... and judging by posts hereabouts on crude prices the past few months,
that a goodly percentage of wRec participants are more capable than congress
of making valid judgments regarding the why's and wherefores of national
IOW, all the asses in congress, combined, have failed to exhibit enough
judgment to make a single pimple on a wooddorkers butt.
However, it is inarguably "speculation" when the mere rumor of a storm
hitting the Gulf a week in advance is enough to drive up prices within 24
hours; likewise it is such speculation that keeps prices, already falling on
your valid "supply and demand" issues, from falling further.
IOW, the effect of "supply and demand" on prices has demonstrably been
trumped by "speculation" in this regard.
Most will agree that "supply and demand" generally takes some bit of time to
effect prices, but the effects of "speculation" on prices, driven by
innuendo, rumor, greed, and fear, take effect before you wake up the next
To declare that "supply and demand" is not part of the big picture is as
equally foolish as blaming it all on speculation, but it's been clear for
sometime that the driving force in the past year has been fear/greed based
speculation, and with much of the speculative index trading done on margin.
It's amazing how little "speculation" there is when you have to put up your
own cold hard cash to practice it.
That is one of the controls I would like to see the CFTC take an interest in
All the above notwithstanding, my original point was the planned paralysis
of the corrupt bastards supposedly leading this nation.
No doubt requiring "some skin in the game" would go a long way toward
curtailing speculation. Would also have helped in the
mortgage/housing/banking crisis. You have to get to the very end of
the financing "pass it on chain" before anyone has any skin in the
game and, as we have seen, by the time you get there the taxpayers are
left holding the bag.
I have said this time and again. When the oil companies started to merge
they cut out 1/2 the competition. If pricing was truly the result of supply
and demand we all would have been sitting in lines to gas up like we did
back in the 70's.
Speculation and "What the market will Bare" is what's going on here. US oil
consumption was down 6 months before prices shop up to $4.00 per gallon.
The demand began it's decline in the fall of last year.
Hey, if you are willing to pay $4.00 per gallon there is certainly plenty to
go around, same goes at $3.25 per gallon.
Since I was one of those working in the industry and became part of
the "competition" that was eliminated, I would agree wholeheartedly
I still think you are confusing crude supply/demand curves with
refined product costs. U. S. Oil consumption is only one part of the
demand curve. When you buy that Chinese whatever in Walmart, you are
living in the USA and driving up crude demand in China.
When the consumer quit driving, U. S. Demand went down. When the
consumer quit spending, worldwide demand went down.
Well I probably blur the lines occasionally however my son has been studying
world economies in college and has learned that China has been hoarding oil
for the Olympics. Thier demand should deminish. Either way I see and have
seen no shortages of any thing oil related.
Their demand isn't going to diminish unless the world economy goes into
a far deeper recession than it has so far. Their "hoarding" for the
Olympics has been accomplished in large part by rationing the consumer
market. Once that has returned to pre-Olympic status the demand for
more vehicles and their continuing expansion of electricity production
will more than make up for small drops in consumer goods production for
the short term and longer term their demand will only continue to
skyrocket (as will India and the rest of SE Asia).
While there haven't (at least yet) been severe restrictions in supply,
that supply is extremely tight is clear if one looks at overall world
Last I looked, US production was still flat at best if not slightly
decreasing. The higher prices have brought some old production back
online that was marginally or unprofitable before, but new production
hasn't yet increased significantly enough to really make a big impact on
turning around the longtime trend of lowered production from mature fields.
If prices will stabilize at a level that isn't recession-inducing yet
still above the "do-nothing" inducing values of the previous 20 years,
we should gradually see the positive impact of increased production.
The difficulty is, of course, that there's always the risk of the
"boom/bust" cycle if, for example, OPEC were to flood the market as some
have asked them to do.
I looked at the charts earlier this year. World consumption is down
compared to 3 or 4 years ago. 3rd world countires are using more but over
all the world demand is lower.
Demand has been down for over a year, supply this summer has been
interrrupted by hurricanes. Many refineries still do not expect to be back
up and running to capacity for several more weeks because of Gustov and
price of oil and gas continues to drop.
While the dollar is strengtening, oil prices began dropping befor the dollar
went up. Oil prices going down will strengthen the dollar.
True, if were only feedback/controlling mechanism.
It works both ways, too, of course. It's actually _a_good_thing_ in
this period of high prices on the way back down to help accelerate that
which has to be good overall for the entire world economy, not just the
US. OTOH, the declining dollar did exacerbate the the rise in oil
prices and that wasn't a good thing...
I've not researched it, but I suspect there have detailed analyses that
attempt to break out portions of rises that can be attributed to various
factors--I'd guess this one isn't in the noise but isn't the dominant,
either, but somewhere in the middle of the pack.
