Aces High Bulletin Board
General Forums => The O' Club => Topic started by: Dago on October 21, 2008, 08:15:33 PM
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So, we have all pretty much had to notice the price of gas has fallen quite a bit.
Has anyone wondered why it has plummeted???
When it was skyrocketing, it was all "supply and demand" BS, you know, "we need off shore drilling". Well, was there a sudden large increase in supply? Did demand suddenly decrease a tremendous amount?
Why have gas prices fallen 38% in a very short time? Can't be tied to Fannie Mae and Freddie Mac, and sub-prime mortgages now can it?
Did someone in the gov't whisper in the oil companies ear "hey, the economy has gone to crap, how about backing off those sky high prices and profits for a while?".
Is the impending election a motivator? Maybe make the Republicans look a little better?
Are we, with our thirst for oil, so emotionally grateful for relief at the pump, allowing ourselves to be manipulated like puppet sheep?
Just what the fxxk is causing this big drop in price at this time?
Why did it go so high to start with?
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We're now actually cutting down on our usage of oil... for the first time in history IIRC? At least since the last gas crisis.
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We're now actually cutting down on our usage of oil... for the first time in history IIRC? At least since the last gas crisis.
In the matter of a few short weeks, we have cut usage by 38%? I don't think so. Supply and demand? Did we ever really run short? With the exception of a temporary refining issue caused by the hurricane, nobody has had to wait in line for gas. There was always plenty to go around. Did OPEC just drop prices because they felt like being nice guys?
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I didn't mean to suggest that was the only reason, but I'm sure it contributed to it.
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I didn't mean to suggest that was the only reason, but I'm sure it contributed to it.
I am sure it had an effect, but couldn't be that much, do you think?
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actually it seems to be a paranoia based issue.
one candidate wants to open local off shore drilling the other doesn't (neither do the foreign oil producers)
one candidate wants us to realize that we are in an energy crisis the other wants to under play it (same as foreign oil producers)
one candidate wants to stabilize the middle east before withdrawing our troops the other doesn't care about stability and wants to pull them out now leaving the majority of the worlds oil reserves solely in the hands of foreign powers (same as the foreign oil producers)
give the sheep want they want just before the election and the sheep will stop believing there is a problem and are more inclined to vote in the direction that you lead them in.
now ask yourself..................who sets the prices for oil??? who could decide to drop price per barrel?? why now, right on the verge of winter (traditionally the time oil prices rise) and just before the electionwho gains if the sheep are lulled into believing that the crisis isn't really that bad and that it is fine to vote for the person who will not push for offshore drilling and stability in the middle east, but instead would happily leave us being financially milked dry by foreign powers who control the only available oil without any American presence in the area to ensure who controls that oil.
one final question
which candidate received millions of dollars in campain contributions from foreign companies.................... ..........
obama? sound familiar????
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Gasonline is a commodity. Current price is based on speculation about future demand and availability. Strong hints of a world wide depression may have a lot to do with this...
Hooligan
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Don't get used to it, Opec will cut production, sending prices back up to $4 a gallon in Jan 2009.
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Gas out north east of our town, about 20 miles out apparently has gas at something like 2.15-2.30 last I heard... Someone even said it was at 2$$. :O
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I bought gas for under 3 a gallon today. it felt good to fill up the car and not spend 60 bucks. it cost 47 lol.
One reason is that the US dollar is actually stronger on the world market. While our economy has been hurt, the world economy was hit worse, so the dollar is worth abit more. I think its only$1.30 to the euro now. That can bring prices down.
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Apparently you guys haven't seen what a barrel of Oil has droppped to in the Stock Market
Highlight the 1y on the bottom of the graph to see the trend from the last year.
http://www.oil-price.net/ (http://www.oil-price.net/)
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Apparently you guys haven't seen what a barrel of Oil has droppped to in the Stock Market
Highlight the 1y on the bottom of the graph to see the trend from the last year.
http://www.oil-price.net/ (http://www.oil-price.net/)
scroll down to this section- Profitability and $100 oil by Steve Austin - 2008/01/05
amazing
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I understand the point about speculation made by Hooligan and that is part of it. I also understand the point made by Motherland. Both are correct to a degree. One factor that hasn't been mentioned is the fact that if gasoline rises past $4 USD per gallon or even hovers there for the next 24 months or so, the demand for alternative fuel cars will rise to the point that the next Administration, House, and Senate will be forced to enact legislation that WILL effectively kill the current fuel industry as we know it today. As long as gasoline, heating oil, and petroleum products in general are affordable to the masses there will be no mainstream alternative fuel.
