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(NASDAQ)   Experts: "rising demand for oil around the world and supply concerns stemming from Iran sanctions are driving prices at the pump"   (nasdaq.com ) divider line 152
    More: Interesting, sanctions against Iran, Iran, Dow Jones Newswires, U.S. Energy Information Administration, Senate Hearing, oil exports, crude oil  
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1275 clicks; posted to Politics » on 31 Mar 2012 at 1:04 PM (3 years ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-03-31 02:36:03 PM  

aug3: Today, virtually all oil transactions are made in U.S. dollars. This means that if you want to buy a barrel of oil anywhere in this world, you must pay for it with U.S. dollars. If you do not have U.S. dollars, you must obtain them somehow. One way is to simply convert your currency for U.S. dollars on the exchange markets. Or, products can be exported to U.S. in exchange for U.S. dollars.


If I remember right, wasn't Sadam pushing to start exchanging in Euros? Then the whole "boom boom" started up.
 
2012-03-31 02:36:46 PM  

GAT_00: 1. The US purchases no Iranian oil and has not for years.
2. US oil demand, the highest in the world, is the lowest it's been since the 1990s.
3. Speculation is absolutely occurring and raising the price. You're simply wrong if you say otherwise. That's just a fact.
4. Speculation is legal and occurs in every other commodity, and in each of those is responsible for at least some price rise, so pretending it isn't happening is like pretending the sun didn't rise today.
5. The same people who say that oil speculation is good for a free market also refuse to end tax breaks to the most profitable businesses in the country, on the grounds that a fair market is bad.
6. There is a sharp disconnect between gas prices, gas demand, and oil prices. Oil prices rise, triggering an instant gas price rise when the supply of higher oil won't reach the pump as gas for a month at minimum. The rise in price also reduces the demand for gas.
7. Supply is relatively constant. Oil production does not vastly increase or decrease on a daily basis, and Iran has been cut off for some time.

Combine all this together, and you have steady supply, rising prices, falling demand and only one variable: speculation.

Now tell me again how speculation can't be raising prices, or disprove any of the above.


1) Not how the market works. It simply doesn't. That's a fact. Krugman says you're nuts.
2) The US is not a closed system. See 1. Krugman says you're nuts.
3) Krugman says speculators are not at fault, and it drives him professionally crazy when people say they are. The sole exception being if it causes inventories to rise, and then it's because the producers hoard, not speculators. Gas inventories fell, and so, again, Krugman says you're nuts.
4) Except that Krugman says that, as a matter of course, you're nuts.
5) I don't think speculation is necessarily good or evil. I'm for ending tax breaks for them.
6) Keynes says prices are sticky, especially downward. That's not any surprise.
7) World demand has gone up. To pretend that doesn't matter is bad for Paul Krugman's mental state.
 
2012-03-31 02:37:02 PM  

quatchi:
As a Canadian, lemme just say sorry about that whole "sitting on top of your oil" thing but in our defense we are pumping the stuff back down to you at a prodigious rate in order to make amends. ^_^


Whatever, you guys still haven't apologized for Bryan Adams.
 
2012-03-31 02:38:12 PM  
abb3w: No "obvious" tag, subby?
 
2012-03-31 02:39:31 PM  

winterwhile: Mrtraveler01: Obviously what we need to do is to build a pipeline that would take oil that would've been destined for the Midwest and sell it on the world market.

or we could just print more money

you do know the value of the dollar is in no way tied to the price of oil?

So lets print another 2 trillion, and spend it?

Worked last time Obama did it... right?


There's actually good reason to believe there is an insufficient supply of US currency. Also, inflation has been pretty darn low, so all this concern over "printing money" is pretty retarded.
 
2012-03-31 02:40:18 PM  

YodaBlues: quatchi:
As a Canadian, lemme just say sorry about that whole "sitting on top of your oil" thing but in our defense we are pumping the stuff back down to you at a prodigious rate in order to make amends. ^_^

Whatever, you guys still haven't apologized for Bryan Adams.


Nor for making the moon recede from Earth.

/Seriously - it's Canada's fault.
 
2012-03-31 02:40:22 PM  

Serious Black: That can't be true! Rush Limbaugh told me Obama is causing gas prices to skyrocket because of his Kenyan Muslim socialist policies, and Rush would never lie. He's the kindest, most good-hearted person I know.