As of December the IEA was forecasting a worldwide increase in the
demand for crude. In May they revised that figure down, but still an
increase, based on slowing economies. I think, most recently because
of the worldwide economic slowdown, the demand is actually predicted
Yes, if you go back in history, anytime there has been an economic
slowdown demand drops. A slice in time. That's what is happening
You better check your facts, worldwide demand has not been down for
over a year.
Refineries have to do with the price of refined products not with the
price of crude, although if refineries are down for a lengthy period,
and unrefined crude stacks up that could temporaily lower the price of
crude by raising unrefined inventories.
The key work you used here Frank is "forcast". A forcast is not a sure
thing. The figures I was looking at were not forcasts rather actual figures
for the last several years. IIRC the percentage of increase of 3rd world
countries has been up significantly ofer the last 10 years where as the
usage by large industrial nations has been dropping for 4 or 5 years. I
will say that I don't recall the source of those figures, probably "MSNBC"
however the article that included that actual world usage chart was actually
trying to explain that the rising oil and gas costs were a direct result of
supply and demand. I suspect a 2nd year college drop out was piecing
together information he found on the internet. While supply and demand is
certainly a part of the pricing/any product pricing actually, I would say
it has about 10% effect on the current situation.
Here in the US drop in demand has been going on for the last 4 or 5 years/
Not according to EIA data...
There has been roughly a 1.5%/yr increase in total petroleum products
supplied (which equates to usage as very little percentage-wise is
stored long term) over the period from 1991 thru 2007; from approx 16.5
M(illion)B(arrels)/D(ay) to about a 21 MB/D peak in roughly the end of
the 3rd-Q of '07. Since then it has backed off slightly to about the
level at the beginning of 2004. That is roughly 20.0 MB/D, still 20%
higher than that at the beginning of the '90s.
Intended to make an additional note--the above link has weekly data
plotted--if select the 4-wk average, the weekly variations are smoothed
significantly and the effects on demand of the economic contraction
following 9/11 are vividly evident as is the shorter downturn at the
beginning of 2000.
One last note on these data...any conclusion that demand has tapered off
over the last several years could only be drawn by blindly looking at
the numbers pre- and post- 9/11. If only the values were in front of
one, it's possible one might draw a conclusion to that effect, but the
graph clearly shows what happened was a significant retraction over the
period of roughly a year or so after which the growth was again at
essentially the same rate as previously.
This continued until a new peak demand was reached in the 2006/07 time
frame and has since tapered off owing to the high prices and associated
Really quite a revealing graph...
Forecast demand is what current price is built around.
for actual world demand through 2007
World Total 63,113.57 60,943.79 59,543.24
58,778.20 59,815.17 60,085.13 61,808.95
63,095.12 64,965.31 66,077.79 66,689.10
67,295.81 67,489.45 67,609.63 68,930.00
70,133.12 71,670.75 73,426.90 74,052.94
75,727.16 76,711.90 77,443.55 78,089.42
79,660.39 82,407.67 83,818.93 84,948.77
Read across then down, figures in thousands of barrels per day
Well not quite.
The U. S. figures are
United States 17,056.00 16,058.00 15,296.00
15,231.00 15,725.61 15,726.42 16,280.63
16,665.05 17,283.31 17,325.15 16,988.50
16,713.84 17,032.86 17,236.73 17,718.16
17,724.59 18,308.90 18,620.30 18,917.15
19,519.34 19,701.08 19,648.71 19,761.30
20,033.50 20,731.15 20,802.16 20,687.42
Large spike up in '04, increase in '05 two years of very slight
declines 2006 and 2007, and more than likely 2008 will come in as a
decline because of the reaction to high gas prices and the slowing
economy, so by year end three years, but made up for up till possibly
this year by the world demand.
Keep in mind this in the shadow of "forecasted"declining production
which affects the supply side of the equation and also puts pressure
On Wed, 10 Sep 2008 16:03:07 -0500, Swingman wrote:
Well, we may not agree on a lot of things, but we have proven we're
I saw an ad on TV this morning for an auger to drill holes in your garden.
Order it and you got a free "high-power" cordless drill. Had a "value of
$1??.00 for only $19.95 plus (unspecified) S&H".
Consider that the marketeers felt there were enough customers out there to
more than pay for the cost of the ad.
Should people stupid enough to fall for that ad be allowed to vote?
Should we force the "it slices, it dices" crowd to provide their customer
lists and use them to purge the voting rolls? Hmmmm - I may be on to
something here :-).
For most of those items, the S+H charge covers both the S&H costs plus
the wholesale cost of the item. What you pay then is pure profit, and
even if you send it back, all they're out is the profit, they still have
the S+H and the original item which can be resold.
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