Oil hits $135/barrel- what does this mean for the economy?
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Oil hits $135/barrel- what does this mean for the economy? - 5/22/2008 11:11:18 AM
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blessedinnyc
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http://biz.yahoo.com/ap/080522/oil_prices.html
quote:
NEW YORK (AP) -- Americans getting an early start on the Memorial Day weekend found that gasoline prices again sprinted to a new record high overnight, reaching a national average above $3.83 a gallon. Some analysts predict gas will break past $4 as early as next week.
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Oil prices, meanwhile, fluctuated Thursday after setting a new record of $135.09 in overnight trading. A stronger dollar gave some investors reason to sell oil futures to lock in profits from crude's record run. But concerns about falling supplies and rising demand are expected to keep propelling prices higher in the days and weeks to come.
Perhaps here is the most disturbing piece of information:
quote:
For years, the IEA has predicted that supplies of crude and other liquid fuels will arc gently upward to keep pace with rising demand, topping 116 million barrels a day by 2030, up from around 87 million barrels a day currently.
The agency is now concerned that aging oil fields and diminished investment mean that companies could struggle to surpass 100 million barrels a day in production over the next two decades, the paper reported.
Assuming people do not adjust their gasoline usage in the short-term future, the recent run-up in prices from $125/barrel to $135/barrel has just cut Americans' disposable income by $70 Billion/year. This is roughly three times Macy's revenues and eight times its market cap.
Anyone have any thoughts on how this will affect the economy? Also, can anyone see the light at the end of the tunnel? The EIA seems to indicate that we may not be able to get out of this by increasing production, so what kind of alternatives to oil are available?
< Message edited by blessedinnyc -- 5/22/2008 1:02:03 PM >
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RE: Oil hits $135/barrel- what does this mean for the e... - 5/22/2008 11:23:32 AM
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ElmerFishpaw
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What I'd like to know is, how much of the price per barrel is actually supply and demand. How much of the price is speculators. IF the FED raises the rate again and the dollar gains value, will it go down. I don't think being alone in a big vehicle doing 85 down the turnpike helps matters either. No question....gotta do wind, solar etc...gotta get those online and quick. One good thing, people are using public transit more, and the air gets a bit cleaner.
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RE: Oil hits $135/barrel- what does this mean for the e... - 5/22/2008 11:26:46 AM
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JimboFletch
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It's now time to pay for all the slave-labor wages we've based our cheap prices on the past couple of decades. The Chinese and 3rd world nations need more fuel to pay for all those jobs that used to be here at reasonable wages.
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RE: Oil hits $135/barrel- what does this mean for the e... - 5/22/2008 11:28:52 AM
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WesP
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There are only 2 options available. First, we can invest in equipment to drill in the Mid-West and ramp up drilling in Alaska. We would also need to construct refineries to process all of our own crude rather than outsourcing. Even so, this is not sustainable indefinitely; it is a temporary crutch to assist the economy for a few years.
Second, we can ramp up our efforts to utilize other fuel sources. Quit the efforts to use corn for fuel, which is undermining the economy as much as gas prices.
Other than these things, I do not know what would be more effective. The sad thing is that our economy is going to suffer radically from the present situation, and until some measures are adopted to reduce the need or desire for so much fuel, we will pay via recession.
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Wes
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<--- BTW, this is the true function of corn! It is to help the oil industry and its functionaries, not detract from them! 
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RE: Oil hits $135/barrel- what does this mean for the e... - 5/22/2008 12:52:24 PM
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blessedinnyc
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I think a quick solution that could cut probably reduce oil consumption by 400K-800K barrels per day worldwide might be to cut a deal with the EU and Canada to reduce speed limits to 55 mph. Even the anti-speed-limit folks admit that the reduction we made in the '70s likely cut fuel consumption by 1%, and if every consuming country reduces speed limits, we can have the effect in the oil markets of doubling Texas's oil production.
I also think that we're going to see the rate of foreclosures increase soon. Hopefully, these families will take the opportunity to move closer to work.
Long-term, I think the answer is to move to a hydrogen economy where we generate energy from wind and nuclear, convert it into ammonia or some other means of storing H2, and use that to power our cars. In the meantime, though, plug-in hybrids and maybe Gas-to-liquids or Coal-to-liquids will help get us through.