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The "demand" was based on oil futures, and the price on oil delivered sometime in the future was driven by speculators betting that demand would continue to rise and rise.
The banking crisis pretty much guaranteed that real demand for oil will remain flat for the next few years, so the price of oil has dropped to a much more reasonable and "real" price that reflects the reality of the supply/demand situatoin. Anyone betting that demand will quickly rise is going to lose their shirt. The super high prices reflected a nearly 50% speculative boost and an insane bidding war that pretty much matched the stupidity in the housing markets.
The value of the dollar also has a big impact... Yea the US stock market has taken a huge hit but other global exchanges have seen up to DOUBLE the losses. The asian/pacific markets have seen upwards of 60% losses in the last 3 weeks, while the US stock market is down maybe 35-40% tops. That means a very real decrease in expected future demand, so there is no reason to bid up the price of oil to be delivered tomorrow, next week, etc. The demand just isn't going to increase until companies have cash and credit to work with again.
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We're now actually cutting down on our usage of oil... for the first time in history IIRC? At least since the last gas crisis.
Same thing over here. Consumption of oil has gone down alot so the price also has gone down. Prices on pretty much everything has gone down because people are abit more careful with their money.
Its called supply and demand.
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Did demand suddenly decrease a tremendous amount?
yes
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China was buying oil like crazy, China lost their shirt in our mortgage security's.
China has no money left to buy oil.
That plus we slowed way down on how much we were using.
Combine that with fact that speculators could no longer borrow money to leverage oil futures.
Price of oil per barrel is lower than its been in a year.
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the Russian economy is based on energy
as soon as she is ready to stir the pot which will shoot oil through the roof, she will
enjoy the "cheap" gas while you can, it is only temporary
why did it drop so fast? it was nothing more than a bubble - just part of our global bubble economy, nothing is based on fact these days just greed & selfishness
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I didn't mean to suggest that was the only reason, but I'm sure it contributed to it.
WE CUT DOWN A LOT.
didn't you notice a lot less SUV's on the road? somoene had mentioned that in another gas thread. in south hersey, i noticed a lot les of the suv's, and the ones that were still being driven, were being driven much more conservitivly. in the city(philly in my case) i've noticed a HUGE increase in those little motor scooters, and a lot more people on bicycles.
i think chinas economy is tanking too, causing them to cut back a lot too, along with other big iol users in the world.
of course opec'll be sure to find a way to get the price back up t hough.
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In the matter of a few short weeks, we have cut usage by 38%? I don't think so.
It doesn't work like that because few people have a fixed budget for oil.
If you have a fixed budget of $40 and a gallon costs $2 you buy 20, if it doubles to $4 you buy 10.
What most people have is a fixed requirement for oil and they adjust the budget to match. With a fixed requirement you might buy 20 gallons of gasoline a week. If the price is $2 a gallon you spend $40. If the price goes to $4 a gallon you still need 20 gallons so you pay $80.
Of course what happens in reality is some people can't afford to spend more and have to reduce consumption, some people give up the car altogether and cut out consumption, others carry on as normal, or even increase consumption. So the price does have some effect on consumption, but not at a 1:1 ratio.
Supply and demand? Did we ever really run short?
No, because the price went so high. Ask yourself, though, what would have happened if the price hadn't gone up. If oil had still been selling at $50 a barrel last spring and summer, consumption would have been higher. Then we would have run short.
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In the US, consumption is down about 1.7 million barrels/day over the last-year period.
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Drop in oil price was due to the perfect triple whammy.
1. Hedge funds collapsed killing off all the speculators. Say this is what caused it's greatest percentage loss in just three weeks.