Rush Limbaugh is an expert just not an economic one. When using illegal pharmaceuticals and buggering little Dominican boys he's your man.

\\\That and eating pudding.
 
2012-03-31 02:43:42 PM  
If Obama would just let us drill for more oil, prices would come down. Canada is sitting on a bunch of oil and they practically give away gasoline there.
 
2012-03-31 02:44:50 PM  

MisterRonbo: The Economist had a piece on oil speculation, I think it was four issues back. On a $125 barrel of oil, speculation accounted for $8.

You know how conservatives engage in this magical wishful fantasy world, where more drilling in the US will somehow end imports and knock 30 or 40% off prices?

"B-b-b-but speculation!" is the left's version of that.


www.shadowlocked.com

How dare you bring facts into this discussion? The story around these parts is that the bankers are 100% at fault for all of the woes in the world, especially something like oil prices.
 
2012-03-31 02:49:20 PM  
vygramul


Ahhh, another Chicago school economist. Milton Friedman's already got enough people sucking his dick. You don't rate.


/oh wait.....he ded.
 
2012-03-31 02:50:46 PM  

Great_Milenko: The only thing I would change is that we might be one of the biggest users. Hasn't China passed us?


In gasoline and other crude oil based products? No. The US is still the first with the EU second. In total energy use resulting in more CO2 released than the US? Yes. Most electricity in China is produced via coal power plants in China, with more going up every day.
 
2012-03-31 02:56:03 PM  
Canada - They ruined bacon, they have a coin called a Toonie, French people who live in the woods, their claim to fame is being north of the U.S, the Metric System, yhey hit baby seals, gained independence from the Queen in '82, 1982. They ruined baseball with the Toronto team, Michael J Fox your shaky ass ain't made a movie that I liked

Okay I guess Back To The Future was okay.


BLAME Canada. It's Canada's fault gas prices are high. If Canada could get their shiat together we would have rivers of oil but noooooooooo.

I say we blow 'em up but only stuff around Hudson Bay (that store sucks). Sends a message. Harper get your shiat together or we'll flank you from below the 48th parallel which is like 3/4 of their population.
 
2012-03-31 02:59:16 PM  

FlippityFlap: vygramul


Ahhh, another Chicago school economist. Milton Friedman's already got enough people sucking his dick. You don't rate.


/oh wait.....he ded.


What make you think I'm Chicago School? All the Krugman references?
 
2012-03-31 03:00:34 PM  

GAT_00: Arkanaut: GAT_00: 1. The US purchases no Iranian oil and has not for years.
2. US oil demand, the highest in the world, is the lowest it's been since the 1990s.

1. Europe/India/China buy oil from Iran. If the sanctions are cutting off their access to Iranian oil, they'll buy oil from the same places that the US buys oil from.
2. The US buys oil from the same markets and thus at the same prices as Europe/India/China, so higher demand in those markets (mainly the last two) does affect our prices.

We buy quite a bit of oil in long term contracts that don't vary. All the oil companies do this and only buy extra speculated oil for demand they think they can meet outside of their main supply. So no, most of our supply isn't changing or up for price fluctuations.


The US is now a net oil exporter, that was a pretty huge story on the energy circuit. They drilled, baby, drilled and those contracts were negotiated on the global market. I think most people in America don't really understand how profound the demand destruction was during the crisis and how much it is growing now.

Look when you have most of the world champing at the bit to pay the prices there are in America because it's so cheap, then don't be shocked when the prices go up. That's how markets work.
 
2012-03-31 03:03:14 PM  

Lupine Chemist: The US is now a net oil exporter, that was a pretty huge story on the energy circuit. They drilled, baby, drilled and those contracts were negotiated on the global market. I think most people in America don't really understand how profound the demand destruction was during the crisis and how much it is growing now.


Most people in America have no farking clue how commodities work, and the oil and gas lobbyists would like it to stay that was so they can manipulate voters easier.
 
2012-03-31 03:05:03 PM  

T-Servo: quatchi: Wait, are you trying to say that the entire RW narrative about Obama deliberately keeping the price of gas high because he's A) Got the power to do so B) Likes making Americans suffer and C) Is the libbiest eniviro-wacko EVAH is some kind of untruth?

