Aren’t the rising prices going to hurt the economy’s recovery?
Storage tankers across the globe may be brimming with oil that no one is buying because of the global economic downturn, but the traditional laws of supply and demand don’t always apply to oil prices. Drivers have faced rising prices at the gas pump in recent months, as investors and oil-producing countries hoard supplies in anticipation of a global economic recovery later this year.
The 12 member countries of the OPEC cartel voted in Vienna on Thursday to maintain output at current levels rather than increase supplies in order to bring some relief to consumers, particularly in the gas-guzzling West. The OPEC oil ministers, whose countries account for about 40% of the world’s entire crude-oil supply, also renewed their commitment to stick to their agreed quotas, rather than ship extra oil, as they began doing last April when several members ignored their agreed output limits. OPEC leaders, many of whose economies are heavily dependent on oil exports, have struggled to stabilize prices at a level that suits their own economic needs amid falling demand and rising supplies.
[…]
“There is some risk we will run out of storage space in the next four to six weeks,” says Simon Wardell, director of global oil at IHS Global Insight, an energy-forecasting company in London.
[…]
Despite such dangers, investors and oil producers are betting that global demand will roar back, apparently hoping that the recession has already hit bottom. Over the past two months, investors have plowed billions of dollars into oil futures. If the U.S. and other major industrial economies rebound, oil supplies could be depleted because the recession has prompted producer nations to freeze hundreds of projects to open new oil wells or upgrade existing ones.
Ah, isn’t it wonderful how the “free” market operates?
ok lets see if any of you can come to the same conclusion that i did..
check these two graphics out:
GasBuddy
2008 election results
not a real scientific study here….
but notice for the most part the republican states the price of gas is lower?
hhmmm
but notice for the most part the republican states the price of gas is lower?
I’m not sure what that could possibly have to do with anything. I would bet that the variations in gas prices lines up pretty closely to real estate prices too. I couldn’t find a decent US map of real estate prices but here’s one for sale prices that lines up with the gas prices too.
Up is easy, down is hard.
#29, soundwash, what the heck?
plus, the Freakazoid weather we’re gonna have in July/August from the “magnetic sqeeze” the solar system is experiencing from the Celestial bodies we are approaching
Expecting visitors from the planet Twilo are you?
That’s absurd. The Solar System is not approaching any ‘magnetic heavenly bodies.’ Cripes, the nearest star, Proxima Centauri, is 4.2 light years away.
#23alfred
#21 “Everyone follows self interest…even you loons…Business formation doesn’t happen when you take the profit away via taxes…and like water not going up hill…onerous regulation prevents business formation…”
What’s this got to do with a gas tax that could even have a full refund all that would do is get people to buy more efficient cars or cars that don’t use gas in a matter of there self interest. Do you even read what people write before responding?
“The very people loons think to help…they make unemployed.”
No. Short sighted try to maximize profits NOW by delivering substandard cars year after year and lose market share year after year GM did that all buy themselves. Even lobbying away the very regulations that would have help them be competitive on a world stage.
“The ripoff of GM bond holders has spooked investors…we don’t seem like a nation of law anymore…the smart money is NOT investing in the US…contract law can be changed by the whim of the “the Leader””
Without Washington help GM would have been a total loss long ago, those foolish enough to gamble by buying GM stock shouldhave know better don’t gamble if you cant take the loss.
“I realize this all seems stupid to you…you never tried to open a business and seen all the regulations you had to meet, the hurdles you had to jump over…if you did, you would realize why new small businesses are not forming…and why big business is RUNNING away…”
I have been running my own small business as my only source of income since 1987. Your egotistical speculations are wrong again. I’m sure you are use to ignoring when you are wrong so don’t bother to apologize we just except this as something we have to put up with to have you join the debate on this blog. Like that high school dropout uncle with halitosis and mind full of right wing talk radio, he’s family you just put up with it.
#41 – BubbaRay – Expecting visitors from the planet Twilo are you?
LOL
#40 – sargasso – Up is easy, down is hard.
Some guys have the opposite problem.
To answer Uncle Daves question, um yes it is (wonderful how the free market works). The alternative is that a bureaucrat would decide prices. I’ll give you that you don’t like the free market (at least in oil); ok. But you’d like the alternative less. So, instead of griping and favoring constraint of the free market system why not either embrace it or embrace the alternative; complete control by the government. And quit debating about how the free market is controlled by greed. If the human greed factor is g then are you really arguing that in a government run program g would be any different? No, whatever system you could come up with will have the same g factor. So the question is which system works best; not perfect but best.
#44: I hate it when I have to explain the obvious. The comment was meant as sarcasm because OPEC, the oil companies and oil speculators have created anything but a free market. Price has little relation to anything, constantly manipulated to get higher profits without that nasty supply and demand stuff to bother with.
And when did I ever say I wanted the government to run this business?
