Oil prices shot up more than $11 to a new record above $139 Friday

It ceases to amaze me that there all always people who think there is some grand conspiracy with the price of oil. Common sense should tell them that when you add 2-3 billion people entering "middle class", that were not in "middle class" 10 years ago, like India and China, prices are going to rise. Sure speculators have something to do with the rise, but energy prices today are going to cheap in 10 years unless new energy sources and new infrastructure are developed.
If any consiracy exist, it is the low prices of oil in the US by our support of the Saudi government. Just look at the prices of energy around the world.
Common sense guys, if you are interested in buying your neighbors lawnmower and 5 more people become interested in buying the neighbors lawnmower, the price of the lawnmover is going to rise!

 

I agree. After the last energy crisis in the 70's alternative energy companies flourished. Many solar systems were build then. Just as things started to get going low prices and a flood of cheap oil killed em all.

Peak oil is here and there are buyers for every barrel of oil over $100. The price will not go below that barring the aftermath of a terrible war. I expect oil to stay between $100 and $150 because the higher price will kill some demand.

 

Which would be true under normal circumstances, in this case its not, this price rise is pure manipulation, by our government, the oil companies, and "speculators" controlled by the very companies that the government just bailed out.

This is the actual situation in a nutshell:

GWB invades Iraq, creates instability in the Middle East

Iran pushes for higher oil prices, and fear of a US invasion causes them to speed up their nuclear ambition, further instability

Then, the Oil companies take advantage of every opportunity to increase prices, no government watchdog under a Republican administration.

Saudi Arabia sees that the US has a problem with refining oil, the oil companies created a bottleneck with not building refineries, oil companies convinced people that it was too expensive to build one, because of the mean environmentalists, but it was a conspiracy to control the flow of refined products. Saudi Arabia recognized that in 2004, and offered to build 2 refineries in the US, to keep prices stable, but were refused by the oil companies.

After Katrina, Saudi Arabia made the offer again to the government and the oil companies, but both the Bush administration and the oil companies turned them down again. Remember the price of gas going up after Katrina? Also, I wonder how the price of oil would be now, with an announcement and planning of two new refineries in 2004 or 2005.

At this point the US government was spending so much debt, that the dollar started to really go downwards in value.

Then two things kicked in, the government's deregulation of the banking industry back in the 1990's formed the basis of the current housing crisis, add to that, reports of peak oil. After that, it became a major housing crisis, and government bailout of mortgage lenders, the same lenders that are the basis of the oil investor groups, but now with cheap government money, which means money they can invest in oil for their "clients", the "speculators".

So now you got the government continually lowering the value of the dollar by more and more debt, adding to the fear of a crisis, although a real crisis, and speculator investment banks raising the price of oil for their clients.

And all the while, leaving OPEC in the dust so even they can't set prices, they just get to sit back and reap the rewards of US government corruption, and oil company policy.

 

Not so simple, Pat. If you read the link I provided, it talks about how these futures traders (aka speculators) are only required to have 5% margin instead of 50% for typical investments. The difference (a sinister loophole) creates a humongous incentive to pour money into those markets (oil, rice, corn, soybean, etc.)

The fuss is about this unlevel playing field where you and I, the lowly consumers, have to compete against these multi-billion dollar investment bankers for our everyday necessities. Not a fair fight, even if you're a true believer in laissez-faire free market (a very rare breed).

Speaking of everyday necessities, being from Texas I do a lot of outdoor barbecue in the summer. Noticed yesterday that refilling my two tanks of propane now cost over 35$ (a few months ago it was only $15). I need a hybrid grill. Bad.

 

The current price of oil is inflated by investors reading articles like the one posted, and gambling that prices will be higher in the future. That is precisely the point.

 

These two articles basically dispel the speculators/speculative bubble myth:

Big fund money and its effect on oil markets - May. 16, 2008

Bits of News - You better get used to $4 gas

 

No they don't, they just try to spread the blame further and whitewash the "speculators", but they still put the blame on government and "speculators"

 

The authors of the articles have persuasive reasoning and are more qualified than you. Your paranoid rantings aren't very compelling.

 

reportonbusiness.com: Speculators not to blame for oil surge: Rubin

 

Seems several of you are forgetting that the oil market is World Wide! Wake up in the morning and listen to the market reports before the US markets open and you will find that other countries have raised oil prices based on world events. It isn't just the US market that is setting oil prices. The feds may be able to impose some regulations in the US market, but they have no impact on what other countries markets can do. The strength of the US dollar also has a huge impact on oil prices, when it goes down, oil shoots up, when it goes up, oil prices drop. Why is that? It is because oil is traded in US dollars, which is one reason Iran has been pushing to change the currency of oil trades to the Euro. Right now the US dollar is weak, mainly because we have nothing to trade, but have a large demand for imports. I blame the government directly for that by making it easy for US business to work offshore yet maintain US status, while using foreign workers to produce products. We import the majority of our goods now, while exporting very few, basically all we really have to trade is wheat, corn and other related goods. Corn stocks have depleted due to the increase of Ethanol, another boondoggle if you ask me, short sighted cause that it is.