It's completely true. Obama has stifled demand for oil through lousing up the economy and smothering us with regulations, and as everyone knows, lower demand only drives up prices.

Right?... Oh wait.


Cognitive dissonance, more than just a political strategy, it's become a way of life for far too many.
 
2012-03-31 03:06:47 PM  
0bama's mother was a Canadian.


It's true. All a big conspiracy.
 
2012-03-31 03:07:19 PM  

Lupine Chemist: The US is now a net oil exporter, that was a pretty huge story on the energy circuit.


No, the news was the US is a net gasoline exporter, refining more gasoline than consumed. The US still imports ~10 million barrels a day of oil.
 
2012-03-31 03:08:07 PM  

quatchi: Wait, are you trying to say that the entire RW narrative about Obama deliberately keeping the price of gas high because he's A) Got the power to do so B) Likes making Americans suffer and C) Is the libbiest eniviro-wacko EVAH is some kind of untruth?

Obvious tag gone golfing or something?

/My favorite RW pundits are the ones who complain about the high price of gas and then without even drawing breath go on to demand military adventurism in Iran.
//Never gets old.


Pretty much this.
 
2012-03-31 03:10:08 PM  

MisterRonbo: The Economist had a piece on oil speculation, I think it was four issues back. On a $125 barrel of oil, speculation accounted for $8.

You know how conservatives engage in this magical wishful fantasy world, where more drilling in the US will somehow end imports and knock 30 or 40% off prices?

"B-b-b-but speculation!" is the left's version of that.

Its expensive. Its going to get more expensive. The fact that many costs are externalized screws up price signals that would otherwise make it even more expensive. The only answers are to use less, make alternatives viable, or bend over and pay.

Those three choices. No magic solutions. None.


Forbes had an article (referencing GS) that said (when a barrel of oil was $108) $23.39 out of the price of a barrel of oil was due to speculation.

CEO of Exxon said $30-40.

What issue of The Economist had the article on oil speculation?
 
2012-03-31 03:14:40 PM  

YodaBlues: quatchi:
As a Canadian, lemme just say sorry about that whole "sitting on top of your oil" thing but in our defense we are pumping the stuff back down to you at a prodigious rate in order to make amends. ^_^

Whatever, you guys still haven't apologized for Bryan Adams.


Aw C'mon, we gave you Nelly Furtado to make up for Brian.

/Bieber was just a natural backlash to years of David and Shaun Cassidy, Leif Garret, Donny Osmond and Aaron Carter.
//That was a freebie.
///Celine Dion's Vegas act is balanced off by Cirque du Soleil.
 
2012-03-31 03:14:54 PM  

Mrtraveler01: Lupine Chemist: The US is now a net oil exporter, that was a pretty huge story on the energy circuit. They drilled, baby, drilled and those contracts were negotiated on the global market. I think most people in America don't really understand how profound the demand destruction was during the crisis and how much it is growing now.

Most people in America have no farking clue how commodities work, and the oil and gas lobbyists would like it to stay that was so they can manipulate voters easier.


The US is a net oil exporter? I was under the impression that the US uses around 18MM barrels per day, but produces less than 6MM per day. How is that possible?
 
2012-03-31 03:21:10 PM  

Moopy Mac: MisterRonbo: The Economist had a piece on oil speculation, I think it was four issues back. On a $125 barrel of oil, speculation accounted for $8.

You know how conservatives engage in this magical wishful fantasy world, where more drilling in the US will somehow end imports and knock 30 or 40% off prices?

"B-b-b-but speculation!" is the left's version of that.

Its expensive. Its going to get more expensive. The fact that many costs are externalized screws up price signals that would otherwise make it even more expensive. The only answers are to use less, make alternatives viable, or bend over and pay.

Those three choices. No magic solutions. None.

Forbes had an article (referencing GS) that said (when a barrel of oil was $108) $23.39 out of the price of a barrel of oil was due to speculation.

CEO of Exxon said $30-40.

What issue of The Economist had the article on oil speculation?


Here you go. (new window)
 
2012-03-31 03:31:41 PM  
Subby's Dictionary
Expert: Mid level Obama appointee with a paunch, a receding hairline, and a penchant for "kiddie porn."
 
