Not that speculation in oil futures has anything to do with the prices, of course.
First there’s this:
Most Americans have no idea how important oil prices are to the overall health of the U.S. economy. Whenever oil prices have pressed toward record levels in recent decades, it has always resulted in an economic downturn. A high oil price does not just mean that consumers will have to pay a little more at the pump. The truth is that oil is the very lifeblood of our economic system. We have built our entire country around the concept that we can transport lots of stuff very long distances for a very, very cheap price. When that paradigm beings to change, it fundamentally alters the dynamics of the U.S. economy. A high oil price will mean an even faster economic decline for America.
Here’s one take on things:
The International Energy Agency (IEA), which represents industrial consumers, said prices “already pose a real economic risk” and said Saudi Arabia has stealthily boosted its output. However, OPEC said “any assumption that there is tightness in the market… is incorrect”. The cartel of oil-producing countries blamed the weak dollar and speculation for taking the price per barrel near $100.
[…]
He criticised the IEA for lacking “consistency”, suggesting it was willing to add to oil prices by telling members to raise related taxes, but would then pressure OPEC to curb prices to safeguard growth. However, analysts say that the cartel is reluctant to openly agree output rises in case prices drop sharply.
And then there’s this:
Oil prices dropped ahead of important data on U.S. oil supplies, due 11 a.m. EST Thursday. U.S. oil inventories are expected to fall by 900,000 barrels in the weekly report from the Department of Energy. But the expected decline is partly due to the shutdown of the Trans Alaska Pipeline, which restarted Monday. Fuel inventories are seen continuing their recent steep increase, with gasoline stockpiles expected to grow 2.3 million barrels and distillates, including heating oil and diesel, seen adding 500,000 barrels.
[…]
Supply issues have been paramount in recent days after the shutdown of the Alaska pipeline last week pushed crude futures back above $90 a barrel. With the key 800-mile oil route back in service, investors are closely watching the recent rise in stockpiles of fuel products, both in the U.S. and Europe, as continued builds could stifle any push toward triple-digit oil.
$43–Lyin’ Mike: lets parse:
Funny how liberals want to blame high oil prices on speculators, /// every dollar of speculator profit is increased cost to the consumer. Pull your pants up and stop embarassing yourself.
oil companies, /// who, where, when, link?
and George Bush, //// who, where, when, link?
but then can’t help but say how they like the idea of higher prices. /// who, where, when, link? I support higher prices when that is done thru tax policy to generate revenues and fund alternative energy research and generation NOT when it goes to some anti-free market but always present cartel.
Nice combo you continue to run there Lyin’ Mike: made up BS and just wrong. Makes me want to PUKE!!!!
The key to oil energy independence:
– 60 mpg autos by 2015
– add the cost of military presence in the middle east to the price of a barrel of oil. No more tax payer subsidizing the true cost of oil
– tax the sheeple for driving huge cars just to haul their fat ass to the mall. Proceeds go to battery, green energy and clean energy research.
– limit fossil fuel use to transportation industry only where the need for highest energy density and range is crucial. Transportation does NOT include transporting your fat ass to McDonalds drive thru.
– invest in nuclear, green and renewable resources .
#45 Dallas – The US needs strict national growth management.
The US doesn’t have urban sprawl. It has suburban sprawl, exurban sprawl, etc. (Or what ever come after!)
The era of central power plants should be coming to an end. It’s like having to pick up a phone in order to speak to an operator to complete a call. The fruits of research just don’t filter down to the consumers as lower prices with this model. Coal, diesel, natural gas, & nuclear are just for water boilers. Electricity rates & water rates are becoming a worsening burden on consumers.
#46 I agree with most of what you said. I don’t understand your point that research does not end up benefiting the consumer in lower prices.
Being a cranky geek fan, I would think you would have observed how research in the high tech field has allowed for huge reductions in computational and storage costs for the average consumer. The same benefits can be enabled by research in battery and renewable energy if we just stop sucking on the Saudi oil tit.
Dallas: re Nuke Power–how are you willing to pass on the storage costs of radioactive waste onto our kiddies in addition to all the other drawbacks?
Toxic waste in mining the ore
Target for Terrorists
China Syndrome
Large Centralized Project
Why not subsidize green energy?
#48 agree nuclear is dangerous and not a good primary source for our energy needs. However, I believe nuclear has a place in our portfolio of options to help ween ourselves from the saudi-bush oil cartel tit.
Nuclear helps us straddle a quicker transition but the investment and direction needs to be in clean, renewable sources of energy connected together with a smart national electric grid. That is the vision of pres obama and I wholly support that vision. The fact that jobs are created in making that happen is equally exciting.
The R’pukes do not like above plan forntwo reasons.
1. They are beholden to their oil cartel election dollars
2. They do not want to see a democrat, much less a black one, actually implement an energy policy that is successful.
Bobbo, 4 parts
You yourself say you support higher prices for yours truly, then you wasnt a link of where people like you are calling for that. Strike one
You blamed speculators in your own post so that’s strike two. Pretty bad when you say I’m lying and 2 out of four are contradicted by your own post. Back to this one later.
Dallas helpfully contributed the other two in his later posts, unless you don’t think oil cartel includes oil companies. Thanks Dallas.