Open up drilling off the coasts and anwar, the retrieval of oil from shale in Colorado, more nuclear and wind power, and eventually oil prices will drop, not so much for gas for our cars, but diesel for transportation, and home heating oil, and propane. Those three have the biggest impact on all of us, including those who do not own cars. There are solutions out there, and too many people are blocking it, in the meantime our dollar grows weaker, directly affecting our economy. Keep bragging all you want about how the high gas prices pad your retirement plan, you will need every penny when a loaf of bread costs $10, and you have to stand in line to get it. No matter how you look at it, OIL is the root of everything you have, need or do in your life, from heating your home to putting food on your plate, to typing on the keyboard to post on this forum, oil in some form or another plays a part in it, when the price of oil goes up, eventually so will everything else. Lets add a $3 tax on diesel, fine, then dont bitch when food costs go up, or a bus or train ride goes up. Just remember, EVERYTHING in the US relies on diesel to get to where its going. Its at $5 a gallon now, that 300 gallon tank on the 18 wheeler that is bringing food to the store now costs $1500 to fill. When diesel first jumped to $2 a gallon, I said it would have dire effects on the economy if it keeps going up, and well, guess what, it did, and it will only get worse. Some of you might only think, hey raise gas to $10 a gallon what do I care, well just keep in mind that everything you buy at the store had to get there somehow, and they dont deliver by horse and buggy anymore. How many here know that the majority of china's electricity is generated by diesel powered generators? That is the #1 reason diesel is so high, so we need to tap OUR resources, not to bring down the price of oil, but to stabilize it, before its too late.

 

I see lots of 18-wheelers roaring past me on the freeway going 70 MPH, so apparently the cost of that diesel isn't affecting them too much, is it? Those trucks can easily slow down to 60 MPH and save a lot on fuel costs. The current price of diesel is not hurting the drivers or their companies enough to force them to slow down. When I see everyone slowing down then I'll say the price is high enough.

 

I just finished watching some of the Senate hearings on oil prices held on Tuesday, on C-Span (where are the other networks on this important subject?)
This is a complicated subject, but the experts who testified seemed to be saying that speculation is the cause of at least 25% of the inflated gas and heating oil prices right now. Maybe more. The speculation has been created by the so-called "Enron Loophole" which allows banking institutions in this country (Lehman Bros, etc) to buy huge amounts of oil futures with very little collateral (5-6%). So they hold a lot of paper betting on higher futures oil prices. The next thing they do is make public statements saying "they expect oil to be at $150 a barrel by July." It's obviously in their interest to say that. So guess what happens.
There are other aspects of this thing--mainly the weak dollar--and the fact that the oil producers have a commodity in the ground gaining value that they are reluctant to swap for American dollars decreasing in value because we print new money to pay for everything these days. But the main short range problem is oil futures and lack of regulation. This is the same problem--lack of regulation--that created the subprime crisis, and the Fed under Greenspan is now getting blamed for both.

Expect the Senate to close the Enron Loophole soon (Bush would be a fool to object), and the bubble to burst on gas prices. Down to $3.00 by the end of the summer. It's election year. Care to take a poll?

 

Would this be a good thing or bad thing?

 

I have read many alternative fuels can be profitably produced if gasoline prices are at $4 per gallon. In the past oil companies have not maintained high oil prices for long enough for companies to develop factories for alternative fuels.

 

Wonderful Wonderful Wonderful.. It is about time that more visability is being given to the speculative buying component of rising oil prices. In fact, to this untrained eye, it is pretty obviious that blantant maniupulation by Morgan Stanely has occured. You know, we heard the same recycled excuses as to why the oil demand is so high. Now, it is because of increased demand in Asia. May I ask, where in Asia the demand for oil is high? Could it be code words for China and India? Seems we have heard that many times before. It just appears to be the same old lame excuses being recycled to sound new..

Also, what is our LIMP Congress going to do about the speculative buying practices? Probably a lot of talk and no action. Whether the Congress is controlled by Deomcrats (currently) of Republicans, it doesn't matter. They live in a totally different world than us average folks do. They are best known for their EARMARK projects and LIP SERVICE.. That is about all!! They are AROGANT AND USELESS!!!!

 

Congress is not controlled by Democrats, but not much they can do either way, they are holding hearings, but the best they can do is repeal the Republican laws that allowed and caused the current problems, and thats going to take Republicans to agree, and Bush not to veto, not likely.

 

EJFB1029, you need to go back and understand that elections from 2006 changed the control of Congress from Republican control to Democratic control. I believe the MAJORITY Leaders are Nancy P and Harry R, both Dems.. They have the power with their Dem committee chair's to controll the agenda of what should be done to help our energy situation. They have been in for almost 2 years now. That is control to me!!

 

I think you need to understand reality, yeah they can set the agenda, doesn't mean they can get anything passed, there is no real majority to do that, thats reality. All the Democrats can do, is postpone things and create committees, but they don't have the votes to do much of anything, and can't override any veto, thats reality. So where is your control?