Gas Price Change For You

[clerick]

Dang it.  I knew I should have trademarked that.

Then we'll be forced to go to some foreign country for our wishes and we'll wind up with something like "Schwing!!! You have been given your desires!"

[RTHolmes]

this is good, it shows how cheap the pump price is compared to 8 yrs ago. if the pump price accurately reflected the crude price, it should be about $5.70/gall now ...

luckily oil companies can use all the tools that the international financial markets provide (yes, those evil things like futures) to buffer the consumer from the overall real rise in the cost of oil, and its short-term fluctuations.

[CAP1]

As in all cases, Wall Street heard the word "bet" and flocked to futures, taking the market to strange new places on the fringe of legality. In the 19th and early 20th centuries it bet on grain. In the 21st century it was oil. Despite U.S. petroleum reserves being at an eight-year high, the price of oil rose dramatically beginning in 2006. While demand rose, supply kept pace. Yet, prices still skyrocketed. This means that the laws of supply and demand no longer applied in the oil markets. Instead, an artificial market developed.

[Ardy123]

(Image removed from quote.)

this is good, it shows how cheap the pump price is compared to 8 yrs ago. if the pump price accurately reflected the crude price, it should be about $5.70/gall now ...

luckily oil companies can use all the tools that the international financial markets provide (yes, those evil things like futures) to buffer the consumer from the overall real rise in the cost of oil, and its short-term fluctuations.

do you have a chart on world oil consumption vs world oil output?


EDIT: Cap1, and everyone else...

you are all part of the problem and part of the solution. Don't you realize, diving that muscle car or that monster truck, wastes gas, increasing demand, rising prices, ultimately hurting our economy?

You can blame 'others' but the problem starts with you and your actions. Take responsibility or don't complain.

[RTHolmes]

oil supply is relatively easy to determine - the oil companies publish their production and reserves, but how do you know what demand was? you can get a rough estimate from a very complex (and therefore error-prone) calculation involving national growth rates, energy requirements, exchange rates etc. but the simplest way is to just look at the price relative to the supply ...

lets approach this from a different angle. you're saying that trading in the futures markets influences the spot price. what is the mechanism for this?


edit: consumption and demand are not the same thing.

[Ardy123]

but the simplest way is to just look at the price relative to the supply ...

Not true, because oil supply is partially managed by a cartel which can artificially restrict supply. This makes using the price as a poor measure as artificial restricted supply alters the point at which the supply and demand curves intersect.

EDIT: you do hear of numbers such as "The US consumed x number of barrels of oil last year". Granted, as the price changes the "substitution effect" kicks in, making it hard to guess what the demand will be.


Maybe use the 'barrels of oil per person' ratio from a time when oil prices were lower to attempt to 'plot' the intersection points of the demand/supply curve intersections?

[CAP1]

oil supply is relatively easy to determine - the oil companies publish their production and reserves, but how do you know what demand was? you can get a rough estimate from a very complex (and therefore error-prone) calculation involving national growth rates, energy requirements, exchange rates etc. but the simplest way is to just look at the price relative to the supply ...

lets approach this from a different angle. you're saying that trading in the futures markets influences the spot price. what is the mechanism for this?


edit: consumption and demand are not the same thing.

By betting on the price outcome with only a single futures contract, a speculator has no effect on a market. It's simply a bet. But a speculator with the capital to purchase a sizeable number of futures derivatives at one price can actually sway the market. As energy researcher F. William Engdahl put it, "peculators trade on rumor, not fact" [source: Engdahl]. A speculator purchasing vast futures at higher than the current market price can cause oil producers to horde their commodity in the hopes they'll be able to sell it later on at the future price. This drives prices up in reality -- both future and present prices -- due to the decreased amount of oil currently available on the market.

Investment firms that can influence the oil futures market stand to make a lot; oil companies that both produce the commodity and drive prices up of their product up through oil futures derivatives stand to make even more. Investigations into the unregulated oil futures exchanges turned up major financial institutions like Goldman Sachs and Citigroup. But it also revealed energy producers like Vitol, a Swiss company that owned 11 percent of the oil futures contracts on the New York Mercantile Exchange alone [source: Washington Post].

As a result of speculation among these and other major players, an estimated 60 percent of the price of oil per barrel was added; a $100 barrel of oil, in reality, should cost $40 [source: Engdahl]. And despite having an agency created to prevent just such speculative price inflation, by the time oil prices skyrocketed, the government had made a paper tiger out of it.

[RTHolmes]

equally an oil producer could short on the very same contracts the vast speculator is going long on, dump oil onto the market just before the settlement and take all their money

markets can be manipulated to some degree, but long term these manipulations cannot overwhem the influence of real supply and demand. hence bubbles, which always burst. suggesting that 60% of the spot barrel price is due to manipulation of derivatives is just preposterous, which made me check out Mr. Engdahl ... who appears to be a bit of a conspiracy nutter, and rather unqualified to write books on this stuff with any authority.


“The popular fear of [speculation] may be compared to the popular terrors and suspicions of witchcraft." Adam Smith.


edit: to be clear, I'm arguing that theres nothing intrinsically wrong with derivatives markets, that they are infact a good thing. but only with appropriate regulation.

[Pigslilspaz]

I take the bus and bike. Costs only $40 a month.   

[CAP1]

equally an oil producer could short on the very same contracts the vast speculator is going long on, dump oil onto the market just before the settlement and take all their money

markets can be manipulated to some degree, but long term these manipulations cannot overwhem the influence of real supply and demand. hence bubbles, which always burst. suggesting that 60% of the spot barrel price is due to manipulation of derivatives is just preposterous, which made me check out Mr. Engdahl ... who appears to be a bit of a conspiracy nutter, and rather unqualified to write books on this stuff with any authority.


“The popular fear of [speculation] may be compared to the popular terrors and suspicions of witchcraft." Adam Smith.


edit: to be clear, I'm arguing that theres nothing intrinsically wrong with derivatives markets, that they are infact a good thing. but only with appropriate regulation.

bolded......wigh that, i could/would agree. the funny thing is that the regulators lost their power to regulate.........around 2006.

[CAP1]

I take the bus and bike. Costs only $40 a month.   

 as long as i can avoid using public transportation i will.

[clerick]

I take the bus and bike. Costs only $40 a month.   

you have fallen for the lie of public transportation. You only see $40 but the fact is very very few systems could survive unsubsidized. The LR system here in MN costs far more per passenger mile than a rider pays. If they had to bare the full cost of ridership it would be empty.

[coombz]

damn those evil socialist public bus services!

[Ardy123]

you have fallen for the lie of public transportation. Y

Lie???

If you realize that some of your tax money is subsidizing it and your community voted on it, where is the lie?

damn those evil socialist public bus services!

not to mention that 'commie' fire dept. That's why they always use the color RED!   

[JOACH1M]

I bent over and waited to take me beating today..... 4.16 a gallon.