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RE: Oil hits $135/barrel- what does this mean for the e... - 5/22/2008 12:54:58 PM
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blessedinnyc
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quote:
ORIGINAL: WesP
Second, we can ramp up our efforts to utilize other fuel sources. Quit the efforts to use corn for fuel, which is undermining the economy as much as gas prices.
In some ways, I don't know if ethanol is quite as awful as it seems. Perhaps we can end the subsidies, but threaten to revive them whenever Chavez or OPEC wants to engage in resource nationalism.
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RE: Oil hits $135/barrel- what does this mean for the e... - 5/22/2008 1:24:35 PM
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WesP
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quote:
ORIGINAL: blessedinnyc
quote:
ORIGINAL: WesP
Second, we can ramp up our efforts to utilize other fuel sources. Quit the efforts to use corn for fuel, which is undermining the economy as much as gas prices.
In some ways, I don't know if ethanol is quite as awful as it seems. Perhaps we can end the subsidies, but threaten to revive them whenever Chavez or OPEC wants to engage in resource nationalism.
Production added to the net output compared to the efficiency of burning fossil fuels results in a net increase of greenhouse gas generation from ethanol. Waste of time, money, and resources, and the exact opposite of intended results is achieved. 
_____________________________
Peace,
Wes
___________________________________
<--- BTW, this is the true function of corn! It is to help the oil industry and its functionaries, not detract from them!
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RE: Oil hits $135/barrel- what does this mean for the e... - 5/22/2008 2:02:45 PM
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rcjames
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quote:
Oil hits $135/barrel- what does this mean for the economy?
What it means for my economy is that I will be going to town once a month to buy groceries, spend a little more on cable TV to get some non-porno pay for view movies, and stay home a lot.
Thanks
RC
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Just a country Preacher's humble opinion
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RE: Oil hits $135/barrel- what does this mean for the e... - 5/22/2008 2:29:19 PM
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Soxfan
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I read an article that said that within 12-18 months, oil will top $200 and may go to $250 a barrel.
This will translate to $6.00-7.00 a gallon gas.
Air travel will revert back to the days when it was only for the well to do
No one will do anything about it either because most politicians (in BOTH parties) are in the pockets of the oil companies
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"This would be the first step in apostasy; men first forget the true, and then adore the false.".......C.H. Spurgeon
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RE: Oil hits $135/barrel- what does this mean for the e... - 5/22/2008 2:45:20 PM
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blessedinnyc
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quote:
ORIGINAL: Soxfan
No one will do anything about it either because most politicians (in BOTH parties) are in the pockets of the oil companies
Now the interesting thing here is that the oil companies don't make a whole lot more money when oil prices are $130/barrel instead of $80. Sure, they sell the oil for more, but all of their costs go up.
One of the biggest costs for oil companies, IMHO, is sovereign cost. The US wants to impose a windfall profits tax on oil production. Venezuela and Russia are basically confiscating oil assets. Norway would be doing the same thing if it weren't already getting about 80% in taxes before royalties from the oil companies.
Big oil doesn't profit when oil prices go up; governments in oil producing nations do.
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RE: Oil hits $135/barrel- what does this mean for the e... - 5/22/2008 3:42:04 PM
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relady
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I have to say that I didn't know whether to laugh or cry when the Vice Chairman of Exxon described himself as a "regular" person in front of the Senate committee on TV. This guy is probably on of the LOWEST paid of the bunch and he makes in excess of $2M per year. That's not "regular" in my book, LOL. Let's see him live through this and drive to work on, say, $60K a year. Might change his perspective just a little.
I say take away ALL the oil companie's government subsidies, for starters.
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RE: Oil hits $135/barrel- what does this mean for the e... - 5/22/2008 4:09:01 PM
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blessedinnyc
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quote:
I have to say that I didn't know whether to laugh or cry when the Vice Chairman of Exxon described himself as a "regular" person in front of the Senate committee on TV. This guy is probably on of the LOWEST paid of the bunch and he makes in excess of $2M per year. That's not "regular" in my book, LOL. Let's see him live through this and drive to work on, say, $60K a year. Might change his perspective just a little.
At the very least, he's a regular CEO. Most CEOs of fortune 500 companies make more than him, and considering that he manages a company that produces roughly 15% of the US's daily oil consumption, his salary at least looks reasonable compared to that of various football stars.
quote:
I say take away ALL the oil companie's government subsidies, for starters.