2012-03-31 03:41:41 PM  

GAT_00: 1. The US purchases no Iranian oil and has not for years.
2. US oil demand, the highest in the world, is the lowest it's been since the 1990s.
3. Speculation is absolutely occurring and raising the price. You're simply wrong if you say otherwise. That's just a fact.
4. Speculation is legal and occurs in every other commodity, and in each of those is responsible for at least some price rise, so pretending it isn't happening is like pretending the sun didn't rise today.
5. The same people who say that oil speculation is good for a free market also refuse to end tax breaks to the most profitable businesses in the country, on the grounds that a fair market is bad.
6. There is a sharp disconnect between gas prices, gas demand, and oil prices. Oil prices rise, triggering an instant gas price rise when the supply of higher oil won't reach the pump as gas for a month at minimum. The rise in price also reduces the demand for gas.
7. Supply is relatively constant. Oil production does not vastly increase or decrease on a daily basis, and Iran has been cut off for some time.

Combine all this together, and you have steady supply, rising prices, falling demand and only one variable: speculation.

Now tell me again how speculation can't be raising prices, or disprove any of the above.


Most petroleum is sold under long term contracts - now, some contracts do have built-in price fluctuations (contract prices are tied in some manner to the spot price or futures prices).
 
2012-03-31 03:46:32 PM  

GAT_00: 1. The US purchases no Iranian oil and has not for years.
2. US oil demand, the highest in the world, is the lowest it's been since the 1990s.
3. Speculation is absolutely occurring and raising the price. You're simply wrong if you say otherwise. That's just a fact.
4. Speculation is legal and occurs in every other commodity, and in each of those is responsible for at least some price rise, so pretending it isn't happening is like pretending the sun didn't rise today.
5. The same people who say that oil speculation is good for a free market also refuse to end tax breaks to the most profitable businesses in the country, on the grounds that a fair market is bad.
6. There is a sharp disconnect between gas prices, gas demand, and oil prices. Oil prices rise, triggering an instant gas price rise when the supply of higher oil won't reach the pump as gas for a month at minimum. The rise in price also reduces the demand for gas.
7. Supply is relatively constant. Oil production does not vastly increase or decrease on a daily basis, and Iran has been cut off for some time.

Combine all this together, and you have steady supply, rising prices, falling demand and only one variable: speculation.

Now tell me again how speculation can't be raising prices, or disprove any of the above.


Now, I'm being totally serious here: I like this list, but could someone possibly point me to the data to back up these facts? I just want to be able to point to sources.
 
2012-03-31 03:51:39 PM  

Raharu: Almost Forgot. This was written by someone else but its still valid.

Dear Winterwhile,

I hope everything you say is true. I hope everything Santorum, Palin and Rush beleives in is 100% unequivocally and demonstrably true.

Do you know why?

Because I hope that one day an Obamacare 'death panel' will execute you,


stary classy Liberal, stay classy

BTW... can I be on that Obamacare Death panel?
 
2012-03-31 03:54:19 PM  

vygramul: winterwhile: Mrtraveler01: Obviously what we need to do is to build a pipeline that would take oil that would've been destined for the Midwest and sell it on the world market.

or we could just print more money

you do know the value of the dollar is in no way tied to the price of oil?

So lets print another 2 trillion, and spend it?

Worked last time Obama did it... right?

There's actually good reason to believe there is an insufficient supply of US currency. Also, inflation has been pretty darn low, so all this concern over "printing money" is pretty retarded.


So the US dollar falling is a good thing? Print more money..... works?

Did you ask the Germans? Or any body with savings about that?
 
2012-03-31 03:55:42 PM  

epocalypse:
Now, I'm being totally serious here: I like this list, but could someone possibly point me to the data to back up these facts? I just want to be able to point to sources.


Good luck with that. If you can't get Krugman to subscribe to that nonsense...
 
2012-03-31 03:55:42 PM  

vygramul: Moopy Mac: MisterRonbo: The Economist had a piece on oil speculation, I think it was four issues back. On a $125 barrel of oil, speculation accounted for $8.

You know how conservatives engage in this magical wishful fantasy world, where more drilling in the US will somehow end imports and knock 30 or 40% off prices?

"B-b-b-but speculation!" is the left's version of that.

Its expensive. Its going to get more expensive. The fact that many costs are externalized screws up price signals that would otherwise make it even more expensive. The only answers are to use less, make alternatives viable, or bend over and pay.

