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Gas prices are highest ever for this time of year

EagleAye said:
You know folks, with all the debates going on about the price of oil/gas, I'm seeing a lot of mixed messages. Can anyone provide just the straight poop on how oil and gas is priced?

It seems that the prime movers are Supply and Demand, and Speculators, right? So if the US produces more domestic oil, that domestic oil will not necessarily be cheaper because oil price follows the Intl market price, right? But sometimes some countries get oil for more or less, and that seems contradictory, yes? And how can the president be or not be responsible for the price of gas?

And then the price of gas is obviously influenced by the price of oil, but does that (gas) follow Intl pricing? I don't think it does. The price of gas follows the regular rules of Supply and Demand I would think because I can get different gas prices from different stations in the same town. Correct?

I'm not trying to be a wiseass, I'm asking sincerely.
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No domestic oil is not cheaper and supply has little to do with price. 60% of oil produced is "owned" by entities that use no oil, mostly hedge funds and commercial banks. Those funds are now attacking oil prices with the "Iran Situation" being the excuse. In the commodities market, the more money chasing oil futures the higher the price gets. It is nothing less than a perversion of the system of supply and demand that needs to be regulated out of existance. The only ones who should be buying oil are those that use it. Until that happens we are at the mercy of the speculators and their enormous wallets.
 
Another factor driving gasoline prices higher: U.S. refineries continue to set new records for exports of refined fuels because they can make more money selling products like diesel overseas.

During the week of Feb. 10, refineries exported a record average of 3.1 million barrels of refined fuels a day. That's up 42.6% compared with the same week in 2011 and up 80.6% since 2010.
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L.A. on brink of $4-a-gallon gasoline ahead of holiday weekend - latimes.com
 
iguanaman said:
No domestic oil is not cheaper and supply has little to do with price. 60% of oil produced is "owned" by entities that use no oil, mostly hedge funds and commercial banks. Those funds are now attacking oil prices with the "Iran Situation" being the excuse. In the commodities market, the more money chasing oil futures the higher the price gets. It is nothing less than a perversion of the system of supply and demand that needs to be regulated out of existance. The only ones who should be buying oil are those that use it. Until that happens we are at the mercy of the speculators and their enormous wallets.
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Exactly, and it is not only oil. Even food stuffs are being hoarded like this, jacking up world prices on many essential food stuffs. The 150 dollar oil price a few years back was because of this very speculation.
 
sharon said:
Its fear driven.

If Iran is bombed the ppb may climb to $180 in a matter of hours.
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That's utter bull****. Fear driven when there is nothing going on? It is an excuse, just as Libya was an excuse to keep oil prices up. When major banks have oil tankers sitting around full of oil, just waiting for the oil to go up, then you know that the market under someone's influence.

When 64% of oil sold in a month went to speculators then you know that the system is broken. When oil went up during the first and second oil crisis, speculators accounted for a minor part of the trade.. that was fear.. that was based on facts.. Today speculators control the prices of oil (and other commodities and bond yields) as they see fit.

Tell me why oil is now HIGHER than it was when Iran threatened to close the Straits of Hormuz a few weeks ago? Why has oil been around 100 dollars for a long time, despite Libya being peaceful again?
 
Oil is finite. Our demand for it is not. The entire fabric of human civilization is now entirely dependent upon oil, and in the grand scheme of things we're burning through it about as fast as we can, and emerging economies are catching on to the hype too.

There may be little ups and downs, but these short term fluctuations are ultimately irrelevant, as the trend is undeniable and inevitable: petroleum will always be more expensive than it was before.
 
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iguanaman said:
No domestic oil is not cheaper and supply has little to do with price. 60% of oil produced is "owned" by entities that use no oil, mostly hedge funds and commercial banks. Those funds are now attacking oil prices with the "Iran Situation" being the excuse. In the commodities market, the more money chasing oil futures the higher the price gets. It is nothing less than a perversion of the system of supply and demand that needs to be regulated out of existance. The only ones who should be buying oil are those that use it. Until that happens we are at the mercy of the speculators and their enormous wallets.
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PeteEU said:
Exactly, and it is not only oil. Even food stuffs are being hoarded like this, jacking up world prices on many essential food stuffs. The 150 dollar oil price a few years back was because of this very speculation.
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So you guys can agree that Speculators are the primary driver of oil price? But even Speculators will adjust the price based an what they "expect" the availability of oil will be, yes? So events in the ME, or even a major oil spill, would drive the price up because Speculators "expect" the supply to be less, yes? And of course this has to be measured against Demand as well.

