NationStates Jolt Archive

Truly amazing! Just a couple months ago you yould be glad to play $3.00 but today I saw that the Shell station was charging only $2.00 for it. I must have been missing out on the news stories because I can't figure out why exactly the prices are dropping like they are. Anyone know why? Whatever is the cause it is certainly terrific.

Whatever the reasons may be, I'm still going to vote Democrat in November so I guess I'm not associating Bush with low gas prices. :cool:

Peak driving season is over, post-labor day..

Of course the conspiracy-related answers are more fun, but...

Truly amazing! Just a couple months ago you yould be glad to play $3.00 but today I saw that the Shell station was charging only $2.00 for it. I must have been missing out on the news stories because I can't figure out why exactly the prices are dropping like they are. Anyone know why? Whatever is the cause it is certainly terrific.

Whatever the reasons may be, I'm still going to vote Democrat in November so I guess I'm not associating Bush with low gas prices. :cool:
Oil prices are relatively low at the moment.

They are getting their oil for about 3/5 of the price they were a while ago - and selling you petrol at 2/3 the price.

Looks like you're getting a good deal, but they're still ripping you off. Although a whole gallon (although American gallons are 3.8 rather than 4.5 litres) for just over a quid is very, very cheap.

Here it was $2 a litre in some places last month.

...but, the fact is, there's less demand for gas so there's no need for higher prices to ration the scarcity.

The price here just fell below $1/litre.

Truly amazing! Just a couple months ago you yould be glad to play $3.00 but today I saw that the Shell station was charging only $2.00 for it. I must have been missing out on the news stories because I can't figure out why exactly the prices are dropping like they are. Anyone know why? Whatever is the cause it is certainly terrific.

Whatever the reasons may be, I'm still going to vote Democrat in November so I guess I'm not associating Bush with low gas prices. :cool:

A few reasons. One, as someone mentioned North American driving season is over so there is the yearly lull in demand. If you look back at oil prices you'll notice that they always dip in the spring and autumn and go up in the Summer (driving) and winter (heating oil). Second, there was a fear premium built into the price because of the forcasted hurricane season. The huge hurricanes never came and while the hurricane season is not quite over the forcasts are not predicting a very active season ahead of us. Thirdly, tensions in the Middle east are simmering right now, but nothing looks like it's going to explode. lastly, crude oil inventories in the US are at the upper end of their range for this time of year so the market is well supplied.


Don't worry, though. Come November - December, when it gets cold in the Northeast, those prices will go right back up and next summer they'll break $80/barrle and $4.00/gallon gasoline in the U.S. After that it will get much worse.

...but, the fact is, there's less demand for gas so there's no need for higher prices to ration the scarcity.

The price here just fell below $1/litre.

But there's still no spare capacity in the world for oil poduction so a shortge is just a well placed hurricane, bomb or conflict away. The extra money you are paying is a risk premium and it's a good thing. :) It prepares us for shocks before they happen so we don't go to bed with $1.50/gallon gas and wake up with $4.00/ gallon because someoone blew up an oil pipeline in Saudi Arabia.

Yep. It's gone down here, all the way to $2.65 a gallon for regular. That's about where it settled last year after everything came back online after Katrina. The trend will be large rises, with smaller comebacks, but the trend will continually be up.

Yep. It's gone down here, all the way to $2.65 a gallon for regular. That's about where it settled last year after everything came back online after Katrina. The trend will be large rises, with smaller comebacks, but the trend will continually be up.

You mean like this?
http://content.answers.com/main/content/wp/en/thumb/f/fc/300px-Oil_Prices_Short_Term.png

Wow. I just found this graph with the whole history of oil prices. Pretty cool. I wish I had found this before. Has both real and nonadjusted prices. and if you look you can actually see the Iranian revolution and the Arab Oil Embargo in the graph.

http://upload.wikimedia.org/wikipedia/en/thumb/4/42/Oil_Prices_1861_2006.jpg/800px-

Just wait until the elections over.

The oil speculators drove that price of oil up way past where it should have been if just the factors of normal supply and demand would have valued it. Now that the hurricane season seems to be tame and the middle east has settled down the price of oil will below its real value. I believe that the present system of oil futures ( and other future markets) should be more closely regulated and not allowed to drive the price of commodities into the the upper regions.