Those three choices. No magic solutions. None.

Forbes had an article (referencing GS) that said (when a barrel of oil was $108) $23.39 out of the price of a barrel of oil was due to speculation.

CEO of Exxon said $30-40.

What issue of The Economist had the article on oil speculation?

Here you go. (new window)


That's not the article to which he was referring. That's from June 2008.
 
2012-03-31 03:57:29 PM  

dinch: aug3: Today, virtually all oil transactions are made in U.S. dollars. This means that if you want to buy a barrel of oil anywhere in this world, you must pay for it with U.S. dollars. If you do not have U.S. dollars, you must obtain them somehow. One way is to simply convert your currency for U.S. dollars on the exchange markets. Or, products can be exported to U.S. in exchange for U.S. dollars.

If I remember right, wasn't Sadam pushing to start exchanging in Euros? Then the whole "boom boom" started up.


yes
 
2012-03-31 04:00:14 PM  

winterwhile: vygramul: winterwhile: Mrtraveler01: Obviously what we need to do is to build a pipeline that would take oil that would've been destined for the Midwest and sell it on the world market.

or we could just print more money

you do know the value of the dollar is in no way tied to the price of oil?

So lets print another 2 trillion, and spend it?

Worked last time Obama did it... right?

There's actually good reason to believe there is an insufficient supply of US currency. Also, inflation has been pretty darn low, so all this concern over "printing money" is pretty retarded.

So the US dollar falling is a good thing? Print more money..... works?

Did you ask the Germans? Or any body with savings about that?


Hyper-inflation is not the same as regular inflation. You're claiming the intellectual equivalent that because you can drown, you should never drink water.

As Greg Mankiw (American Enterprise Institute, so you should approve of the source) says, society faces a short-run tradeoff between inflation and unemployment. Mankiw would say that printing money helps curb unemployment.
 
2012-03-31 04:18:53 PM  

vygramul: winterwhile: vygramul: winterwhile: Mrtraveler01: Obviously what we need to do is to build a pipeline that would take oil that would've been destined for the Midwest and sell it on the world market.

or we could just print more money

you do know the value of the dollar is in no way tied to the price of oil?

So lets print another 2 trillion, and spend it?

Worked last time Obama did it... right?

There's actually good reason to believe there is an insufficient supply of US currency. Also, inflation has been pretty darn low, so all this concern over "printing money" is pretty retarded.

So the US dollar falling is a good thing? Print more money..... works?

Did you ask the Germans? Or any body with savings about that?

Hyper-inflation is not the same as regular inflation. You're claiming the intellectual equivalent that because you can drown, you should never drink water.

As Greg Mankiw (American Enterprise Institute, so you should approve of the source) says, society faces a short-run tradeoff between inflation and unemployment. Mankiw would say that printing money helps curb unemployment.


Apt analogy is apt.

Slapping WW down with facts never gets old for me.

/I'mma steal that analogy cos it's so good but in return I'mma favorite you with the notation "apt anology is apt" so it should sorta even out.
 
2012-03-31 04:19:06 PM  

winterwhile: Raharu: Almost Forgot. This was written by someone else but its still valid.

Dear Winterwhile,

I hope everything you say is true. I hope everything Santorum, Palin and Rush beleives in is 100% unequivocally and demonstrably true.

Do you know why?

Because I hope that one day an Obamacare 'death panel' will execute you,


stary classy Liberal, stay classy


Best part... FOREVER!

images.mylittlefacewhen.com
 
2012-03-31 05:07:48 PM  

Moopy Mac: Mrtraveler01: Lupine Chemist: The US is now a net oil exporter, that was a pretty huge story on the energy circuit. They drilled, baby, drilled and those contracts were negotiated on the global market. I think most people in America don't really understand how profound the demand destruction was during the crisis and how much it is growing now.

Most people in America have no farking clue how commodities work, and the oil and gas lobbyists would like it to stay that was so they can manipulate voters easier.

The US is a net oil exporter? I was under the impression that the US uses around 18MM barrels per day, but produces less than 6MM per day. How is that possible?


Net exporter of refined fuel. We are refining fuel and shipping it overseas, to places like China. That was the big bruhahah over the keystone pipeline. With that, more oil could be shipped to texas, refined there as fuel and then shipped over seas (or whoever is the high bidder).
 