I agree with this, actually. I don't think they need any more help than they're already getting from the market. This is coming from someone who has roughly 40% of his portfolio in energy stocks and 50% in energy-related natural resources.
< Message edited by blessedinnyc -- 5/22/2008 4:16:59 PM >
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RE: Oil hits $135/barrel- what does this mean for the e... - 5/22/2008 6:01:27 PM
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kernsfamily
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quote:
Hopefully, these families will take the opportunity to move closer to work.
And, then, when your job moves once again, then what? I've lived in the DFW metroplex area for 11 years, and this is my 4th workplace....
quote:
No one will do anything about it either because most politicians (in BOTH parties) are in the pockets of the oil companies
Politicians, or oil companies, can't do much about the global oil markets. If politicians of BOTH parties are "in the pockets", as you say, then why does ONE party in particular make it impossible to build more capacity in the refining side of the business, to increase drilling production or allow refineries to use "economies of scale" to everyone's benefit, and scrap the "boutique" blends that are mandated specially for each and every state?
quote:
I say take away ALL the oil companie's government subsidies, for starters.
Any idea how much Exxon Mobil paid the federal government in taxes last year? While the news reporters go on and on that Exxon earned a "record" $40 billion in profits (never mentioning that it was on "record revenues" at a 9% or so profit margin, which, is on the "low side" of "normal" for a company today), that they paid a record $30 billion in corporate income taxes!.....and that's not including the taxes confiscated by the state & federal governments at the pump!
Want to know who REALLY makes a "killing" on the production of oil, the refining and the sale of gasoline? the government does. Makes far more than the oil companies do.
I live within a stone's throw of Exxon Mobil's HQ in the Dallas area....many of my neighbors are employed there (among thousands of the hardworking people who work there, and have VERY VERY good jobs)....the media loves to portray the "big oil" business as a few big high-paid execs....the oil business is far more than that....it's the livlihood of millions of people....and they are just as frustrated with the global markets as you are....
quote:
I have to say that I didn't know whether to laugh or cry when the Vice Chairman of Exxon described himself as a "regular" person in front of the Senate committee on TV. This guy is probably on of the LOWEST paid of the bunch and he makes in excess of $2M per year.
Most people in the oil business are just "regular guys"....many grew up in West Texas....got started in the business by working the oil rigs either on land or offshore....and, got an education and worked hard....
I think Steve Simon (exxon mobil) is the guy you are referring to....he started out working at a refinery in Louisiana....after being in the Army in the late 1960s in Vietnam. At what "salary range" did he "cease" being a "regular guy"????
Many forget 1998....oil was $10/barrel....gasoline was selling at 89¢ here in town, and the oil companies were capping wells, while the "service companies" (Halliburton, Schlumberger, etc...etc...) were laying of vast amounts of people....since the cost to drill and capture the oil as far more expensive than what it was worth?
as far as these "congressional" hearings go...it's just an election year "dog & pony" show for the politicians.....they really don't care what the oil company managers have to say.....they just want their "soundbites" to be on the evening news.....
< Message edited by kernsfamily -- 5/22/2008 6:07:40 PM >
_____________________________
Proud dad of 3 great girls....Erin, Emilie and Elise
Blessed to have all of them in a "totally awesome" public elementary school!
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RE: Oil hits $135/barrel- what does this mean for the e... - 5/22/2008 6:48:53 PM
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blessedinnyc
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quote:
ORIGINAL: kernsfamily
And, then, when your job moves once again, then what? I've lived in the DFW metroplex area for 11 years, and this is my 4th workplace....
Perhaps you should find another employer- or at the very least, convince your employer to set up a van or bus system. My friend at Microsoft gets a free ride home every evening on the company bus. Actually, if I stay late enough, I get a free car ride home, but that's another story.
quote:
Politicians, or oil companies, can't do much about the global oil markets. If politicians of BOTH parties are "in the pockets", as you say, then why does ONE party in particular make it impossible to build more capacity in the refining side of the business, to increase drilling production or allow refineries to use "economies of scale" to everyone's benefit, and scrap the "boutique" blends that are mandated specially for each and every state?
