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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"   ( divider line
    More: Interesting, sanctions against Iran, Iran, Dow Jones Newswires, U.S. Energy Information Administration, Senate Hearing, oil exports, crude oil  
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1280 clicks; posted to Politics » on 31 Mar 2012 at 1:04 PM (5 years ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»

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2012-04-02 10:23:48 AM  

BSABSVR: downpaymentblues: quatchi: Kinda used to them not mentioning the fact that US domestic oil production under Obama is at an 8 year high with more oil rigs in production any time since the late 80s (nu-pop)

The majority of the permits for that increase came during the Bush years. It is incorrect to credit Obama for the increase in domestic production simply because the permits applied for years ago came to fruition recently.

I'm not blaming or crediting Obama: I'm just pointing out a fact.

True, but this still negates the premise that we can drill our way to cheap oil id only Obama would let us.

Not true speculators are less concerned with now then they are the future. If it appeared that there was going to more oil on the market in the future in comparison to demand the would bid the market down not up. If the Obama admin was issuing many more permits and were weren't threatening Iran that might happen. But were are going the other way.
2012-04-02 11:32:13 AM  
1. The US purchases no Iranian oil and has not for years.

[True but other countries do purchase Iranian oil and if sanctions against Iran cause a disruption in their supply then they will look for other suppliers in order to make up the difference which could mean they tap a US supplier]

2. US oil demand, the highest in the world, is the lowest it's been since the 1990s.

World oil demand however has continued to increase since we are not in a magic bubble free from the demand of others.

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.

Speculation does indeed affect prices however speculation isn't a bad thing as it does provides a mechanism for bearing risk which helps contain prices from being highly volatile.

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.

Taxes do not create a fair market. If anything taxes act as a barrier to entry that causes the market to become concentrated into fewer hands

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.

The reason for the instant price increase is because when current gasoline is sold part of its price is the cost to restock it and if the cost of restocking is going to go up then price must adjust to account for that.

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.

World oil consumption however continues to increase even if supply is holding fairly steady. You must remember that oil is not exclusively used just to produce gasoline but plastics, detergents, medicines, synthetics, ink, etc... oil is all around us because it is just that versatile.

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.

So yes speculation has an effect on oil prices, but a far bigger factor is just how versatile oil actually is
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