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(New Europe)   Oil price falls toward $93 as tightening by Chinese central bank intensifies growth worries   (neurope.eu) divider line 23
    More: Scary, People's Bank of China, Chinese, oil prices, economic growths, electronic trading, petroleum product, commodity markets, Greater China  
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900 clicks; posted to Business » on 24 Jun 2013 at 9:57 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



23 Comments   (+0 »)
   
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2013-06-24 07:03:11 AM  
is subs the exxon ceo?
 
2013-06-24 08:53:13 AM  
Cheaper is somehow scary?
 
2013-06-24 09:17:58 AM  
ZOMG SO SCARY WE MIGHT GO BELOW $3 AGAIN

to the time machine!
 
2013-06-24 10:02:51 AM  
et tu the Canuckian loonie ($.9485/US)

Rejoice, manufacturing/exporters/tourist industry! This place is almost affordable again!
 
vpb [TotalFark]
2013-06-24 10:02:58 AM  

ontariolightning: Cheaper is somehow scary?


Well, if it is a sign of decreasing economic activity it could be.
 
2013-06-24 10:17:38 AM  

vpb: ontariolightning: Cheaper is somehow scary?

Well, if it is a sign of decreasing economic activity it could be.


This could be the case, but I think oil is overpriced from the standpoint of Syria's civil war.  I've read that possible problems from Syria could affect the price and is thereby acting as a floor, but it's been over a year and 90,000 are dead without an impact on a single drop of oil.  Low growth is certainly an impetus, but I think the price will fall further as speculators capitulate.

I don't short anything so I'm not putting my money where my mouth is, but I certainly wouldn't go long on oil right now.
 
2013-06-24 10:49:30 AM  
So if the price of oil has been falling, why hasn't the price of gas gone down as well?

I seem to remember $100/bbl being a lot more even with $3/gal not that long ago.
 
2013-06-24 10:57:28 AM  

Fireproof: So if the price of oil has been falling, why hasn't the price of gas gone down as well?

I seem to remember $100/bbl being a lot more even with $3/gal not that long ago.


It's called "rockets and feathers".  It shoots up and floats down.

In some places around the country, gasoline retailers sell at a loss when wholesale prices are high, and they try to make up that loss when prices go down, said Matthew Chesnes, the economist who conducted the FTC study. Retailers say keeping prices higher for as long as possible is the only way for them to make a little bit of a profit or, in some cases, break even.

Gas stations make most of their profit from attached convenience stores, said Jay Ricker, who operates about 50 gas stations in Indiana. If a sign boasting low prices draws drivers to the station, they're more likely to spend money in the store.
 
2013-06-24 11:07:53 AM  

ontariolightning: Cheaper is somehow scary?


Most of the domestic oil production in the US is only economically viable when oil is above about $80 as it is expensive to extract and needs a lot of refinement. If/when oil falls much further a lot of the fracking outfits around the country will just shut up shop until oil prices go back up again.

Whether that is a good or bad thing depends on your point of view, but it will put a lot of people out of work.
 
2013-06-24 11:08:53 AM  

Fireproof: So if the price of oil has been falling, why hasn't the price of gas gone down as well?

I seem to remember $100/bbl being a lot more even with $3/gal not that long ago.


Well see the manufacturers have all ready paid for that gas that is in the pipeline at the higher rate and just can't lower the price of gasoline until that high priced gas has been sold from inventory. Similarly they are buying oil at future prices and when oil prices increase they must immediately increase the price of gasoline to pay for the oil they are currently buying. Oil is fungible (which means you are farked and will pay what we tell you to pay slave.)
 
2013-06-24 11:10:40 AM  
FTFA:"Brent crude, which is used to price oil used by many U.S. refineries to make gasoline, was down 19 cents to $100.72.
In other energy futures trading on the Nymex:
- Wholesale gasoline was nearly unchanged at $2.746 a gallon."

Tell me again how oil prices are driving gasoline pricces?
 
2013-06-24 11:11:06 AM  
What, did people really think that you could extrapolate China's growth spurt to infinity? And these people get to call themselves Economists?
 