Actually, increasing refining capacity would hurt a lot of refiners. In fact, back in the 1980s, the AEI issued internal memos about refiners getting together to cut excess capacity. (In other words, collude to increase refining crack spreads.)
That said, making more oilfields available to energy companies would be a good thing- at least over the course of 10 years- to most oil companies if oil were a renewable resource. Because it isn't, the situation gets a whole lot more complicated. The question is whether we should use the oil in ANWR now or when oil prices are $200/barrel. In all honesty, I'm happy that we weren't pumping in ANWR when oil was $25/barrel and the oil industry was pushing for it. I'm not sure what a good price is, but I do know that it's better for us to start pumping in ANWR when prices are high rather than when they're low.
quote:
Any idea how much Exxon Mobil paid the federal government in taxes last year? While the news reporters go on and on that Exxon earned a "record" $40 billion in profits (never mentioning that it was on "record revenues" at a 9% or so profit margin, which, is on the "low side" of "normal" for a company today), that they paid a record $30 billion in corporate income taxes!.....and that's not including the taxes confiscated by the state & federal governments at the pump!
But a lot of companies pay a lot in taxes. Take McGraw-Hill, for example. In 2007, McGraw-Hill reported income tax expense as 37.5% of income. This, of course, doesn't include sales taxes on various books it publishes, payroll taxes, unemployment taxes, and more. Chevron, on the other hand, which operates in 60%-tax Venezuela, still pays only 40% of its pre-tax income in taxes.
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Want to know who REALLY makes a "killing" on the production of oil, the refining and the sale of gasoline? the government does. Makes far more than the oil companies do.
But in some ways, it makes sense from an economic standpoint. Profits tend to move upstream. If gas station owners are making a killing, that means refiners will eventually start making a killing, which means oil companies will eventually start making a killing. Since governments supply the "sovereignty" required to maintain an oil company's ownership of its facilities, it makes sense that an oil company's sovereignty expenses (taxes, royalties, etc.) will also increase.
quote:
I live within a stone's throw of Exxon Mobil's HQ in the Dallas area....many of my neighbors are employed there (among thousands of the hardworking people who work there, and have VERY VERY good jobs)....the media loves to portray the "big oil" business as a few big high-paid execs....the oil business is far more than that....it's the livlihood of millions of people....and they are just as frustrated with the global markets as you are....
I don't think we need to defend Big Oil's employees- exorbitant CEO pay should be something that stockholders should be responsible for clamping down on. The fact is that millions of grandparents, orphans, and everyday families are counting on oil company profits to keep up with inflation. If government intervenes too heavily, that won't happen. This will mean a lot of angry seniors in the voting booths come 2010 or 2012.
And the fact is that if oil remains at $135/barrel and oil companies can deduct salaries from their income tax expense, nobody's gonna get fired if tax rates go up. It makes just as much sense to hire employees if tax rates are 35% or 50%- just as long as the rate on employee salary deductions stay the same.
quote:
Most people in the oil business are just "regular guys"....many grew up in West Texas....got started in the business by working the oil rigs either on land or offshore....and, got an education and worked hard....
I think Steve Simon (exxon mobil) is the guy you are referring to....he started out working at a refinery in Louisiana....after being in the Army in the late 1960s in Vietnam. At what "salary range" did he "cease" being a "regular guy"????
But many aren't. I actually met one of BP's oil traders when I did an on-site visit way back in college while I was job hunting. He's 26, makes eight figures, and owns a mansion on Lake Michigan outright.
BP, for example, hires kids straight out of the Ivy League (and also will stoop to recruit from the humble Big Ten on occasion) to run their supply and trading operations. Many of the people making money off of high oil prices have more in common with Donald Trump than you and me- or more likely, have more in common with the Saudi royal family than they have with you and me.
quote:
Many forget 1998....oil was $10/barrel....gasoline was selling at 89¢ here in town, and the oil companies were capping wells, while the "service companies" (Halliburton, Schlumberger, etc...etc...) were laying of vast amounts of people....since the cost to drill and capture the oil as far more expensive than what it was worth?
The past four years have been more than enough to make up for the losses back in '98.
quote:
as far as these "congressional" hearings go...it's just an election year "dog & pony" show for the politicians.....they really don't care what the oil company managers have to say.....they just want their "soundbites" to be on the evening news.....