Lastly, if Speculators are buying 60% of the oil, where are they buy it from, and what happens with the other 40%? Is the remaining 40% affected by prices set by speculators?
 
Neomalthusian said:
Oil is finite. Our demand for it is not. The entire fabric of human civilization is now entirely dependent upon oil, and in the grand scheme of things we're burning through it about as fast as we can, and emerging economies are catching on to the hype too.

There may be little ups and downs, but these short term fluctuations are ultimately irrelevant, as the trend is undeniable and inevitable: petroleum will always be more expensive than it was before.
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Meanwhile there is a ton of easy money to be made by buying and holding oil off the market so prices go up even when demand is at a 10 year low. We are being held over the fire by the wealthy yet again and the more they make the more they can bid it up. The system is rigged to benefit the very rich. Exporting 400,000 barrels of gas a day doesn't hurt either.
 
PeteEU said:
Exactly, and it is not only oil. Even food stuffs are being hoarded like this, jacking up world prices on many essential food stuffs. The 150 dollar oil price a few years back was because of this very speculation.
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Speculation in the market serves a good purpose as well.


j-mac
 
PeteEU said:
That's utter bull****. Fear driven when there is nothing going on? It is an excuse, just as Libya was an excuse to keep oil prices up. When major banks have oil tankers sitting around full of oil, just waiting for the oil to go up, then you know that the market under someone's influence.

When 64% of oil sold in a month went to speculators then you know that the system is broken. When oil went up during the first and second oil crisis, speculators accounted for a minor part of the trade.. that was fear.. that was based on facts.. Today speculators control the prices of oil (and other commodities and bond yields) as they see fit.

Tell me why oil is now HIGHER than it was when Iran threatened to close the Straits of Hormuz a few weeks ago? Why has oil been around 100 dollars for a long time, despite Libya being peaceful again?
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Banks don't have any oil tankers sitting around..

Why don't you check the OPEC basket price against Brent Crude and Texas crude.

Yes.. there is a lot of fear that if Iran is attacked they will destroy the Saudi oilfields only 800 miles from Tehran.
 
EagleAye said:
So you guys can agree that Speculators are the primary driver of oil price? But even Speculators will adjust the price based an what they "expect" the availability of oil will be, yes? So events in the ME, or even a major oil spill, would drive the price up because Speculators "expect" the supply to be less, yes? And of course this has to be measured against Demand as well.

Lastly, if Speculators are buying 60% of the oil, where are they buy it from, and what happens with the other 40%? Is the remaining 40% affected by prices set by speculators?
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No one really knows what the future may bring so speculators make their own "news" with their ready cash at the slightest provocation. The 40% goes to those who actually use oil and take delivery. They pay the same "market price" that the 60% bid up with their deep pockets. Eventually they buy all the oil, speculators never take delivery, only the profits.
 
iguanaman said:
No one really knows what the future may bring so speculators make their own "news" with their ready cash at the slightest provocation. The 40% goes to those who actually use oil and take delivery. They pay the same "market price" that the 60% bid up with their deep pockets. Eventually they buy all the oil, speculators never take delivery, only the profits.
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Right.. they never take delivery..

And if there is any attack on 22 Iranian nuclear sites.. the oil infrastructure will be destroyed as well.

Here's a map.

iranOil-fields.gif
 
iguanaman said:
The system is rigged to benefit the very rich.
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All games seem rigged in favor of those who are the most dominant at them.

My point is the real story of oil will not be that it was what the rich speculators screwed us over with--it will be that it's the most precious resource in history and we will have squandered it all in a span of about 200 years.

When there's always less of something than there was before, and there are always more people wanting more of it than the day before, what do we expect should happen to prices?
 
sharon said:
And if there is any attack on 22 Iranian nuclear sites.. the oil infrastructure will be destroyed as well.

Here's a map.
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How do you know that? That map doesn't show the 22 nuclear sites.
 
j-mac said:
Speculation in the market serves a good purpose as well.


j-mac
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For those who actually must plan long term for it's use.
 
