Originally Posted by obvious Child

If you like pandering to big oil...

Any new drilling will take 7~10 years to get to the market. That won't solve our problems.
Any new refinery will take years to build. Again, no short term solution.

The only RATIONAL way to decrease prices is to decrease demand. The irrational would be to nationalize and put a price ceiling up.

The good thing about high gas prices is that it makes alternative profitable and thus a good candidate for investment.

Originally Posted by John1234

God knows I don't want to defend Bush, but 7-10 years is a very short time and we need to be concerned about our near future just as much as our immediate future.

Originally Posted by Gill

I agree that speculators are a major cause of the high prices...

Originally Posted by The Economist

Stuck for answers, politicians have been looking for scapegoats. Top of the list are the speculators profiting from other people's hardship. Some $260 billion is invested in commodity funds, 20 times the level of 2003. Surely all that hot money has supercharged the demand for oil? But that is plain wrong. Such speculators do not own real oil. Every barrel they buy in the futures markets they sell back again before the contract ends. That may raise the price of “paper barrels”, but not of the black stuff refiners turn into petrol. It is true that high futures prices could lead someone to hoard oil today in the hope of a higher price tomorrow. But inventories are not especially full just now and there are few signs of hoarding.

Originally Posted by The Economist

Those who see speculators as the culprits point to the emergence of oil and other commodities as a popular asset class, alongside stocks, bonds and property. Ever more investors are piling into the oil markets, the argument runs, pushing up the price as they do so. The number of transactions involving oil futures on the New York Mercantile Exchange (NYMEX), the biggest market for oil, has almost tripled since 2004. That neatly mirrors a tripling of the price of oil over the same period.

But Jeffrey Harris, the chief economist of the Commodity Futures Trading Commission (CFTC), which regulates NYMEX and other American commodities exchanges, does not see any evidence that the growth of speculation in oil has caused the price to rise. Rising prices, after all, might have been stimulating the growing investment, rather than the other way around. There is no clear correlation between increased speculation and higher prices in commodities markets in general. Despite a continuing flow of investment in nickel, for example, its price has fallen by half over the past year.

By the same token, the prices of several commodities that are not traded on any exchange, and are therefore much harder for speculators to invest in, have risen even faster than that of oil. Deutsche Bank calculates that cadmium, a rare metal, has appreciated twice as much as oil since 2001, for example, and the price of rice has risen fractionally more.

Investment can flood into the oil market without driving up prices because speculators are not buying any actual crude. Instead, they buy contracts for future delivery. When those contracts mature, they either settle them with a cash payment or sell them on to genuine consumers. Either way, no oil is hoarded or somehow kept off the market. The contracts are really a bet about which way the price will go and the number of bets does not affect the amount of oil available. As Mr Harris puts it, there is no limit to the number of “paper barrels” that can be bought and sold.

That makes it harder for a bubble to develop in oil than in the shares of internet firms, say, or in housing, where the supply of the asset is finite. Ultimately, says David Kirsch of PFC Energy, a consultancy, there is only one type of customer for crude: refineries. If speculators on the futures markets get carried away, pushing prices so high that refineries run at a loss, they will simply shut down, causing the price to fall again. Moreover, speculators do not always assume that prices will rise. As recently as last year, the speculative bears on NYMEX outweighed the bulls.

Originally Posted by Calculated Risk

Here is a simple diagram of a bottleneck:

Raw Material --->> bottleneck --->> Finished Good

What happens with a bottleneck? If the process is running at full capacity, there is a fixed supply of finished goods, so the price of the Finished Good will rise rapidly with any increase in demand.

But what happens to the price of the raw material? Since the process is running at full capacity (a bottleneck), the demand is fixed, and any additional supply of raw material will cause the price of the raw material to drop!

For the Oil industry: Crude oil is the raw material, the potential bottleneck is the refining process and the finished good is gasoline (also other products, but I'll use gasoline in this example). If refining is at or near full capacity, any additional demand for gasoline would increase the price of the finished good (gasoline) but would not change the demand for crude oil (demand is fixed by the refining bottleneck).

Since demand for crude would be fixed with a bottleneck, any additional supply of crude would depress the price of the raw material (crude oil). Therefore the lack of refining capacity could only depress the price of crude and would not contribute to the rise in the price of crude - the opposite of what is being reported. Adding more refining capacity would increase the demand for crude oil and could lead to higher crude oil prices, unless additional supply of crude is brought online.

Originally Posted by Ethereal

I was watching his online interview, and I must say he did a good job. I was particularly pleased with his response to this question...



I'd say that about sums it up.

Interview with President Bush - White House Transcript - Politico.com

Originally Posted by Gill

Yeah, and if Clinton hadn't vetoed it in the early 1990's, we would be pumping that oil right now.

Originally Posted by Sergeant Stinger1

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Well this is the truth about 'SUMMING it UP'!
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bush has been in office for nearly 8 years with a Repub controlled Congress from 1994 to 2007 and THIS is his answer???? Let the next Pres do it???
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**** you bush you American People HATER, Iraqi people LOVER and BIG business LOVER!!!!
Got it bush???
**** YOU BUSH!!!

Originally Posted by disneydude

Too funny....Bush talking about gas prices That's like the Ku Klux Klan talking about racisim....or a 500 lb. woman talking about dieting....

Originally Posted by DeeJayH

are you two married?????

i'm just saying

Originally Posted by Sergeant Stinger1

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No.Haaaaaaaaa so its OK for YOU to propose to him!

Originally Posted by Sergeant Stinger1

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Is that right?