I agree that congress hasn't done a whole lot to help in the past year; if they were interested in helping out the economy, they could lower the national speed limit, open up ANWR, make SUVs illegal, or come up with an energy policy, but they haven't exactly sat on their behinds the entire time. They have offered tax credits for hybrids and increased CAFE standards, for example. And the Hybrid tax credit is now making the ability to convert nuclear energy into energy that can run your car a serious possibility- manufacturers are starting to develop plug-in hybrids that can run on either gas or electricity produced here at home.
However, I think their concerns- and anger- about high energy prices are well-justified. I don't know if punishing oil companies- which help keep oil prices down with the oil they produce- is going to help, but I do think that oil executives might be some of the best-positioned people to explain to Congress why oil prices are so high.
One group that is notably absent from these hearings are the hedge fund managers. I don't agree with Carl Levin's proposal to regulate American citizens trading on foreign exchanges (thus putting Americans at a disadvantage to people who might consider moving to the Bahamas or Dubai), but I think some disclosure on large positions held by hedge funds to FERC might make some sense. We'll be happy to let Amaranth corner the natural gas market on the ICE if they at least notify FERC that they are doing this. If we must have people playing games with the markets, it would at least be better for them to be doing it in the US- and letting regulators know what's going on- than having London or Dubai-based hedge funds do this to American consumers.
< Message edited by blessedinnyc -- 5/22/2008 6:56:19 PM >
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RE: Oil hits $135/barrel- what does this mean for the e... - 5/23/2008 8:51:58 AM
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kernsfamily
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quote:
quote:
ORIGINAL: kernsfamily
And, then, when your job moves once again, then what? I've lived in the DFW metroplex area for 11 years, and this is my 4th workplace....
Perhaps you should find another employer- or at the very least, convince your employer to set up a van or bus system. My friend at Microsoft gets a free ride home every evening on the company bus. Actually, if I stay late enough, I get a free car ride home, but that's another story.
I didn't explain it correctly.....this is my 4th EMPLOYER....yes, back in 1998-2001, my office was a mere 7 miles away from my house.....today, it's 32 miles...(the dallas/fort worth metroplex encompasses over 9,000 sq miles (larger in area than connecticut & rhode island combined).....Iam the only one at this site that lives where I live.....the closest coworker lives 20+ miles north of me, and has differing work hours....there IS no one on "my side" of the world.....so, let's say I move to the "Fort Worth side of the world" to be closer to my job (in an attempt to "save on gas")....guess what? Iam back to "Day 1" on a mortgage, and any home I find here is going to start off at least twice what I owe on my current home. Then, comes an "organizational" shift in a few years, and Iam looking for another job....chances are, I would then be working back over to where I currently live now!....and, Iam right back where I started.
Here in DFW, you live wherever you want to live....because your job can move at anytime....to almost anywhere....we are fairly "centrally" located to where we can get most anywhere conveniently.
Sure, the high gas prices have taken a hit....but, we're doing OK.
quote:
However, I think their concerns- and anger- about high energy prices are well-justified. I don't know if punishing oil companies- which help keep oil prices down with the oil they produce- is going to help, but I do think that oil executives might be some of the best-positioned people to explain to Congress why oil prices are so high.
Correct....while the oil execs are TRYING to explain, those in congress have their blinders on, and are using the opportunity to mislead the American people into thinking it's those guys that control the world oil markets....and, on a whim can reduce the price of oil, as well as the price at the pump.....
they can explain all they want....but, judging by the responses of those in congress, that are on that "committee", they don't really care what they say.....they are there for "show" and nothing else.
< Message edited by kernsfamily -- 5/23/2008 9:18:01 AM >
_____________________________
Proud dad of 3 great girls....Erin, Emilie and Elise
Blessed to have all of them in a "totally awesome" public elementary school!
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RE: Oil hits $135/barrel- what does this mean for the e... - 5/23/2008 9:43:58 AM
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blessedinnyc
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quote:
I didn't explain it correctly.....this is my 4th EMPLOYER....yes, back in 1998-2001, my office was a mere 7 miles away from my house.....today, it's 32 miles...(the dallas/fort worth metroplex encompasses over 9,000 sq miles (larger in area than connecticut & rhode island combined).....Iam the only one at this site that lives where I live.....the closest coworker lives 20+ miles north of me, and has differing work hours....there IS no one on "my side" of the world.....so, let's say I move to the "Fort Worth side of the world" to be closer to my job (in an attempt to "save on gas")....guess what? Iam back to "Day 1" on a mortgage, and any home I find here is going to start off at least twice what I owe on my current home. Then, comes an "organizational" shift in a few years, and Iam looking for another job....chances are, I would then be working back over to where I currently live now!....and, Iam right back where I started.