2013-06-24 11:13:59 AM  
Well, it is sort of bad, everything is intertwined these days and there is no black and white any more. It's bad because of the reason for the drop; less growth in China and possibly the start of a liquidity crisis in China; that is coming some day you know with their lending practices. Less growth in China means less US oil sold to them and less demand for other US goods there. It also means Chinese banks dumping stocks and bonds to get cash which might depress the stock market. It also means a stronger US Dollar, which makes US exports more expensive and costs jobs in the US.
 
2013-06-24 11:22:59 AM  

Fireproof: So if the price of oil has been falling, why hasn't the price of gas gone down as well?

I seem to remember $100/bbl being a lot more even with $3/gal not that long ago.


Here in Oklahoma, it's dropped $0.70.  After rising $0.70.  After falling $0.70.  After rising...
 
2013-06-24 11:44:02 AM  
So. we can't blame OPEC and Saudi Arabia for the high gas prices anymore, but the average investor instead?

If we were to actually lower the prices back to under $2.00 a gallon, dropping the corresponding barrel price, essentially we'd wind up screwing ourselves by creating a massive economic collapse. Right?

Somehow, it seems self defeating to open up a vital commodity to public trading, especially when so much depends on it. The average person can't be trusted to make good, long range decisions when dealing with such an important product, as we've seen by the wild fluxuations in the market created when a frog farts and people stampede to sell their shares.

I've noticed that biofuels have been put on the back burner and have risen in cost. All the alcohol fuel concept did was to make the cost of food soar and those masses of waste cooking grease and oils that used to have to be hauled away at a price are now being fought over by companies wanting to buy it to make it into bio-diesel. With the inevitable result that the gallon cost has gone up considerably.

It seems the more we conserve, the more it costs us. The same thing happens if we wildly consume.

So, what's the solution?
 
2013-06-24 12:05:01 PM  

Rik01: So. we can't blame OPEC and Saudi Arabia for the high gas prices anymore, but the average investor instead?

If we were to actually lower the prices back to under $2.00 a gallon, dropping the corresponding barrel price, essentially we'd wind up screwing ourselves by creating a massive economic collapse. Right?

Somehow, it seems self defeating to open up a vital commodity to public trading, especially when so much depends on it. The average person can't be trusted to make good, long range decisions when dealing with such an important product, as we've seen by the wild fluxuations in the market created when a frog farts and people stampede to sell their shares.

I've noticed that biofuels have been put on the back burner and have risen in cost. All the alcohol fuel concept did was to make the cost of food soar and those masses of waste cooking grease and oils that used to have to be hauled away at a price are now being fought over by companies wanting to buy it to make it into bio-diesel. With the inevitable result that the gallon cost has gone up considerably.

It seems the more we conserve, the more it costs us. The same thing happens if we wildly consume.

So, what's the solution?


Holy cart before the horse there batman!

Prices are dropping because the Chinese economy appears to be headed towards recession, not the other way around.  To the extent that this is bad for domestic production, that should be fine for anyone who doesn't work for an oil company.  The wells aren't going anywhere - if there are lower priced marginal producers that can satisfy global demand at lower prices, we should be buying from them anyways and drill the higher-cost domestic wells in the future when either technology makes it cheaper to do so or foreign production can no longer satisfy global demand.

Without markets, we wouldn't have these price signals - when and how much to drill without causing shortages or massive overproduction would be almost impossible while oil consumers would have no indicator of the proper level of conservation effort versus capacity that they should be undertaking.  There are plenty of countries that fix or subsidize the price of gasoline - they are largely shiatholes.
 
2013-06-24 01:47:25 PM  

Target Builder: ontariolightning: Cheaper is somehow scary?

Most of the domestic oil production in the US is only economically viable when oil is above about $80 as it is expensive to extract and needs a lot of refinement. If/when oil falls much further a lot of the fracking outfits around the country will just shut up shop until oil prices go back up again.

Whether that is a good or bad thing depends on your point of view, but it will put a lot of people out of work.