2012-03-31 05:14:00 PM  

Trolljegeren: Most petroleum is sold under long term contracts - now, some contracts do have built-in price fluctuations (contract prices are tied in some manner to the spot price or futures prices).


Which is further proof, as I mentioned earlier, that prices shouldn't be rising. Speculation has to be the cause.

epocalypse: Now, I'm being totally serious here: I like this list, but could someone possibly point me to the data to back up these facts? I just want to be able to point to sources.


From 1995 was total ban on trade with Iran by USA.

Demand: Link
At the bottom, compare to previous
 
2012-03-31 05:14:58 PM  

GAT_00: 1. The US purchases no Iranian oil and has not for years.
2. US oil demand, the highest in the world, is the lowest it's been since the 1990s.
3. Speculation is absolutely occurring and raising the price. You're simply wrong if you say otherwise. That's just a fact.
4. Speculation is legal and occurs in every other commodity, and in each of those is responsible for at least some price rise, so pretending it isn't happening is like pretending the sun didn't rise today.
5. The same people who say that oil speculation is good for a free market also refuse to end tax breaks to the most profitable businesses in the country, on the grounds that a fair market is bad.
6. There is a sharp disconnect between gas prices, gas demand, and oil prices. Oil prices rise, triggering an instant gas price rise when the supply of higher oil won't reach the pump as gas for a month at minimum. The rise in price also reduces the demand for gas.
7. Supply is relatively constant. Oil production does not vastly increase or decrease on a daily basis, and Iran has been cut off for some time.

Combine all this together, and you have steady supply, rising prices, falling demand and only one variable: speculation.

Now tell me again how speculation can't be raising prices, or disprove any of the above.


Unless people are actually hoarding physical oil, speculation doesnt have more than marginal impact on prices. It's simply impossible.

Concentrating on speculation as a cause distracts us from the true reason for the long term rise in the price of crude - supply not keeping up with demand.

It's certainly not Obama's fault, mind you. But focusing on speculation is farking silly.
 
2012-03-31 05:17:39 PM  

Debeo Summa Credo: Unless people are actually hoarding physical oil, speculation doesnt have more than marginal impact on prices. It's simply impossible.


You don't have to take delivery. Simply buy up the currently available supply, and then turn around and sell it for a higher price. It's quite possible and done every day.
 
2012-03-31 05:18:47 PM  
Moopy Mac
What issue of The Economist had the article on oil speculation?

The new grease?

The price of Brent crude shot up by more than $5 a barrel on March 1st, to $128, after an Iranian press report that explosions had destroyed a vital Saudi Arabian oil pipeline. It fell back after the Saudis denied the claim, but at $125, crude is still 16% costlier than at the start of the year....Jeffrey Currie of Goldman Sachs reckons that the fundamentals of supply and demand have pushed oil prices to around $118 a barrel. He thinks the remaining increase is down to fears about Iran. If so, should relations with Iran improve, the oil price might go down by a few dollars, but stay close to $120.



Its pretty hard to drive up prices through pure speculation in a market as huge as oil. Ask the Hunt brothers how that works.
 
2012-03-31 05:20:24 PM  

Elfich: Moopy Mac: Mrtraveler01: Lupine Chemist: The US is now a net oil exporter, that was a pretty huge story on the energy circuit. They drilled, baby, drilled and those contracts were negotiated on the global market. I think most people in America don't really understand how profound the demand destruction was during the crisis and how much it is growing now.

Most people in America have no farking clue how commodities work, and the oil and gas lobbyists would like it to stay that was so they can manipulate voters easier.

The US is a net oil exporter? I was under the impression that the US uses around 18MM barrels per day, but produces less than 6MM per day. How is that possible?

Net exporter of refined fuel. We are refining fuel and shipping it overseas, to places like China. That was the big bruhahah over the keystone pipeline. With that, more oil could be shipped to texas, refined there as fuel and then shipped over seas (or whoever is the high bidder).


Of course the USA is a net exporter of gasoline. That has been mentioned ad naseum in the politics tab over the last 2 months. Particularly every time the Keystone XL pipeline is discussed.

The USA is a huge net importer of oil. Which is the opposite of being a net exporter because those two words are antonyms.
 
