View Poll Results: Why are oil prices so high right now?

Voters
16. You may not vote on this poll
  • OPEC is not increasing production to meet demand

    1 6.25%
  • Obama has banned oil drilling and exploration in key areas for seven years

    1 6.25%
  • It is an extremely cold winter and worldwide demand is higher than usual

    1 6.25%
  • We are still recovering from the Deep Water Horizon rig explosion

    1 6.25%
  • Currency values are dropping relative to commodities due to loose monetary policy

    3 18.75%
  • A combination (explain)

    9 56.25%
  • Who cares? I drive a Volt, heat my house with wood, and use only recycled paper based products.

    0 0%
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Thread: Why are oil prices so high right now?

  1. #1
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    Why are oil prices so high right now?

    Oil is up in the $90-$95 range per barrel and it is causing winter time record gas prices. Opec has announced that they are not increasing production because they believe $100 is a far price. Obama has just instituted a seven year ban on offshore oil drilling in large areas of the gulf of Mexico. We are experiencing record conditions this winter. The oil industry is recovering from the Deep Water Horizon rig explosion and the six month moratorium on drilling and exploration. And the value of the dollar and European currencies is dropping relative to commodity prices due to loose monetary policy, deficit spending, and money printing. So which is most to blame for the oil prices being so high?
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    Re: Why are oil prices so high right now?

    Mostly supply and demand...with a bit of irrational exuberance from speculators thrown in for good measure.

    Supply - The supply has mostly been flat-lining for several years now. We are reaching peak oil production, if we haven't already. We can probably expect the supply to stay the same or slowly begin to decline in the coming years.

    Demand - As the global economy continues to recover, and emerging economies continue to develop at a breathtaking pace, the world needs more energy than ever before. We are not yet to the point where there are any economical substitutes for oil, so the increased demand for energy translates into increased demand for oil. This will continue to be the case for several years, and the underlying value of oil (minus speculation) will probably continue to increase.

    Speculation - I'm of the opinion that although supply and demand are the main driving forces, they are not enough to justify $95 a barrel. There are a lot of people speculating on oil, using it as an inflation hedge. However, the actual evidence does not warrant such an aggressive approach. Deflation is the more immediate risk for the US dollar, which is what oil is priced in. Although we may or may not have another bout of inflation once the US economy picks up, that is highly speculative. Oil investors are getting over-eager IMO.

    The Deepwater Horizon explosion or Obama's ban on drilling/exploration have virtually no impact on the global price of oil. These are parochial issues that only affect the United States, and oil is traded on a global market. Furthermore, neither of those issues are very important in the grand scheme of things.
    Last edited by Kandahar; 12-31-10 at 04:51 PM.
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    Re: Why are oil prices so high right now?

    Quote Originally Posted by Kandahar View Post
    Mostly supply and demand...with a bit of irrational exuberance from speculators thrown in for good measure.

    Supply - The supply has mostly been flat-lining for several years now. We are reaching peak oil production, if we haven't already. We can probably expect the supply to stay the same or slowly begin to decline in the coming years.

    Demand - As the global economy continues to recover, and emerging economies continue to develop at a breathtaking pace, the world needs more energy than ever before. We are not yet to the point where there are any economical substitutes for oil, so the increased demand for energy translates into increased demand for oil. This will continue to be the case for several years, and the underlying value of oil (minus speculation) will probably continue to increase.

    Speculation - I'm of the opinion that although supply and demand are the main driving forces, they are not enough to justify $95 a barrel. There are a lot of people speculating on oil, using it as an inflation hedge. However, the actual evidence does not warrant such an aggressive approach. Deflation is the more immediate risk for the US dollar, which is what oil is priced in. Although we may or may not have another bout of inflation once the US economy picks up, that is highly speculative. Oil investors are getting over-eager IMO.

    The Deepwater Horizon explosion or Obama's ban on drilling/exploration have virtually no impact on the global price of oil. These are parochial issues that only affect the United States, and oil is traded on a global market. Furthermore, neither of those issues are very important in the grand scheme of things.
    Do you think that the seven year ban, which will limit future supply, might be one of the factors driving speculators to inflate the price?
    Get informed: UNICEF foreign adoption policy is killing orphans and the US gives $132 million to UNICEF every year. Stop the madness.
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    Re: Why are oil prices so high right now?

    A combo, of course.
    Our political spectrum is far too conservative, we are years behind the true world leaders(France,Germany,Japan).
    I have yet to read about our nuclear powerplant start ups.
    We have yet to build an automotive Diesel - pushing 50 years behind Germany.
    So OPEC smells our fear of innovation and charges whatever the market will bear.. And we continue to drive over-sized trucks on the way to work, just like our fathers and grandfathers did.
    When we finally do modernize(metrics,health care, communications, education,etc) and gasoline costs ten dollars for a liter, maybe something will give..
    The conservatives will blame this on President Obama as well.

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    Re: Why are oil prices so high right now?

    Quote Originally Posted by friday View Post
    Do you think that the seven year ban, which will limit future supply, might be one of the factors driving speculators to inflate the price?
    Not one iota. It's a drop in the pan, that's about it.
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    Re: Why are oil prices so high right now?

    Quote Originally Posted by earthworm View Post
    A combo, of course.
    Our political spectrum is far too conservative, we are years behind the true world leaders(France,Germany,Japan).
    I have yet to read about our nuclear powerplant start ups.
    We have yet to build an automotive Diesel - pushing 50 years behind Germany.
    So OPEC smells our fear of innovation and charges whatever the market will bear.. And we continue to drive over-sized trucks on the way to work, just like our fathers and grandfathers did.
    When we finally do modernize(metrics,health care, communications, education,etc) and gasoline costs ten dollars for a liter, maybe something will give..
    The conservatives will blame this on President Obama as well.
    Do you really think it is conservatives who are holding back energy innovation such as increased nuclear power plant startups?
    Get informed: UNICEF foreign adoption policy is killing orphans and the US gives $132 million to UNICEF every year. Stop the madness.
    For the best news and commentary on the 2012 election from the GOP perspective, visit www.whitehouse12.com.

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    Re: Why are oil prices so high right now?

    Quote Originally Posted by friday View Post
    Do you really think it is conservatives who are holding back energy innovation such as increased nuclear power plant startups?
    No. It's Big Oil and King Coal.
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    Re: Why are oil prices so high right now?

    As long as it doesn't go up as much as it did under Bush, I'll be ok. It was like 45 dollars to fill my tank. OMG!

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    Re: Why are oil prices so high right now?

    100 percent speculation just like the last time prices spiked. Anyone that uses the supply and demand excuse is very naive or just plain ignorant.

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    Re: Why are oil prices so high right now?

    There are too many factors to narrow it down to just one, but a major one would be, at least over here, the near-monopoly of a few multinationals controlling the distribution of petrol. So would be the terrible perspectives of Western society in the middle east as a result of the perceived aggression of the US and its allies. So would be the dwindling supply: oil is a non-renewable resource that's running out, while demand increases.

    Offshore oil drilling is near insignificant in the grand scheme of things. The US simply requires too much oil. I don't know why people list issues as "Obama did this... Obama did that", he can do very little without the support of Congress/the rest of the government. Then again, this is your country not mine, so point out if I'm wrong on this.

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