#45 – Uncle Dave
And this is the exact reason for us to get the hell off oil and onto something that we can produce ourselves…
Most of the rise is inflation and the sense that the US may soon have difficulty borrowing more money.
That plus we’ll pay it and many Americans still have tons of fat in their budget and gas gets top priority.
It won’t be gas that isn’t purchased, they’ll skip eating at a restaurant that week or avoid making some purchase they don’t need.
Uncle Dave asks the question: Why The Hell Are Gasoline Prices Going Up When Global Usage Is Down?
Gee, why would this concern Uncle Dave. After all President Obama said he wants his “cap and trade” program to bankrupt the electricity companies. We are getting exactly what Obama wants us to get.
And don’t forget that even with the pending huge tax increases on energy, President Obama has it all under control. He has made countless speeches predicting the economic turnaround thanks to his trillion + dollar spending program.
Ooops!
The unemployment picture looks even worse than if Obama spent nothing on the stimulus package.
But the facts won’t change the true believers. The Obamamaniacs are still hoping for change.
Speculation is back. There has been a huge influx of cash at Nymex for open interest positions, especially on the long side. These tend to be non-reporting small investors but as a group they now hold the largest net long positions.
As usual, regulators can’t keep up.
As far as I can tell, the traditional laws of supply and demand absolutely apply. Demand in Asia and other countries along with speculation is picking up which is raising the prices since supply is not increasing. The free market is working exactly as predicted.
I haven’t seen anyone mention the real answer:
Oil is priced in $US dollars. The US Treasury is now printing money are an unprecedented rate. So the $US dollar is now worth less and less every day. So a barrel of oil at $25 now costs $50 (at least).
If oil was priced in Zimbabwe dollars, it would costs $500 trillion a barrel.
And Dave, thanks for the explanation, I guess the sarcasm could be taken two ways and I took it the other way. I must be getting too sensitive to people blaming the free market instead of the real culprit for the mess we’re in; it’s because of governments and other entities trying to control everything. The free market has nothing to do with it. Hmmm, maybe we could debate whether the other entities are really free market entities sometime 😉
#51. Yes, the price, long term will continue to climb as the US $ slides due to printing of currency without regard to GNP.
“Ah, isn’t it wonderful how the “free” market operates?”
This isn’t a free market.
#51 – chuck
Good point.
Simple…
Prices for all commodities are going up. The Fed is printing massive amounts of dollars in an attempt to screw our debtor nations by devaluing the dollar.
Time to short USO
I bought my stock in Piaggio.
It seems to me that something is different from the last time gas prices went through the roof. This time Desil prices or less than gas prices. It is my understanding that there are fewer gallons of desil to be had from a barrel of crude then is the case for gas and therefore market forces alnoe should make desil more expensive than gas. If this is an Opec or futures investment sckeme, I would expect the MO to be the same as last time. I am woundering if our “nanny state” might be coluding with ?, to produce a price increas in order to save us from global warming. The low desil price is their vigarish in the deal because desils tend to have a lower carbon foot print per mile than gas engines. The ? side of the deal of course, gets more 12 billion dollar profit quarters.
nunyac
It’s not just the OPEC member producers. In the past, most of the Non-OPEC oil producing nations have secretly agreed to production limits, as well. That was probably the real reason Venezuela had a political problem, supply the US with oil. This same kind of price fixing is how the world’s diamond market monopoly, keeps its commodity’s value high. I really don’t have much of a problem with that, as gems are a luxury item to most people. But oil is not a luxury, in the 21st Century. Anymore than clean air, water, and food are. We can’t live so self-sufficient as the Amish or mountain men of old. Most zoning laws would prevent us, even if we had the skills and determination to do so. The Urban blight we live in, and are a part of, forces us to consume oil to stay alive. So such a vital commodity, should not be the plaything of global monopolists.
There may indeed by a Third World War, in the future. And I suspect it would be between those who need the oil, and those that have the oil. Cause I doubt all the barons that control the oil now, are just going to roll over and give it up to true free trade.
China’s industrial growth continues to outpace the U.S. with increased demand for oil the past 3 months.
U.S. reserves in tank farms have declined 4 months in a row.
What more do you need?
BTW, #59, diesel comes off the top easier and in greater quantity than gasoline from every barrel of oil. Though the composition at the source may vary.
You can take the crap straight out of the ground in Nigeria and stick it straight into your Mercedes diesel taxi. Which is why there is such a ready market for pipeline thieves there.
I say do not buy anything for at least 6 months. Let those tankers sit out there until they rot. And when investors get stung again. Like they did last time then maybe the goldmans of the world will stop manipulating the futures market. A couple big losses and they will stop fucking around. I say park your car and don’t go to work one big strike. I went a year without work after hurricane andrew. It’s feasible. Don’t pay anyone and if everyone does it then this fuckers will stop trying to rob us as there losses keep climbing and for all you investors dick heads YOU are the problem. Take your money and buy something stop trying to make money with your money like you think you are some kind of smart ass by doing so. LAZY FUCKS