2. Global recession oil and all commodity prices have dropped through the floor.
3. Stronger US dollar
As for oil going back over $100 and gas $4 a gallon, isn't going to happen. OPEC can cut it as much as they wasn't global demand is dropping at a ever increasing rate with fears of a Global depression let alone recession. Plus if OPEC really cut the tap when the world is fighting a recession they would get hammered politically.
I wouldn't be surprised if oil is down to $55 a barrel by Christmas and stays there.
<S>...-Gixer
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In the matter of a few short weeks, we have cut usage by 38%?
Demand does not have to fall so much for prices to begin plummetting on a commodity. It is all about excess capacity. Even a small drop in demand (due to recession or whatever) means there is now a small excess of capacity.
When there is no excess capacity, the sellers can set their own price, and that price will climb until people think they can do without, at which point it will stabilize. This is what had been happening, more or less.
Now that demand has dropped a smidge, there is excess capacity. This means that the buyers, not the sellers, have the advantage. Supplier X won't sell it to me for my asking price, so I will go to supplier Y, who now has extra to sell, and is willing to give me a price break to "fill his plant." Supplier X then loses that customer, and has excess capacity, and wants to fill it -- and coaxes a different customer to take that capacity using a price break. And so on.
So, you get falling prices. Again, the excess does not have to be a lot to get the ball rolling, it just needs to be there.
So, yes, it is all supply and demand.
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I BALME BUSH FOR THE SUDDEN FALL GAS PRICES!!!!!
B@st@rd is at it again, ruining americas fabulous high gas prices!!!
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Actual demand did NOT drop 38% (or whatever number you try to pull from the price of oil). What dropped was the expected future demand over time. Growth slowed.
Yes, the US is beginning to work hard to reduce actual usage and real demand, and there will be some real demand/usage decreases if the recession continues. But the real effect is that the future growth is perceived to have slowed enough that speculators are not betting that demand will outstrip production and therefore are not driving up the price of oil on speculation of future demand.
OPEC saw this coming about a year ago even without the bank crisis whacking the economy, because the US and some other countries are getting serious about reducing their reliance on middle eastern oil. It scares the heck out of them because their economies are based almost entirely on selling oil, so it is in their best interest to keep supplies tight to help fuel a bit of speculation. Yea it hurt the US when the price of oil was hampering economic growth, but that means if our economy takes a dump then so will the price of oil, and their profit margin along with it.
What we'll see is supply adjustments that, combined with the eventual economic stabilization, will bring the price of oil back up to a profitable level. Pumping a lot of oil and selling it below cost is a losing proposition so they'll just drop production until the price rises enough for it to be profitable. And middle eastern oil is a lot cheaper to pump and distribute than oil from many other sources, including canadian oil sands and many deep sea oilfields.
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and all it would take is an attack, real or staged, on a rig or two in the ME and the price would go through the roof regardless of the economy or our usage reduction...look for the saudis, iran or russia to create such a scenario once the falling price affects their economies to the point they feel they have to act..
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Some of y'all are confused about what demand is. It's not the amount of oil or oil products used. In economics, demand is the relationship between the price that is charged and the amount that will be bought at that price. In other words, it's the desire for a product, not how much of the product you need or use.
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Myelo is right - simple supply and demand graph shows that
(http://www.mikeonads.com/wp-content/uploads/2007/05/supply_demand_11.JPG)
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1. Falling demand. People were buying less with the rising cost.
2. Fears of a global recession. The futures price is tanking due to the worries of the global economy shrinking as opposed to growing.
3. The US dollar is making a recovery against other currencies.
There's three simple reasons for you.
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Myelo is right
Learn it, know it, live it.
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Interesting to note from OPEC meeting, it's Iran and Venizula pushing the agenda most for oil production cuts of greater then 2mil barrels a day. Think it's more to do with trying to push the west into a deeper recession then anything about profit concerns.
Iran especially is long overdue for a lesson in STFU.
<S>...-Gixer
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one word. speculators
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Last I heard Venezuela was only up to 1 million. It was Iran and another Arab nation that were pushing for 2+ million