Ok, then move close to a park-and-ride. I live five blocks from a Subway stop, and where my Dad lives out in the Chicago suburbs, he just drives two miles to the train station, parks his car, and gets on the train. Surely Dallas has a bus or train system?
quote:
ORIGINAL: kernsfamily
Correct....while the oil execs are TRYING to explain, those in congress have their blinders on, and are using the opportunity to mislead the American people into thinking it's those guys that control the world oil markets....and, on a whim can reduce the price of oil, as well as the price at the pump.....
I don't think half the people on that committee think that.
What I am disappointed by, however, is that we don't see any suggestions for influencing supply-and-demand in the short term. One solution would be to decrease
quote:
they can explain all they want....but, judging by the responses of those in congress, that are on that "committee", they don't really care what they say.....they are there for "show" and nothing else.
And I don't think their explanations are sufficient. There is always a market-related reason that oil is at $135/barrel. The guys who run these hedge funds that are buying up oil aren't stupid, and if they're making the wrong bets, they're going to lose money. Perhaps they are worried about peak oil. Perhaps they are concerned about how we are going to supply China with 40 million barrels of oil per day in ten years. Perhaps they are worried that there won't be any alternatives to oil when we start running out in 20 years.
I will say that if I owned an oil company, I wouldn't state my income under oath unless the senator who asked me told me his net income from last year- and if they held me in contempt, well, the US would just have to get by on 800Kbpd less than what they got by on when I wasn't in prison. <EVIL BANKER LAUGH>
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RE: Oil hits $135/barrel- what does this mean for the e... - 5/23/2008 10:04:58 AM
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kernsfamily
Posts: 1222
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quote:
The guys who run these hedge funds that are buying up oil aren't stupid,
Good point...instead of getting the oil execs up there....put up some of the "oil traders" on the stand....and, have THEM explain to congress (who really can't do anything about it anyway) why they are driving up the cost of oil.
quote:
Ok, then move close to a park-and-ride. I live five blocks from a Subway stop, and where my Dad lives out in the Chicago suburbs, he just drives two miles to the train station, parks his car, and gets on the train. Surely Dallas has a bus or train system?
OH...if it were only that simple. I live on the "Dallas side" of the metroplex. If I worked in Downtown Dallas, then I would have ample "mass transport" to get me to work (buses and "light rail")....because the "mass transit" is designed to get people from "downtown" to the 'suburbs"...... Though, I commute "suburb to suburb"....and it's suburbs of two DIFFERENT cities (a suburb of Dallas, to a suburb of Fort Worth).....there is NO mass transit options for someone that lives/works in my situation.....and, iam not the only one.
Let's say I did have something like that for an "option"....on any given day, I can get a call from my printer (iam an art director and use commercial printers), or other vendor, and I'll go out to their facility to handle "issues"....how would I do my job if I can't just jump in MY car and go?
Chicago? Great.....I love going there for trade shows/conferences. I fly into O'Hare, and take the train into town (get off at the station at Lake & State (?), then get a cab to my hotel).....as Chicago has the population density, and infrastructure for such mass transit.
I would LOVE to work in a Downtown situation like Chicago.....but, here, my office is isolated in an industrial/officepark.....nothing but warehouses, light industrial and office buildings.....
quote:
I will say that if I owned an oil company, I wouldn't state my income under oath unless the senator who asked me told me his net income from last year
AGREED! Talk about pandering & stirring up "class warfare"....
_____________________________
Proud dad of 3 great girls....Erin, Emilie and Elise
Blessed to have all of them in a "totally awesome" public elementary school!
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RE: Oil hits $135/barrel- what does this mean for the e... - 5/23/2008 1:35:52 PM
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davemiller7
Posts: 613
Joined: 3/5/2008
From: NC via NY
Status: offline
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Got a question. The media is blaming a lot of the skyrocketing oil prices on "developing countries" like China and India. Now, if we're paying $4 per gallon for our gas and our incomes are 10 - 100 times that of those in China and India, how can they afford the cost of their gasoline? It seems like they would be paying a months pay for a gallon of gas. And the world demands for oil is higher than the US alone. It doesn't add up. Is there something I'm not taking into account?