Yes, but it frees up that money to be used elsewhere in the economy. High gas prices are a huge drain on consumer spending power, and a few jobs in the petroleum industry don't make up for loss of consumer spending power elsewhere.
 
2013-06-24 02:56:43 PM  

Rapmaster2000: Fireproof: So if the price of oil has been falling, why hasn't the price of gas gone down as well?

I seem to remember $100/bbl being a lot more even with $3/gal not that long ago.

It's called "rockets and feathers".  It shoots up and floats down.

In some places around the country, gasoline retailers sell at a loss when wholesale prices are high, and they try to make up that loss when prices go down, said Matthew Chesnes, the economist who conducted the FTC study. Retailers say keeping prices higher for as long as possible is the only way for them to make a little bit of a profit or, in some cases, break even.

Gas stations make most of their profit from attached convenience stores, said Jay Ricker, who operates about 50 gas stations in Indiana. If a sign boasting low prices draws drivers to the station, they're more likely to spend money in the store.


And haven't they been closing refineries left and right recently?
 
2013-06-24 03:11:44 PM  

ongbok: Rapmaster2000: Fireproof: So if the price of oil has been falling, why hasn't the price of gas gone down as well?

I seem to remember $100/bbl being a lot more even with $3/gal not that long ago.

It's called "rockets and feathers".  It shoots up and floats down.

In some places around the country, gasoline retailers sell at a loss when wholesale prices are high, and they try to make up that loss when prices go down, said Matthew Chesnes, the economist who conducted the FTC study. Retailers say keeping prices higher for as long as possible is the only way for them to make a little bit of a profit or, in some cases, break even.

Gas stations make most of their profit from attached convenience stores, said Jay Ricker, who operates about 50 gas stations in Indiana. If a sign boasting low prices draws drivers to the station, they're more likely to spend money in the store.

And haven't they been closing refineries left and right recently?


Yes, yet refinery capacity is at an all-time high.  Shell's Port Arthur facility just became the largest in the world.  Large refineries are expanded and small refineries are closed because refining is a low-margin business that depends on economies of scale to make a profit.

Refineries are closing, but "number of refineries" is not the key metric.  Refinery capacity is the metric.  I'm not sure why this refinery closing idea is such a popular meme.  It misses the point.

Gas is expensive because oil is expensive.  Oil is expensive because demand is high and marginal cost of production (re: fracking) is expensive.
 
2013-06-24 05:48:34 PM  

KarmicDisaster: Well, it is sort of bad, everything is intertwined these days and there is no black and white any more. It's bad because of the reason for the drop; less growth in China and possibly the start of a liquidity crisis in China; that is coming some day you know with their lending practices. Less growth in China means less US oil sold to them and less demand for other US goods there. It also means Chinese banks dumping stocks and bonds to get cash which might depress the stock market. It also means a stronger US Dollar, which makes US exports more expensive and costs jobs in the US.


You make it sound like even if the US becomes a stronger economic player it is still bad news for the US.

Yay we can buy more.....boooo we have less jobs.
 
2013-06-24 08:43:05 PM  
This is bad news...for a handful of folks with more money than sense.
 
2013-06-24 10:29:51 PM  

Girion47: KarmicDisaster: Well, it is sort of bad, everything is intertwined these days and there is no black and white any more. It's bad because of the reason for the drop; less growth in China and possibly the start of a liquidity crisis in China; that is coming some day you know with their lending practices. Less growth in China means less US oil sold to them and less demand for other US goods there. It also means Chinese banks dumping stocks and bonds to get cash which might depress the stock market. It also means a stronger US Dollar, which makes US exports more expensive and costs jobs in the US.

You make it sound like even if the US becomes a stronger economic player it is still bad news for the US.

Yay we can buy more.....boooo we have less jobs.


Well, yeah. Lately a stronger dollar just means better corporate profits (lower costs for crud from China), but corporations aren't passing that extra profit on in hiring or higher wages. Executive bonuses all around though!
 
2013-06-25 10:18:35 AM  
Gas prices to increase, because #capitalism.
 
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