If You Drive - Read This!

Oil falls below $82 as US crude supplies rise

Oil prices sank below $82 a barrel Wednesday in Asia after a report showing a surge in U.S. crude supplies undermined optimism that demand is improving.

The American Petroleum Institute said late Tuesday that crude inventories rose 6.4 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had forecast an increase of 1.5 million barrels. Inventories of gasoline fell while distillates rose, the API said

"The surprisingly large build in API crude oil stocks could work with a stronger U.S. dollar, a watered-down (quantative easing) event and technical resistance to turn oil prices lower from here," Cameron Hanover said in a report.

Source

So, if our reserves are filling, and prices are dropping, why are we still paying anywhere from $2.60 to $3.03 a gallon here in the US?

Link to current US gas prices

Here is an attempt at explaining why gas prices are staying high... but in truth understanding it all is a bit like reading a foreign tongue or listening to a politico radio show. I just found myself nodding as a means of avoiding looking like I was lost.

This is the most rational statement in the whole article:

A butterfly flaps its wings in the Saudi desert, causing the State Department to release a warning of increased terrorist activity. The futures market flips out, sending the price of crude skyward.

But I do recommend the read and will link it here.

Sheesh.... You think military adventurism in oil producing nations and record oil company profits would result in those of us at the pump getting a break, wouldn't ya?

I mean, after all Exxon Mobile is #1 on the Forbes 500.. Come on guys, how about a little trickle down from those economics.

whoa, thats pretty shocking, invisible ink anyone?

Probably one of the more intelligent threads I have seen here. Subtle, factual, and not in your face with unsubstantiated opinions. Very good.

Originally posted by franspeakfree
whoa, thats pretty shocking, invisible ink anyone?

Yes , I have driven through Gray Fog before . Keep your High Beams Off Mate !...........

Yeah... my Firefox got unhappy for a moment... but it's better now!

~Heff

Oops...and now the thread magically appears. I take back what I just said. My apologies, gentlemen.

reply to post by Hefficide


In all seriousness they are raping us at the pumps and we can't do a god damn thing about it. Fuel has risen this week all over europe and continues to rise. I can't speak for everyone (for once) but I have had to really tighten my belt when it comes to driving. Something must be done but what? the governments now have the armies in place if anyone attempts to protest and these fat cat son of a &*&&^%%&&*%&*^%^&* & bitches are getting awayt with daylight robbery! it makes me

reply to post by Hefficide


Oh my Lanta!
This is good news indeed, I better go and fill my car up while it's low before the weekend, road trip!

Cheers
Brady

reply to post by franspeakfree


Thanks Franfreespeak!

And I totally agree with you. When prices jumped a few years ago we were tossed a load of garbage about storms, and diminishing stocks, and this disaster, and that disaster.... ad naseum. Yet we, like good citizens, bit the bullet and paid, thinking that crisis would pass and things would normalize.

Well... years down the road, things have passed and, basically, I don't care about Exxon Mobile being the most profitable company in the world. I just want to be able to drive to work without having to mortgage my house!

~Heff

PS: I think we should all consider a grass roots movement to DEMAND REBATES

Now that I've got the glitch behind me, let me continue to throw some more *ahem* fuel on the fire...

Here is a US federal government explanation about the pricing of gasoline. It is dated 2005 - which I find infinitely convenient - but the concepts should still apply. But it also gives us insight, being from that period, into the conditioning that we were fed in order to get to the "normal" prices of gas today.

And, as I mentioned, Hurricane Katrina was blamed as the primary culprit...

Since the beginning of 2005, U.S. retail gasoline prices have been generaly increasing, with the average price of regular gasoline rising from $1.78 per gallon on January 3 to as high as $3.07 per gallon on September 5, as Hurricane Katrina further tightened gasoline supplies. But the hurricane is only one factor, albeit a dramatic one, which has caused gasoline prices to rise in 2005.

OK... so a storm well over five years ago caused a spike in prices. I'll buy that. But that was over five years ago. Am I daft for thinking we might have resolved whatever issues Katrina caused? Am I just naive?

And of course, where there is gas, there is the blame the Arabs game...

Crude oil prices are determined by worldwide supply and demand, with significant influence by the Organization of Petroleum Exporting Countries (OPEC). Since it was organized in 1960, OPEC has tried to keep world oil prices at its target level by setting an upper production limit on its members. OPEC has the potential to influence oil prices worldwide because its members possess such a great portion of the world’s oil supply, accounting for about 40 percent of the world’s production of crude oil and holding more than two-thirds of the world’s estimated crude oil reserves. Additionally, increased demand for gasoline and other refined products in the United States and the rest of the world is also exerting upward pressure on crude oil prices.