2012-03-31 05:24:45 PM  

MisterRonbo: Moopy Mac
What issue of The Economist had the article on oil speculation?

The new grease?

The price of Brent crude shot up by more than $5 a barrel on March 1st, to $128, after an Iranian press report that explosions had destroyed a vital Saudi Arabian oil pipeline. It fell back after the Saudis denied the claim, but at $125, crude is still 16% costlier than at the start of the year....Jeffrey Currie of Goldman Sachs reckons that the fundamentals of supply and demand have pushed oil prices to around $118 a barrel. He thinks the remaining increase is down to fears about Iran. If so, should relations with Iran improve, the oil price might go down by a few dollars, but stay close to $120.



Its pretty hard to drive up prices through pure speculation in a market as huge as oil. Ask the Hunt brothers how that works.


I can see why the CEO of Exxon would say that speculation adds a significant amount to the cost of a barrel of oil, but what benefit would Forbes/GS receive from saying the same thing?
 
2012-03-31 05:29:47 PM  

Moopy Mac: MisterRonbo: Moopy Mac
What issue of The Economist had the article on oil speculation?

The new grease?

The price of Brent crude shot up by more than $5 a barrel on March 1st, to $128, after an Iranian press report that explosions had destroyed a vital Saudi Arabian oil pipeline. It fell back after the Saudis denied the claim, but at $125, crude is still 16% costlier than at the start of the year....Jeffrey Currie of Goldman Sachs reckons that the fundamentals of supply and demand have pushed oil prices to around $118 a barrel. He thinks the remaining increase is down to fears about Iran. If so, should relations with Iran improve, the oil price might go down by a few dollars, but stay close to $120.



Its pretty hard to drive up prices through pure speculation in a market as huge as oil. Ask the Hunt brothers how that works.

I can see why the CEO of Exxon would say that speculation adds a significant amount to the cost of a barrel of oil, but what benefit would Forbes/GS receive from saying the same thing?


And that paragraph that you quoted isn't necessarily about speculation. Isn't speculation a part of demand, therefore it would be included in the $118 figure? MisterRonbo said that speculation added $7 a barrel, but that paragraph attributes the $7 increase to fears about Iran. Speculation exists aside from any geopolitical instabilities. I'm confused how that article says what he said it says.
 
2012-03-31 05:37:22 PM  
But I thought it was up because Obama was going gas station to gas station rising up prices himself.
 
2012-03-31 05:39:10 PM  
Moopy Mac

And that paragraph that you quoted isn't necessarily about speculation. Isn't speculation a part of demand

Uh, no.

"the fundamentals of supply and demand "

Fundamentals. As in, not speculation. Demand is actual consumption. Speculation is a derivative based on the projected direction and rate of change in demand. Just as acceleration is a derivative of velocity, and is not relevant when you are stating the speed you're traveling at a specific moment. I can't read the word "fundamentals" and think it includes speculation.

I can see why the CEO of Exxon would say that speculation adds a significant amount to the cost of a barrel of oil, but what benefit would Forbes/GS receive from saying the same thing?

Just a guess on my part, but you're selling a magazine whose audience consists of financial professionals and the customers of their services. Promoting the idea that there is a whole lot of speculation affecting the markets seems like a message your advertisers, who sell investment advice, would like to promote.

I know, I'm such a cynic...
 
2012-03-31 05:45:12 PM  

GAT_00: Debeo Summa Credo: Unless people are actually hoarding physical oil, speculation doesnt have more than marginal impact on prices. It's simply impossible.

You don't have to take delivery. Simply buy up the currently available supply, and then turn around and sell it for a higher price. It's quite possible and done every day.


Poor Exxon, BP, Shell... who knew they were such dupes that speculators could take the oil from them for so cheap and re-sell it to each other for a higher price for some random reason, and then finally sell it to the refineries to turn into gas.

If only the abused oil companies could just get rid of the middle-man and sell it to each other instead (because just selling it means it will go for a higher price, of course - that's why you should buy stuff and just sell it on ebay right away to make money). But the oil companies are too innocent and stupid to do it themselves. They need the speculators because only speculators - and Gat, of course - understand how this works. It mystifies economists like Krugman (who I've been informed makes him some kind of Chicago School Friedman slurper - like Keynes, apparently), but Gat will get the Nobel Prize for this any day now.
 