-Dave
_____________________________
The Prayer of Protection
The light of God surrounds me,
The love of God enfolds me,
The power of God protects me,
The presence of God watches over me.
Wherever I am, God is.
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RE: Oil hits $135/barrel- what does this mean for the e... - 5/23/2008 2:26:28 PM
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kernsfamily
Posts: 1222
Joined: 4/26/2006
From: Dallas (originally Detroit)
Status: offline
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quote:
ORIGINAL: davemiller7
Got a question. The media is blaming a lot of the skyrocketing oil prices on "developing countries" like China and India. Now, if we're paying $4 per gallon for our gas and our incomes are 10 - 100 times that of those in China and India, how can they afford the cost of their gasoline? It seems like they would be paying a months pay for a gallon of gas. And the world demands for oil is higher than the US alone. It doesn't add up. Is there something I'm not taking into account?
-Dave
it's those 'Developing countries"...and their swiftly rising demand for oil (not specifically gasoline).....
but, the rising global demand for oil is just one part of it.....the weak U.S. dollar makes it that more expensive to import oil....(a large factor).....and, speculators are "fueling" the rising oil prices on the markets....
_____________________________
Proud dad of 3 great girls....Erin, Emilie and Elise
Blessed to have all of them in a "totally awesome" public elementary school!
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RE: Oil hits $135/barrel- what does this mean for the e... - 5/23/2008 3:00:04 PM
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davemiller7
Posts: 613
Joined: 3/5/2008
From: NC via NY
Status: offline
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I wasn't considering the weak dollar nor the speculators. That helps make sense of this mess. Thanx.
-Dave
quote:
ORIGINAL: kernsfamily
quote:
ORIGINAL: davemiller7
Got a question. The media is blaming a lot of the skyrocketing oil prices on "developing countries" like China and India. Now, if we're paying $4 per gallon for our gas and our incomes are 10 - 100 times that of those in China and India, how can they afford the cost of their gasoline? It seems like they would be paying a months pay for a gallon of gas. And the world demands for oil is higher than the US alone. It doesn't add up. Is there something I'm not taking into account?
-Dave
it's those 'Developing countries"...and their swiftly rising demand for oil (not specifically gasoline).....
but, the rising global demand for oil is just one part of it.....the weak U.S. dollar makes it that more expensive to import oil....(a large factor).....and, speculators are "fueling" the rising oil prices on the markets....
_____________________________
The Prayer of Protection
The light of God surrounds me,
The love of God enfolds me,
The power of God protects me,
The presence of God watches over me.
Wherever I am, God is.
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RE: Oil hits $135/barrel- what does this mean for the e... - 5/23/2008 3:14:47 PM
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blessedinnyc
Posts: 1594
Joined: 10/12/2007
Status: offline
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quote:
Good point...instead of getting the oil execs up there....put up some of the "oil traders" on the stand....and, have THEM explain to congress (who really can't do anything about it anyway) why they are driving up the cost of oil.
I'm not saying oil prices would be much different- at least over the course of several months- if it weren't for these traders, but I do think that they would have much better ideas on what is influencing the shorter-term price than the CEO of an oil company who's main job is to keep a 3 million-barrel per day operation running, rather than predict price moves in oil.
I think Congress can take some action to temporarily decrease the price of gas by 10 cents almost immediately- without releasing oil from the SPR or cutting the gas tax. All they have to do is reduce the national speed limit to 55. This would reduce gas consumption.
Furthermore, I'm starting to be convinced that short-term oil prices are being influenced by long-term market expectations. Three years ago, oil cost $64/barrel for immediate delivery, but $39 for delivery in 2012. This is normally what happens in oil markets; it's easier to get oil to market three years from now than to get it to market today. Today, we are seeing something different. Oil is trading at $131 for delivery today, but $133 for delivery two years from now. At some point, if the market expects oil to be $140 in several years, oil companies will stop producing oil, thus reducing supply and driving up the price, and if oil still stays at $131, arbitrageurs will buy oil, store it, and then deliver it in eight years, also driving up the price. So if we expect oil to be $200/barrel five years from now, that's going to push up the value of a barrel of oil today.
