Skip to comments.$5 Gas By Summer Is Seen as Iranian Situation Festers
Posted on 04/24/2006 8:41:25 AM PDT by churchillbuff
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Yea, we've had such disruptions.... lets see.. IRAQ came ONLINE as a possible supllier to the US.. which it was not before because of the Sanctions... Yea, whole lots of uncertainty... NOT.
What is going on is simple bubble nonsense... hedge funds et all are now in existance with a mandate just to buy oil futures.. well guess what? There are only so many of them... so what happens? THey have to spend their money on oil, no matter how rediculous the price is... its their mandate... so they are basically trading futures contracts with one another because there is more greed than good sense... I buy it from hedge fund A for $60.. they sell it to hedge fund B a week later for $65... who sells it back to fund A for $70 a week later.. its a CLASSIC BUBBLE....
It has NOTHING, NOTHING to do with supplies, or demand or even refinery capacity. Combine this with the reality that the futures market can be manipulated very easily and that controls and enforcement of such actions are even less likely there there are for the regular stock market... and you can pretty much see what's going on.
There is no shortage of supply, in fact Saudi Arabia has flat out said they have been producing more than they can sell on a daily basis.... Demand, worldwide has actually fallen some, not increased.. and the price is still going up by leaps and bounds... its called SPECULATIVE BUBBLE folks... same thing that was going on in tech stocks in 99.
Like the 'Rats and progressives are going to do all that when they regain power...
What are you smoking, dude?
I love my Ford Escort!
I just get my 10 gallons ever 10 days and keep my mouth shut... (75-mile daily commute)
See the post below yours... Its not some grand conspiracy, its simply greed and manipulation. There is no omnipotent godlike creature breakign old signed contracts, just flat out manipulation of current ones.
Again, demand is down, supplies are up and price continues to skyrocket.... pure and simple manipulation. Fact is simple that supplier is still making a nice profit on that oil being sold at 35 bbl, because his costs haven't increasted at all, his supplies haven't decreased... he can deliver it easily at 35bbl because there has been nothing to truly affect the cost of extracting crude from the earth, and there is no shortage... Saudi Arabia is actually producing more daily than it can sell by its own admission.
How profitable are these oil companies?
You're on a roll, Jack... Don't stop now.
Tell us at that point how the Dem congress and McCain will solve ethe problem...
Perpetual motion is only a reality with their mouths.
The author of this article is totally incorrect on this key point. Contrary to "conventional wisdom," high oil prices are actually counter-inflationary in many respects.
Yes, there are elements of a 'bubble' in this oil market, spurred by tension in the Middle East, Katrina disruptions, Iranian uncertainty and increased demand from India and China. This all makes the future very uncertain.
The hysteria element to this or any price spike will be short-lived. Don't trade in the SUV for a Prius just yet.
Hard to say acurately without doing some research.
But I can say that they are profitable enough to reward their top officers with some very sizable bonuses. We all have seen those numbers.
Now, I don't begrudge anyone from getting what they can, when they can. Whether it be Drew Bledsoe getting $14 million to play football or ExxonMobil Corporation retiring Chief Executive Officer Lee Raymond getting a retirement package worth nearly $400 million...but at some point it does become a little obscene.
For one thing, these "record profits" in the oil industry are "records" primarily because these companies are much larger than they used to be. ExxonMobil, BP/Amoco, Texaco/Chevron, etc. are all the result of major corporate mergers involving two huge oil companies merging to create a single company.
It should also be noted that ExxonMobil's "record" $10 billion profits in 2005 resulted from about $100 billion in gross revenue -- which means the company showed a return on investment of about 10%. This is hardly an obscene profit margin in any sense of the word, and is dwarfed by the enormous profit margins in many other industries. In fact, people who know the energy business actually laugh out loud at the suggestion that buying stock in a company like ExxonMobil is a good investment in a booming energy market. To an investor in the energy sector, buying stock in a company that generates a 10% return on investment at the absolute historic peak of its profitability -- and generates calls for all kinds of government regulation, Congressional hearings, etc. in the process -- is the equivalent of putting your money in a savings account at your local bank.
You seemed to miss a few things . Is most gasoline from light or heavy crude. Is light crude production increasing or decreasing. What is the price difference between light and heavy crude. Why is there a difference? Does the US have many refineries that can refine gasoline from heavy crude. Does heavy crude yield less gasoline than light crude. Is SA crude heavy or light? If given unlimited amounts of heavy crude could the US at present supply its customers with gasoline. Why is SA building new refineries when they already have plenty of supply for themselves. Did the production of light crude peak in 2004?
$5 a gallon gasoline would ruin the economy, plain and simple. Can you imagine paying $125 for a full tank of gas in an SUV? And then do that once a week, if lucky?
Brutal prediction. Pray he's wrong.
I propose we drill for oil in that guy's chins. We are sure to find another gusher.
Exactly. Futures prices are by definition speculations on what might happen, given current circumstances. Its not 'manipulation' in the sense of collusion by speculators. These speculations are not irrational, they may in fact become real problems in supply, given all the circumstances that you mentioned. When current conditions change the outlook, the futures prices will change.
Is the UK not an oil exporting country?
Rationing might ensure a Dem Congress and presidency. Even though rationing is the type of thing leftists really love.
Your Armageddon won't be here for a while, no matter how much you desire it...
"$#it for brains".
Why? There is no supply problem at present. We are fully stocked with raw crude.
The high price is a result of future worries, not the current reality.
As demand drops a bit due to the higher prices, the crude spot prices will come down. The only reason SPR would be opened up, is if refineries needed it for whatever disaster befalls us on the crude supply side.
Only because Clinton had his head so far up OBLs ass. Do nothing is the perfect response to terrorism.
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