A few reasons. One, as someone mentioned North American driving season is over so there is the yearly lull in demand. If you look back at oil prices you'll notice that they always dip in the spring and autumn and go up in the Summer (driving) and winter (heating oil). Second, there was a fear premium built into the price because of the forcasted hurricane season. The huge hurricanes never came and while the hurricane season is not quite over the forcasts are not predicting a very active season ahead of us. Thirdly, tensions in the Middle east are simmering right now, but nothing looks like it's going to explode. lastly, crude oil inventories in the US are at the upper end of their range for this time of year so the market is well supplied.


Don't worry, though. Come November - December, when it gets cold in the Northeast, those prices will go right back up and next summer they'll break $80/barrle and $4.00/gallon gasoline in the U.S. After that it will get much worse.

As low as gasoline prices got this spring it doesn't seem to compare to where they are now. It appears pretty convienient that prices would drop so far when it is this close to the midterm elections.

The oil speculators drove that price of oil up way past where it should have been if just the factors of normal supply and demand would have valued it. Now that the hurricane season seems to be tame and the middle east has settled down the price of oil will below its real value. I believe that the present system of oil futures ( and other future markets) should be more closely regulated and not allowed to drive the price of commodities into the the upper regions.

That would eliminate the purpose for trading futures. Futures are supposed to do exactly that. If you put a cap on how much you can buy or sell a contract for you will have no futures market. It is, in fact, already regulated. No commodity is allowed to make more than a 10% in a day or the exchange gets shut down for a 24 hour "colling off" period. Trust me, the huge firms who are really moving the markets are doing so because of projected supply and demand fundamentals, not because of pure speculation. The fact is, large firms like Goldman Sachs and Berkshire Hathaway are heavily invested because they think oil will be more scarce, and thus more expensive, relative to demand in the coming years. I agree.

As low as gasoline prices got this spring it doesn't seem to compare to where they are now. It appears pretty convienient that prices would drop so far when it is this close to the midterm elections.

Elections are in November. Oil prices always go down after the summer driving season so people will always think it's because of elections. The fact is that the prices are controlled by the futures market on the www.nymex.com exchange and politicians and oil companies have very little control over it except that politicians can ask people to conserve which might bring it down if futures traders think people will listen and oil companies can pump less to bring the price up or more to bring it down - not American oil companies, though, because they don't have enough market share. In order for American oil companies to really bring the price up they would have to seruiously cut into their production which will do two things. First it will tip off the SEC to a market manipulation scheme because there's no way they could hide the slip in production because it would have to be very large and because if they hid it it would negate the point - you need people to know about teh production slip or they will not bid up their contracts. Second, it would make it pointless because as teh price of oil rose they would be pumping less so they wouldn't make any more money.

I have vague understanding of how futures marketes are supposed to work. I just believe that it longer works as well as it was intended too. I have listened to the anaysts complain that there is too much "new" money into the oil futures market and it has driven the price of oil higher that it should be under any kind of reasonable conditions. I have no idea how it would be changed. I just have seen this excessive speculation happen with other commodities over the years.

But there's still no spare capacity in the world for oil poduction so a shortge is just a well placed hurricane, bomb or conflict away. The extra money you are paying is a risk premium and it's a good thing. :) It prepares us for shocks before they happen so we don't go to bed with $1.50/gallon gas and wake up with $4.00/ gallon because someoone blew up an oil pipeline in Saudi Arabia.
Hey, I'm totally on side with gas prices being set on the open market. It's the only fair way to do it.

That way people who really need gas can always get it. Casual users will make space as they're driven away by the high prices.

I have vague understanding of how futures marketes are supposed to work. I just believe that it longer works as well as it was intended too. I have listened to the anaysts complain that there is too much "new" money into the oil futures market and it has driven the price of oil higher that it should be under any kind of reasonable conditions. I have no idea how it would be changed. I just have seen this excessive speculation happen with other commodities over the years.

