Posted on 05/05/2011 8:40:46 AM PDT by OrangeHoof
The price of crude oil has dropped sharply this morning with both Brent Crude and West Texas Intermediate Crude dropping over $4/barrel.
As of 11:10 EDT, Brent Crude has sunk $4.34/bl to $116.41 while WTI Crude has dropped $4.67 to $104.57/bl.
So how many days of storage do you think should be kept at each station? How big a hazard would that be at a retail location and how much space would it take?
And you certainly are getting far from the justification the poster was using to shut down all future trading in crude oil.
If traders are forced out through tougher new rules as you rightfully point out, monopolies on control will develop.. effectively nationalizing the oil market and real collusion, massive supply interruption and price increases will be common.
Speculators are taking profits.
1. The current futures price is WAY too high considering that at least here in the USA, there are no supply issues with both crude oil and gasoline. Also, all the refineries have fully converted to summer blend gasoline, so production bottlenecks are gone. In short, the invisible hand will hit the oil companies soon because there are fewer buyers for such expensive petroleum products, and I don't think the oil companies want to be "holding the bag" on way too much expensive petroleum products!
2. There's also a political angle: the oil companies have to start cutting the price as a favor to President Obama or he will suffer the same fate that befell President Carter in 1980. The DNC saw what happened to Carter and they don't want a perfect repeat of that experience!
It appears that hedge funds are getting out of commodities thus sparking this drop.
Will we hear people complain about speculators and hedge funds now?
Probably not....
I doubt it. QE3 will happen this summer, and it will make QE2 look small in comparison.
Ever hear of Tank Farms or distribution centers? That was what was cut off in the southeast in the event I was talking about. My city was the first on the pipeline to be shut off in the southeast actually. I know that that distribution center is still running on the storage capacity {tanks} that were put in place there in the 1960's I think it was.
Now when that happened gas shot up to nearly $5.00 a gallon in East Tennessee and BTW Knoxville is the regional HUB or Tank Farm sitting on the pipeline itself. Guess what broke the prices faster than anything? About three or four stations to the north {20 miles away} who bought gas pumped from wells and mini-refined locally in a nearby county. The gas 20 miles away was much cheaper than a stations across the street from the tank farm. IIRC at one point they were almost two dollars cheaper. I remember it because I went there about once a week and filled up since I had to go there anyway. Under normal conditions that area's gas stations was and still are serviced {supplied} out of Knoxville.
I'm not trying to shut down trading. But it is a national security issue when and if the refineries in the Gulf have to close for a few days and a whole region of the U.S. has no gas. That can be prevented with more tank farms. We also need ore domestic drilling and refineries up and running in nplaces other then the Gulf. Doing so would do no harm economically. So why isn't it? Market manipulation perhaps?
True enough, but they could lower their prices at the drop of a hat no???
Yes, I've done design and construction of truck loading terminals with tank farms to be the loading point where trucks then take product to retail sales.
That was what was cut off in the southeast in the event I was talking about.
Incorrect. Those facilities remained operational. The problem was the Colonial Pipeline that feeds multiple Truck Loading centers with tank farms quite supplying product. The trucks sucked the tank farms dry in a matter of several days.
who bought gas pumped from wells and mini-refined locally in a nearby county.
No, the trucked in gasoline from much farther away served by other pipelines.
That can be prevented with more tank farms.
Again, how many days supply? Do you understand how much gasoline is used by your state?
Those 3-4 local stations were selling for the pre-shutdown price or close to it and there was almost some lawsuits over the deal. Now keep in mind they did not have the capacity to sell to the entire counties stations but they did have more than enough to meet the local demand at their stations.
http://www.mastercraft.com/teamtalk/archive/index.php/t-26843.html Look at the comment by Prostar19 and look at the comments here as well http://knoxville.wate.com/sound_off/index.php?topic=3648.0 and poster balvey. The next HUB from Lafollette is Lexington I think. Not economically fisable to bring gas from there for their price. Besides even Pilot Oil was having issues securing distant sources and making a buck doing so. I distinctly remember this was a entirely local set up including ownership. Stations closer to Lexington could not do it and were sell at $5.00 a gallon. I'll try to find the article though.
Look at posting from truthseeker http://www.knoxnews.com/news/2008/nov/07/gasoline-prices-continue-slide/
This would make sense as too why a station in Lafollette could even undercut the purchasing power of Pliot Oil and sell cheaper in the region than anyone in the market. At one point IIRC gas there was $1-$2 cheper than Knoxville. The gas as I understand it did not come from the Colonial line in Knoxville but a nearby area source.
You won’t see relief at the pumps for awhile but could this be a sign that the worst of the oil price crisis is over?
Thank goodness. I am glad that it is over. It may take a few weeks to lower the price but that is ok as there is light at the end of the tunnel.
In all probability, BINGO. odumbass is in the crapper and he is going to do some wild things to get out.
Blam, what’s your take on this? A temporary reprieve and some profit taking, as I think? Or a repeat of 2008?
At this point, I honestly cant tell of this is a good thing or a real real bad thing. It seems like something we should feel happy about but it seems like it is a sign of something horrible coming.
Supply and demand didn’t account this latest runup. May it not limit the crash.
tough new rules requiring traders to take physical custody of the oil.
That could be good. It would even out prices a little, and maybe increase our holding capacity.
We can expect oil prices and inflation to take off again when economic growth starts picking up again.
With the zero in office, we’ll be safe for the next two years.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.