2012-03-31 05:53:30 PM  
Also contributing to high oil prices, the main driver of gasoline prices, are supply outages equal to about 750,000 barrels a day and a dwindling amount of spare capacity "that would create upward price pressure in any case," Yergin said.

so, there wasnt enough spare capacity to make up for supply outages, which reduced supply, which increased prices? LOL

and the oil producers are SOOOO upset about this price increase ... LOL

/to be fair, the producers understand that if they tank the world economy with prices which are TOO high, that that would cut into profits .........
 
2012-03-31 05:57:42 PM  

MisterRonbo: Moopy Mac

And that paragraph that you quoted isn't necessarily about speculation. Isn't speculation a part of demand

Uh, no.

"the fundamentals of supply and demand "

Fundamentals. As in, not speculation. Demand is actual consumption. Speculation is a derivative based on the projected direction and rate of change in demand. Just as acceleration is a derivative of velocity, and is not relevant when you are stating the speed you're traveling at a specific moment. I can't read the word "fundamentals" and think it includes speculation.

I can see why the CEO of Exxon would say that speculation adds a significant amount to the cost of a barrel of oil, but what benefit would Forbes/GS receive from saying the same thing?

Just a guess on my part, but you're selling a magazine whose audience consists of financial professionals and the customers of their services. Promoting the idea that there is a whole lot of speculation affecting the markets seems like a message your advertisers, who sell investment advice, would like to promote.

I know, I'm such a cynic...


And what is Krugman selling? (new window)

I suppose he just wants to damage his liberal cred. (new window)

Krugman CLAIMS not to have a dog in this fight when he says, "But the mysticism over how speculation is supposed to drive prices drives me crazy, professionally." (new window) I mean, he goes on to say, "Imagine that Joe Shmoe and Harriet Who, neither of whom has any direct involvement in the production of oil, make a bet: Joe says oil is going to $150, Harriet says it won't. What direct effect does this have on the spot price of oil - the actual price people pay to have a barrel of black gunk delivered?

The answer, surely, is none. Who cares what bets people not involved in buying or selling the stuff make? And if there are 10 million Joe Shmoes [speculators], it still doesn't make any difference."

Maybe Krugman makes money off of brokering speculation. Or maybe it turns out he's some secret conservative.
 
2012-03-31 06:02:50 PM  

Moopy Mac: Elfich: Moopy Mac: Mrtraveler01: Lupine Chemist: The US is now a net oil exporter, that was a pretty huge story on the energy circuit. They drilled, baby, drilled and those contracts were negotiated on the global market. I think most people in America don't really understand how profound the demand destruction was during the crisis and how much it is growing now.

Most people in America have no farking clue how commodities work, and the oil and gas lobbyists would like it to stay that was so they can manipulate voters easier.

The US is a net oil exporter? I was under the impression that the US uses around 18MM barrels per day, but produces less than 6MM per day. How is that possible?

Net exporter of refined fuel. We are refining fuel and shipping it overseas, to places like China. That was the big bruhahah over the keystone pipeline. With that, more oil could be shipped to texas, refined there as fuel and then shipped over seas (or whoever is the high bidder).

Of course the USA is a net exporter of gasoline. That has been mentioned ad naseum in the politics tab over the last 2 months. Particularly every time the Keystone XL pipeline is discussed.

The USA is a huge net importer of oil. Which is the opposite of being a net exporter because those two words are antonyms.


I agree with you. The US is a net importer of crude oil, and a net exporter of refined oil. Its pretty screwed up.
 
2012-03-31 06:05:29 PM  
Experts: "rising demand for oil around the world and supply concerns stemming from Iran sanctions are driving prices at the pump"

The primary reason.

More people want it, more people use it, ergo, it costs more. Duh. That's that "free market" thingy the conservatives are always railing about.
 
2012-03-31 06:21:31 PM  

vygramul: winterwhile: vygramul:

As Greg Mankiw (American Enterprise Institute, so you should approve of the source) says, society faces a short-run tradeoff between inflation and unemployment. Mankiw would say that printing money helps curb unemployment.


oh good

lets print baby print, fark the folks who actually saved money

just Fark the middle class, yea baby lets do it

cause when you print money, it goes down in value
 
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