It's actually not to hard to understand. It basically allows you to buy a contract on future oil production for a certain delivery month. In other words, you are buying oil before it gets delivered and, sometimes, before it even gets produced, depending on how far out the contract is. I believe the limit on oil is 10 years, but I am not sure. Anyways, think of it this way. It's 2007. OPEC is straining to meet world demand and in most of the rest of the world oil producers are in decline. Now, you see a lot of tension in the Persian gulf and are worried that Iran might try to shut down the Straight of Hormuz. 60% of the world's oil flows through those straights to world markets. You look forward to August and you see oil contracts trading at $85/barrel. So, what do you think? Do you think Iran will actually try to close that straight and tip off a serious rehional conflict? If so, you can bet that when you take delivery of the oil in that contract that it will be worth WAY more than $85/barrel. But what if Iran suddenly turn vegan and swear off war and puts on furry mittons and goes frolicking through the meadow with George Bush's family? Then the price may be much less. It's a bet. It's also a bet on how much. You may see $200/barrel oil in yoru mind by August, but how much money are you willing to risk now on that chance? Would you pay $85/barrel? Probably. Would you pay $140/barrel? Now it's getting to be a little risky. Maybe you don't want to risk that much money for a lower payout. All this plays out between thousands and thousands of trades every day on futures contracts and, in the end, you count on their being a price that factors in the possibility of future disruptions, which may make you pay more for gas at the pump now but will better prepare you for possible shocks, and the possibility of future gluts. It really does work well, no matter how many people yell, "God damn those evil oil companies" at the pump.

Hey, I'm totally on side with gas prices being set on the open market. It's the only fair way to do it.

That way people who really need gas can always get it. Casual users will make space as they're driven away by the high prices.

I don't see there being many "casual" gasoline users. Everyone has to go to work, run errands etc. I can certainly say that my parents are leaping for joy inside. The prices last month were crushing now it is tolerable.

Supply and demand in action...supplies are at five year highs, demand is only slightly up and oil production is rising. There are a number of oil projects coming on line in the upcoming year and OPEC production is holding steady, so the supply cushion depleted over the past few years is being replenished. You've also got expanded refining capacity, a successful ethanol switchover and a successful ULSD switchover all putting pressure on the cost of gasoline, RBOB and distillates; the spread on gasoline used to be as high as 50% over Nymex crude or $20-30/barrel back in July but has now narrowed to under $3. This has caused more and more sellers, especially banks and hedge funds to begin dumping their futures as technical indicators break down; the drop in ethanol prices is also putting pressue on the market and lowering retail costs in RFG regions across the country.

Much of the short-term risk premium has been deflated due to a combination of factors; the biggest ones are the resolution of the Israel-Lebanon conflict, the reopening of most of BP's Prudhoe Bay pipelines and the mild, nearly nonexistent Gulf hurricane season. The driving season is over, further pushing down demand and with it prices. Also, the progress being made with Iran and the rise in Iraqi oil production are further deflating the oil price.

Other factors, like rising production/exports in Russia and increases in several OPEC nations as well as the restoration of some Nigerian production are all putting pressure on the market. You've also got a modest slowdown in OECD growth going in to 2007 and signs that China is cooling down a little along with changes in the transportation sector that might impact gasoline demand over the next few years. I also think the discovery in the Gulf is creating a "supply depreciation"; traders might be getting worried that there are more major discoveries and production coming online in the next quarter and so they are discounting oil going in to the period.

Particularly important is the breakdown in natural gas futures; $4.88/MMcf is a major cyclical low and is a pretty convincing sign that prices will remain depressed going in to winter; I'd say $60 oil and $6-7 natural gas are good estimates of the price range we'll be in for the December/January contracts.

I don't see there being many "casual" gasoline users. Everyone has to go to work, run errands etc. I can certainly say that my parents are leaping for joy inside. The prices last month were crushing now it is tolerable.

Yeah, I know what you mean. The president of the division I work in at my work has a very long commute. He drive over 100 miles a day just to work and back. He's an video editor by trade, but now he runs the whole department.


Of course, he makes that trip in an 8 mile per gallon Hummer...


There's always "casual" gasoline users. This isn't sayiing anything about your parents because i don't know them. But the fact is, oil has been so cheap for so long that we North Americans have gotten to thinking that it's a birth right. It isn't. We're about to learn that the hard way.

