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| Name: |
Maverick
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| Subject: |
Gas Prices - Open Debate
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Date:
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11/14/2008 12:19:42 AM
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Two Questions ---
Why have gas prices gone from lets say a $4.00+ or so high to the current per gallon price of lets say $2.00.
And then what do we do as a Nation to ensure gas prices over a 6 month period never go up by over 100% again?
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| Name: |
Swimmer27
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| Subject: |
Gas Prices - Open Debate
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Date:
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11/14/2008 5:23:54 AM
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DRILL HERE DRILL NOW PAY LESS
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| Name: |
water_watcher
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| Subject: |
Gas Prices - Open Debate
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Date:
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11/14/2008 7:06:51 AM
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when gas hit $4plus oil also hit $150 a barrel. Oil has fallen rapidly back down to $55 to $57 a barrel. Gas is heading lower and will probably go under $1.50 a gallon in the next 3-4 months.
Why did oil prices spike and why are the back down? It is a combination of three things, the value of the US dollar, speculation and supply and demand.
With the low interest rates in the US for so long the US dollar kept getting weaker partly on the fear of inflation and the dollar would be devalued. When the dollar is weak it takes more dollars to buy imports, which on the flip side is great for US manufactured goods that are exported since other countries can buy our goods cheaper with their stronger dollar. Look at Canada. For the longest time the canadian dollar was worth about .70 cents to one US dollar .... ealier this year the Canadian dollar was close to a $1.50 to a US dollar. So oil we buy from Canada became much more expensive.
Withe the global finacial crisis the US dollar has strengthen considerably as other countries lowered their interest rates, plus the US is still looked to as a safer place than other countries and the US dollar has gotten stronger. This has made imports (like oil) less costly, but also hurts us on exports, which hurts US jobs.
Oil is a commodity and is traded on an exchange, when oil was rising speculators buying future contracts also kept driving up the price creating artificial demand on the oil contracts which made the price go higher and higher. Can you say "bubble". :) Now that oil is coming down, the opposite has happened that the speculators can not get out fast enough.
Lastly, supply and demand. Despite what the nah sayers say ... the US economy was very strong. If you remember interest rates were starting to rise and there was this big worry about inflation because the US economy was too strong. That creates bigger demands for energy and gasoline and all transportation fuels to move goods. Since the bank crisis hit, the economy has slowed considerably and energy and oil demand has fallen, I heard yeasterday by over 2.5 million barrels a day. Refineries that were once running at 97% of capacity are now down to running at 86% and building inventories even at that.
The sad part is we will be back to higher prices as soon as the economy starts to turn around. this is when we should be drilling more on our own land to reduce our dependence on imports.
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| Name: |
GoneFishin
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| Subject: |
Gas Prices - Open Debate
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Date:
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11/14/2008 11:33:03 AM
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Water_Watcher, excellent explanation to a complicated subject..
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| Name: |
MartiniMan
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| Subject: |
One piece to add
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Date:
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11/14/2008 3:18:14 PM
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WW's explanation is an excellent one. What people tend to forget is oil is one of many commodities that experience price fluctuations based on a variety of factors (many of the unique to the commodity with the exception of supply and demand). I wish I had a nickel for every person that told me over the last several years that oil would never go back down because of the alleged demand of India and China (heck I could retire and still afford $4 gas). When I asked them for the data that worldwide demand of oil doubled over a relatively short period of time there was none forthcoming. Oil booms are nothing new and if history tells us anything they will pass away while we wait for the next one.
You have to be very suspicious of the sustainability of significant price increases in any commodity when it occurs over a relatively short timeframe. That is a sure sign that speculators are running amuck and a bubble is forming. By the law of physics bubbles have always and will always burst......it's just a matter of when and the velocity of the deflation. Oil was impacted significantly by the weak dollar and speculation in the short run and will be impacted by an overall increase in demand by countries striving for a middle class like India and China over the long run and by continued strong demand in developed countries like the U.S.
The quick deflation in the price of oil (and the subsequent reduction at the pumps) reflects a significant increase in supply over the last 2-3 years, the recent reduction in demand due to the economic slowdown (all caused by Obama I am sure......just trying to figure out exactly how and then I will get back to you) and significant strengthening of the yankee dollar. All this is driving speculators to take their profits for those who were in early and absorb their losses for the poor saps that got in late.
One interesting side effect of the collapse in oil may be instability in Russia. That economy and its government have been inordinately propped up by oil revenue and with that evaporating I fear they will look at ways to distract their populace from their internal misery index with a little empire building (i.e., Medeved coming to visit Cuba and Venezuela).
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| Name: |
GoneFishin
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| Subject: |
One piece to add
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Date:
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11/14/2008 3:37:41 PM
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Here is an interesting article on the impact to Iran. This may also force them to cut back on their nuclear program.
" Iran’s central bank warned last week that if oil prices fall under 60 dollars a barrel, the country’s oil-dependent economy will struggle to survive the world financial crisis, the ISNA news agency reported.
“If the average price of oil stays at 60.6 dollars in the remaining five months of the current year [to March 2009], we can get through this crisis safe and sound”, the bank’s deputy for economic affairs, Ramin Pashaifam, was quoted as saying.
“If the price falls under this, our economy will face big problems”.
Oil prices surged to record highs in July of close to 150 dollars a barrel but have since plunged, with OPEC’s basket price standing at 57.65 dollars on October 31, despite OPEC deciding to cut its output.
Crude income accounts for 80 percent of foreign earnings for Iran, OPEC’s second largest exporter, making the economy highly vulnerable to oil price shifts.
Pashaifam said that with a minimum price of 60 dollars, Iran will still need to use savings from oil revenues to cover its budget needs.
“In a case of 60 dollars per barrel for oil, no cash will remain in the Oil Stabilization Fund”, he said, referring to a fund which aims to guard against price fluctuations and to finance private sector projects.
Economy Minister Shamseddin Hosseini has said that the fund now contained 25 billion dollars.
Analysts say Iran needs a price of around 80 dollars to survive inflation and a global economic downturn."
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| Name: |
CAT BOAT
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| Subject: |
Without a doubt....
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Date:
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11/15/2008 10:37:17 AM
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This is a great thread. $1.50 a gallon sounds good to me.
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| Name: |
Mack
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| Subject: |
Here We Go Again.....
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Date:
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11/15/2008 7:26:38 PM
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In the 70's OPEC cut back supply, and we had long lines at the pump. There were cries for action, for alternative power, for local supplies, for Congressional Action, etc, etc.
OPEC opened the pipe at higher rates, and we went away. No action. Nothing happened to prevent it happening again. HAPPY AGAIN.
Folks, it is going to happen again. We went from $4.00 a gallon to $2.00 a gallon in what? 2 months?? $4.00 a gallon will be back, and soon.
SOMEBODY is going to put petrochemical companies in their place, as a supplier for video cassette cases, plastic milk jugs, and Saran Wrap. NOT GASOLINE.
It very well might be CHINA. In which case, we will buy the technology from them. But, why not the good old USA? If not, then I hope somebody friendly with the US.
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