The reason for high oil prices today might have to do with expectations of supply and demand in several years. If that's the case, doing things that would influence the market five years down the road could help reduce prices today. All Congress has to do right now is come up with a convincing plan for getting oil prices in five years lower. Perhaps that means opening up ANWR. Maybe we need to ban SUVs. Maybe we need to build a bunch of wind turbines and nuclear plants. Maybe we need to mandate that every car sold by 2014 needs to come with an electrical hook-up. I don't know which of these would be the best solution, but I do know that any of these (or all of them) could help lower current oil prices by maybe 5%. At the very least, it would scare off the long-term speculators a little.
quote:
OH...if it were only that simple. I live on the "Dallas side" of the metroplex. If I worked in Downtown Dallas, then I would have ample "mass transport" to get me to work (buses and "light rail")....because the "mass transit" is designed to get people from "downtown" to the 'suburbs"...... Though, I commute "suburb to suburb"....and it's suburbs of two DIFFERENT cities (a suburb of Dallas, to a suburb of Fort Worth).....there is NO mass transit options for someone that lives/works in my situation.....and, iam not the only one.
Let's say I did have something like that for an "option"....on any given day, I can get a call from my printer (iam an art director and use commercial printers), or other vendor, and I'll go out to their facility to handle "issues"....how would I do my job if I can't just jump in MY car and go?
Maybe you should consider a Hybrid for your next car. One of the things that I enjoy in New York is that I have the option of either convenience or fuel efficiency every evening. If I leave by about 8 PM, I generally take the subway home- saving fuel. However, if I leave at 10 PM, we only get about one subway train every half hour, so it makes a bit more sense to take a cab. Thus, I only pay for gas when I need convenience.
Here in NYC, we just catch a cab if we have an appointment somewhere where the trains don't go.
quote:
Chicago? Great.....I love going there for trade shows/conferences. I fly into O'Hare, and take the train into town (get off at the station at Lake & State (?), then get a cab to my hotel).....as Chicago has the population density, and infrastructure for such mass transit.
I would LOVE to work in a Downtown situation like Chicago.....but, here, my office is isolated in an industrial/officepark.....nothing but warehouses, light industrial and office buildings.....
It might be time for Dallas to consider a public transit system. As someone who leans libertarian, I normally hate stupid government projects, but a modest bus system would save everyone money in the aggregate.
quote:
AGREED! Talk about pandering & stirring up "class warfare"....
I just think it's sort of rude to ask people questions about their financial lives. At the very least, the discussion should be a give-and-take. If these Senators are claiming these oil tycoons think they are above the law, then perhaps they can answer the same questions the CEOs are asked.
I also think a windfall profits tax will have the exact opposite effect that the Senators intend it to have, but the least they can do is put a one-year sunset provision on it. Let's try it out for a year or two, and when it turns into the failure I'm pretty sure it will turn into, it won't take any work to let it sunset.
< Message edited by blessedinnyc -- 5/23/2008 3:25:21 PM >
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RE: Oil hits $135/barrel- what does this mean for the e... - 5/23/2008 3:17:09 PM
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blessedinnyc
Posts: 1594
Joined: 10/12/2007
Status: offline
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quote:
ORIGINAL: davemiller7
Got a question. The media is blaming a lot of the skyrocketing oil prices on "developing countries" like China and India. Now, if we're paying $4 per gallon for our gas and our incomes are 10 - 100 times that of those in China and India, how can they afford the cost of their gasoline? It seems like they would be paying a months pay for a gallon of gas. And the world demands for oil is higher than the US alone. It doesn't add up. Is there something I'm not taking into account?
-Dave
Most of them aren't. Most of them just want to take the bus, fill up their moped, or make sure their community that was hit with an earthquake can get electricity. I'm not sure if they're all trying to get cars and drive them 10,000 miles/year.
Also, of course, wealth in China and India isn't evenly distributed. It may be that the upper-middle-class between those two countries, which might consist of 100-200 million people, can afford $4/gallon gas and want cars.
Finally, of course, kernsfamily's point about the weak US dollar is spot on. Long-term, speculators can't influence the market, so I'm not sure about the speculators, but they may have a short-term impact.
< Message edited by blessedinnyc -- 5/23/2008 3:28:21 PM >
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