil may drop 30%. We may have a straight line relationship until the supply and demand converge, then the marginal difference are huge.

Look at a fictitional insulin market, insulin being a commodity that has no substitute but limited capacity. If there are4, 5, 6 or 7 guys that need 1 dose of insulin and there are 10 doses available, the price is low. If there are then 8 guys the price is still low, but a little worry adds a few dollars to the market as a safety margin for the buyers.

At 9 guys for 10 doses they worry alot, what if 2 vials get lost then someone dies? Prices goes up alot because everyone NEEDS to have a vial and they are not taking chances. At 10 guys the price is f**king high, that is where we are now in the oil market. What if there is now 11 guys? The price becomes astronomical, that will be next year maybe.

China and India are guys 9 and 10. When they grow they will be 11, 12, and 13. A hurricane or another supply disruption will act like a few vials dropping and breaking and not being available to the people that need it.

This linear relationship you believe in is not really the way the markets work. When commodities become scarce, and demand destruction doesn't occur, then the sky is the limit on prices...that is economics.

 

The oil market is just the next bubble. I believe a lot of it is speculation. Investors see oil making money so they buy oil. I feel the price of oil is going to drop below $100 when the bubble bursts, just like Real Estate, just like Tech. When that bubble bursts, there will be another new rise in some other market.

 

waaah waahhh wah .... I cant say ****, im from Oklahoma and im working for the largest producer of domestic natural gas, 3rd in oil...

Just for the record.. we will never be able to produce enough for our own good.. you guys dont realize this but we have not built a refinery since the 70's..

So what you guys dont understand is even if Bush allows the offshore drilling it wont matter.. bc you cant put any more gas/oil through a refinery...

they are all maxed out.. so it doesnt matter what your producing if you cant get it to market any faster there is no felt effect by the general pop.. only the rich will see more production and royalties on thier wells..< which i personally love..

Im proO&G Industry... but i have also seen it from the side i doubt many of you have.. "the inside" <and its scary.

 

Just for comparison:

there are about 3.78 liters in a gallon. Our friends that live in America's hat (Canada)are paying over $5.00/gallon as we speak.


And George Bush isn't even their President.