EagleAye said:
So you guys can agree that Speculators are the primary driver of oil price? But even Speculators will adjust the price based an what they "expect" the availability of oil will be, yes? So events in the ME, or even a major oil spill, would drive the price up because Speculators "expect" the supply to be less, yes? And of course this has to be measured against Demand as well.

Lastly, if Speculators are buying 60% of the oil, where are they buy it from, and what happens with the other 40%? Is the remaining 40% affected by prices set by speculators?
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Prime driver? I won't argue that but I will argue that they add absolutely nothing to the markets other than added costs.

We should not be paying more because someone "expects" something. If only those who actually took physical control of oil was in the market, it truely then would be more of a supply and demand market. Right now nobody is having any problem getting oil but yet we are paying a pretty large premium over just a few weeks ago.

They "control" 60% is what I think was meant by that statement. A single barrel of oil is sold many times over before it ever reaches the market. Does it make sense to have these "middlemen" involved?
 
People like too make oil speculators the boogey man but they are no different than what speculators. When they see a drought or a flood or anything that will cause less wheat being produced the price of wheat goes up. Same thing with oil, if they see turmoil in oil producing regions or a president of the US that is anti oil they see shortages coming and bid the price up. It's just as simple as that.
 
sawyerloggingon said:
People like too make oil speculators the boogey man but they are no different than what speculators. When they see a drought or a flood or anything that will cause less wheat being produced the price of wheat goes up. Same thing with oil, if they see turmoil in oil producing regions or a president of the US that is anti oil they see shortages coming and bid the price up. It's just as simple as that.
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Often speculators are the boogeyman.

1970s: The Hunt brothers and the silver market

Brothers Nelson Bunker Hunt and William Herbert Hunt attempted to corner the world silver markets in the late 1970s and early 1980s, at one stage holding the rights to more than half of the world's deliverable silver.[3] During the Hunts' accumulation of the precious metal, silver prices rose from $11 an ounce in September 1979 to nearly $50 an ounce in January 1980.[4] Silver prices ultimately collapsed to below $11 an ounce two months later,[4] much of the fall occurring on a single day now known as Silver Thursday, due to changes made to exchange rules regarding the purchase of commodities on margin.[5]

Cornering the market - Wikipedia, the free encyclopedia
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sawyerloggingon said:
People like too make oil speculators the boogey man but they are no different than what speculators. When they see a drought or a flood or anything that will cause less wheat being produced the price of wheat goes up. Same thing with oil, if they see turmoil in oil producing regions or a president of the US that is anti oil they see shortages coming and bid the price up. It's just as simple as that.
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It would be understandable if something actually made wheat production fall. There have been no problems getting oil. Production is up, demand down, prices up.
 
1Perry said:
It would be understandable if something actually made wheat production fall. There have been no problems getting oil. Production is up, demand down, prices up.
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Well, that's what I'm seeing too. US oil production is spiking while US oil demand is dropping, yet gas prices remain the same or even climb.

So what the hell is going on?

The normal rules of Supply and Demand aren't working. It would seem Speculators are circumventing the process, would anyone agree?
 
EagleAye said:
Well, that's what I'm seeing too. US oil production is spiking while US oil demand is dropping, yet gas prices remain the same or even climb.

So what the hell is going on?

The normal rules of Supply and Demand aren't working. It would seem Speculators are circumventing the process, would anyone agree?
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Circumvating? No, it is the process.
 
1Perry said:
Circumvating? No, it is the process.
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They seem about as useful as teats on bull. Given optimal conditions, are Speculators useful, or are they like a VAR (without the added-value)?
 
EagleAye said:
They seem about as useful as teats on bull. Given optimal conditions, are Speculators useful, or are they like a VAR (without the added-value)?
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That is a complicated question. Speculation can be a great asset when someone is looking for funds to create a new business.
 
1Perry said:
That is a complicated question. Speculation can be a great asset when someone is looking for funds to create a new business.
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Okay, in the case of oil, are speculators fulfilling an important role? Are they abusing their position, or does it just seem like it?
 
I do not know what people are complaining about ;), I have to pay 9,14 USD a gallon when I am going to go to the gaspump later today (Netherlands).
 
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