Rapid gasoline price increases have occurred in response to crude oil shortages caused by, for example, the Arab oil embargo in 1973, the Iranian revolution in 1978, the Iran/Iraq war in 1980, and the Persian Gulf conflict in 1990. Gasoline price increases in recent years have been due in part to OPEC crude oil production cuts, turmoil in key oil producing countries, and problems with petroleum infrastructure (e.g., refineries and pipelines) within the United States. Additionally, increased demand for gasoline and other petroleum products in the United States and the rest of the world is also exerting upward pressure on prices.

So, I got it... OPEC is to blame...

Here is a slightly more up to date resource (finding these things is really a hunt), called The Short Term Energy Outlook which says the following...

EIA expects the price of West Texas Intermediate (WTI) crude oil to average about $80 per barrel this winter, a $2.50-per-barrel increase over last winter. The forecast for average WTI prices rises gradually to $85 per barrel by the fourth quarter of 2011 as U.S. and global economic conditions improve. EIA's forecast assumes U.S. gross domestic product (GDP) grows by 2.6 percent in 2010 and 2.1 percent in 2011, while world oil-consumption-weighted GDP grows by 3.8 percent and 3.3 percent, respectively, in 2010 and 2011.

Those darn Ara..... Wait.... Texas??? Why is Texas gouging us? We aren't even at war with Texas. We aren't offending Texas by stationing our troops there. Maybe their still gun shy over Katrina?

Oh, wait, found the Arabs....

EIA expects that OPEC crude oil production will rise slightly through 2011 to accommodate increasing world oil consumption and to maintain OPEC market objectives. OPEC crude oil production is projected to increase by 0.3 million bbl/d and 0.6 million bbl/d in 2010 and 2011, respectively, with non-crude petroleum liquids expected to increase by 0.7 million bbl/d in 2010 and 2011. OPEC surplus capacity should remain near 5 million bbl/d, compared with 4.3 million bbl/d in 2009 and 1.5 million bbl/d in 2008

Well that explains it because doesn't supply and demand say that the more you produce the higher the prices.... Wait, that's the opposite of what it says.

I'm more confused now than ever.

Why, again, is gas three bucks a gallon???

~Heff

reply to post by Hefficide


Commodities, especially those transported via ship has always been a manipulated business. Large agricultural firms, lumber firms and the like have contracts to sell their product at the spot price of the commodity on the day the ship hits port. These firms stack ships out at sea and bring them in when the spot prices are on the rise. The result is a manipulation of actual supply which supports higher prices. Been going on since Marco Polo.

Oil is certainly more complex and the manipulations more subtle, but it is the same game.

I've found a fairly straightforward explanation of why gas prices are so high here. At least the most easily understandable article that I've come across, so far, in my journey through the Google with this subject.

But understanding this is only the tip of the iceberg to me.

Here is the part that really grinds my gears...

BP's first-quarter replacement cost profit was $5,598 million, compared with $2,387 million a year ago, an increase of 135%.

To be clear this is their PROFIT. An increase of 135% in a year... An increase upon an already gouging amount of profit!

Source

If I am one of three or four baker in a small village, and a shortage of flour causes us all to raise our prices literally by multiples... And then continue to charge those exorbitant prices after the flour shortage was over... I think that a few bakers would be seeing torches and pitchforks in their future.

Gas, in our society is as important as bread... so why are we not breaking out the pitchforks?

~Heff

We are paying the best part of £1.50 per litre over here. Its an absolute disgrace, naturally this story will be kept out of our news.

reply to post by Hefficide


Crude Oil is traded in US Dollars . The US Dollar is devaluating at an Alarming Rate right now, and this might Explain the Recent Rise in Gas Prices at the Pump . The Chinese are aware of this and are now in the process of Dumping Dollars in Favor of the Yuan as the NEW Currency for trading Crude . I am sure the Knuckleheads in Washington are scrambling to prevent that , but it is just a matter of time before Hyper Inflation of the Dollar will force them to Except a New Stable Currency for Trading Oil in the World Market . Thanks to Fractional Reserve Banking , the US Dollar will soon become a Worthless piece of Paper , and God Help me and my fellow Americans when that happens because it will more than likely put our Beloved Country into a Serious Economic depression that would not end any time soon .......

I didn't see a major factor mentioned here. It is time for cooler weather in the US. This has a lot to do with the price and surplus of oil. Suppliers don't want to end up with a shortage in the event of a sudden cold snap, so they increase their stockpiles. If say by the end of December, we don't have a major cold snap, the price of gasoline should drop like a bomb. Suppliers will need to reduce their stocks before the end of the year for tax purposes. If we do get that cold snap then prices will stay the same, maybe even rise.