As for speculators making profit leading to higher prices. More sellers leads to lower prices not higher ones. Every time a speculator sells, someone else is buying. The problem if there is one is when the speculators enter the market, not when they exit by taking a profit. I have yet to see a plausible explanation of how the speculators are raising prices. At best, a speculator can raise prices by buying up an oil future contract. But if he is not using the oil himself, then he will have to sell the oil when the contract comes due, causing a lower price at that time. If the future price is artificial, then it means oil is a bubble that will burst, and prices will come crashing down.
#47 – Dallas
“The fruits of research just don’t filter down to the consumers as lower prices with this model.”
By this, I mean the model of very large central generating plants with a transmission grid system.
In Florida, the Crystal River Nuclear Power Plant used to be plagued by shutdowns. Electricity rates are going up before another proposed nuclear power plant is to be built. After the rate hike was O.K.’ed, the estimate went up 100%. Duke Energy wants to buy Progress Energy, operators of Crystal River, to form the largest electric utility. Look for more of these deals in the future.
A couple of years ago, there was a proposal for a large solar panel array in southwest Florida that could support maybe 20,000 homes. It was 75% less than a nuclear power plant.
“… research in the high tech field has allowed for huge reductions in computational and storage costs for the average consumer.” It certainly has, but what did that was the microcomputer model instead of mainframes. My point exactly.
#49 Dallas – Unlike roads and highways that are publicly owned, the transmission grid is 99% privately owned. It is not maintained as well as it should be. I don’t think we need that much extra generating capacity (statement based upon a german study).
#50 MikeN – Oil trades like copper, wheat, corn, etc. Seven times as much as is delivered – that was the case 2 to three years ago. The largest oil company in the northeastern US as far as holdings go is Morgan Stanley. This comment was made by the head of a gasoline station owners group on a 60 Minutes story hosted by Steve Croft, from early 2009, I believe. The problems with the financial sector were probably factoring in somehow. Do you think the price of a barrel of oil went from $147 in July 2008 to somewhere in the $30 range in December 2008 due to supply and demand? Somebody wrote last fall that oil should be trading in the 30 to 40 dollar range if it wasn’t for speculation.
It was disheartening to observe the lack of attention to the increase in food prices when the price of gasoline went up during the summer of 2008 as it will go up this spring and summer. Food banks were bare by the beginning of fall; baby formula being kept under lock and key; truck drivers protesting about fuel surcharges not getting to them, a record number of Americans receiving food stamps, etc.
I’m shaking my hands at my screen saying “and I’m cranky!”
I can see some extra volatility show up because of speculation, though again, they balance out. As you say, $147 to $30 drop in prices, it’s because they can’t keep sending the price higher forever without actual demand. At some point, the speculators have to take possession of their oil or put it back on the market.
There is also the fact that Pres Bush ended an offshore drilling moratorium around that time.
I don’t think $30 a barrel is a reasonable price when gold is $1300 an ounce. More like $90 a barrel.
They refused to shutdown the Alaskan pipeline for necessary repairs, for decades. But suddenly, they’ve done so, for no reason that’s made the news. Might this be another Enron style of manipulation oil futures, by reducing output? The last time oil futures took off, in 2007, we learned much later that Wall Street investors had artificially inflated the prices. Back then, Morgan-Stanley was the chief culprit. But Goldman-Sachs was also a major player. This is another totally unregulated market. And Enron was the one who lobbied to get it deregulated. As far as I know, Congress and Obama has done nothing to fix this. And now we may be seeing those sneaky pigs on Wall Street, upping the prices again. And blaming it all on China.
Lyin Mike–its rare you go off your nut so demonstrably. Your post is a miasma of irrelevant and self contradictory statements. Funny you inaccurately accuse me of the same.
Like a parrot you are. The words come out, but where is the meaning?
Silly.
Dallas–in fairness==you totaly avoided answering the basic complaint against Nuke Power. I list some main ones.
I see articles now about France going to install Nuclear Submarine type reactors underwater to fuel smaller on shore communities. Articles don’t say way “underwater” is the location of choice. Out of sight? Disposing of waste into the ocean for dilution?
Nuke Power: best example of pursing something just because it can be done rather than a full spreadsheet analysis of its benefits and risks compared to other technologies.
Arab oil may be a tit==far superior to what Nuke represents. ((Insert joke here.))
Investing in GREEN RENEWABLE is the only way to go==even if more expensive now.
Think of the kiddies!
Nuclear power is green and renewable, even if more expensive now.
As a global warming skeptic, I don’t consider it a priority that must be subsidized, but if I thought the global warming problem was real, nuclear power is definitely something I would support, even if there are massive safety risks, which there are. The alternative is planetary armageddon. Of course the rest of the world is hopping on the nuclear bandwagon anyway, so America will probably be left out because of all the lawyers.
#53 Glenn E. – A paper came out in 2002 or 2003 from Goldman Sachs describing $100 per barrel oil.
#56 MikeN – How can nuclear be renewable if an atom is split and waste products form?
I wonder if the upcoming State of the Union address will feature these issues? The former CEO of GE has just been appointed by the President to an economics board.
From 2008 to 2009, electricity use in the US fell for the first time – approx. 1% – in at least 50 years. The US is using 7 or 8 % less gas than just 2005. Robert Cringely wrote that the US could save a huge amount of energy by installing 3-phase AC wiring everywhere and eliminating the use of incandescent light bulbs. Ikea no longer sells this type of light bulb.