Hrm... almost like provenance this pops up on the AP a few minutes ago about fuel....

Military, gov't increase investment in algae fuels

While it may sound far-fetched, the U.S. Navy in September ordered more than 150,000 gallons of ship and jet fuel from Solazyme and the company received a $21.8 million grant from the U.S. Department of Energy last year to build a new refinery in Riverside, Penn., to help push production to commercial levels.

The U.S. military hopes to run 50 percent of its fleet on a mixture of renewable fuels and nuclear power by 2020. As part of this drive, the Department of Defense has been investing in companies like Solazyme to help jump-start the young industry.

Source

This could probably be a thread on its own accord... but I've got too many sticks in the fire today as it is, so feel free if anyone wants it.

I just find it funny that apparently Uncle Sam is sick of gas pump sticker shock too!

So... why isn't this fuel available to US as well????

~Heff

reply to post by Hefficide


pay about 3.80-3.90 a gallon up here, its constantly shifting.

reply to post by Alaskan Man


And that disturbs me too! After all YOU are on the business end of the Alaskan pipeline! One would think that gas would be cheaper near the source...that's what all the literature suggests!

I mean a quick Google and the disparity becomes glaringly painful and obvious!

Gas prices around the world

Saudi Arabia Riyadh $0.91 per gallon
Kuwait Kuwait City $0.78 " "
Egypt Cairo $0.65 " "
Nigeria Lagos $0.38 " "
Venezuela Caracas $0.12 " "

Source

I can't find any data that is definitely up to date....but still, compared to what WE were paying 2 or 3 years ago?

OK Folks... Are we angry yet????

~Heff

hmmmmmm

why does this surprise anyone?

prices are driven by what people are prepared to pay, when oil hit $130 a barrel (or whatever the figure was) people were still prepared to pay for expensive fuel

as long as we keep paying those prices, there is no reason for them to drop, regardless of the cost of a barrel of oil

fuel companies are not in their business for the greater good, to do their bit at keeping humanity cruising along, they're in it to make cold, hard, cash, the more the better, full stop.

there was a shortlived campain in the UK to try and force down the cost at the pump, by boycotting BP, effectively forcing them to substantially reduce the cost of petrol by hitting them where it hurts

didn't last

Remember this time?

1973 oil crisis

The 1973 oil crisis started in October 1973, when the members of Organization of Arab Petroleum Exporting Countries or the OAPEC (consisting of the Arab members of OPEC, plus Egypt, Syria and Tunisia) proclaimed an oil embargo "in response to the U.S. decision to re-supply the Israeli military" during the Yom Kippur war; it lasted until March 1974.[1] With the US actions seen as initiating the oil embargo and the long term possibility of high oil prices, disrupted supply and recession, a strong rift was created within NATO. Additionally, some European nations and Japan sought to disassociate themselves from the US Middle East policy.

Sound familiar as of recent current events?

Secretary of State Henry Kissinger had negotiated an Israeli troop withdrawal from parts of the Sinai. The promise of a negotiated settlement between Israel and Syria was sufficient to convince Arab oil producers to lift the embargo in March 1974. By May, Israel agreed to withdraw from the Golan Heights.[1]

Independently, the OPEC members agreed to use their leverage over the world price setting mechanism for oil to stabilize their real incomes by raising world oil prices. This action followed several years of steep income declines after the recent failure of negotiations with the major Western oil companies earlier in the month.

Didn't do much good now did it? And we are still suffering for this with inflation.

For the most part, industrialized economies relied on crude oil, and OPEC was their predominant supplier. Because of the dramatic inflation experienced during this period, a popular economic theory has been that these price increases were to blame, as being suppressive of economic activity. However, the causality stated by this theory is often questioned.[2] The targeted countries responded with a wide variety of new, and mostly permanent, initiatives to contain their further dependency. The 1973 "oil price shock", along with the 1973–1974 stock market crash, have been regarded as the first event since the Great Depression to have a persistent economic effect.

Now, mind you my Grandparents sold oil in this time frame and I recall them getting 3 dollars a barrel for their oil, I lived in Huntington Beach Ca. during the time of this Gas War/shortage and clearly remember my Mom being POed at having to pay 50 cents a gallon and waiting in line to buy it for over 20 minutes.

So if it was 3 dollars a barrel and we were paying 50 cents, then just imagine how much it would really cost now at 85 dollars a barrel!

en.wikipedia.org...