I don't see there being many "casual" gasoline users. Everyone has to go to work, run errands etc. I can certainly say that my parents are leaping for joy inside. The prices last month were crushing now it is tolerable.

For some people, yes. But I see a hell of a lot of big, new SUVs with one driver and no towing hitch on the highway every day during the evening commute. There are a lot of people who haven't cut back on their driving habits or purchased more efficient vehicles; if everyone was really hurting, we'd see some major downsizing of the fleet.

Some good signs are present, though; I've seen a number of Priuses and other hybrids along with other fuel efficient vehicles like the Civic, Insight, and Aveo...there are some changes in the fleet for the better.

For some people, yes. But I see a hell of a lot of big, new SUVs with one driver and no towing hitch on the highway every day during the evening commute. There are a lot of people who haven't cut back on their driving habits or purchased more efficient vehicles; if everyone was really hurting, we'd see some major downsizing of the fleet.

Some good signs are present, though; I've seen a number of Priuses and other hybrids along with other fuel efficient vehicles like the Civic, Insight, and Aveo...there are some changes in the fleet for the better.

There are plenty of fools out there with money who don't mind blowing their cash on gas to keep their monster vehicles fueled. But there are plenty who find the high gas prices to be quite financially straining. For myself, when I have the money to buy a new or at least a relatively new car I plan on driving a hybrid. I do agree that prices have a good chance of skyrocketing even higher then they were this summer so it certainly seems like a smart idea to drive one.

[QUOTE=PsychoticDan;11686336]Wow. I just found this graph with the whole history of oil prices. Pretty cool. I wish I had found this before. Has both real and nonadjusted prices. and if you look you can actually see the Iranian revolution and the Arab Oil Embargo in the graph.

I remember those days before the embargo. Twenty-five cents a gallon for regular at a discount station. Two bucks would actually do something to an empty tank. I don't think anyone actually expected dollar a gallon gas, as most pumps had a '1' tacked on in front of the 99.99 cents digits.

Also, we have a long way to go before we see record prices, no matter what Katie Couric says.

Cool chart PD.

There's an election coming up.

There are plenty of fools out there with money who don't mind blowing their cash on gas to keep their monster vehicles fueled. But there are plenty who find the high gas prices to be quite financially straining. For myself, when I have the money to buy a new or at least a relatively new car I plan on driving a hybrid. I do agree that prices have a good chance of skyrocketing even higher then they were this summer so it certainly seems like a smart idea to drive one.

It sucks for people who are actually hurt by high gas prices; they have to cut back while the people who can afford to waste simply gripe and don't give a damn about the people who are really hurt. I guess that's the way it is, though...at least these moderated prices will save these people some difficulty going in to winter.

Hybrids are a great idea...why waste money on your commute? After all, it's not like people drive to work because they want to; save the money commuting and you'll have more to spend on things you want. Plus, you get a nice tax deduction in addition to your gas savings and a cool looking vehicle.

I remember those days before the embargo. Twenty-five cents a gallon for regular at a discount station. Two bucks would actually do something to an empty tank. I don't think anyone actually expected dollar a gallon gas, as most pumps had a '1' tacked on in front of the 99.99 cents digits.

Hah, just remember 1998! Oil was so cheap by the end of that year that oil prices were at their lowest real levels since 1935...even the people in the 1950's wern't getting the kind of prices we had in the late 1990's.

It sucks for people who are actually hurt by high gas prices; they have to cut back while the people who can afford to waste simply gripe and don't give a damn about the people who are really hurt. I guess that's the way it is, though...at least these moderated prices will save these people some difficulty going in to winter.

Hybrids are a great idea...why waste money on your commute? After all, it's not like people drive to work because they want to; save the money commuting and you'll have more to spend on things you want. Plus, you get a nice tax deduction in addition to your gas savings and a cool looking vehicle.

Seriously? :eek:

It would certainly help the rest of us if people didn't think they have to drive a Hummer in order to get around. Seriously, why would a person buy an expensive car and live in a shit apartment? Having a dependable vehicle should be more important then looking good on the road.

Seriously? :eek:

Up to an $3,150 tax credit on a Prius!: (However, you only have until Sept. 30 to claim the credit this year, but it continues at least to 2010 in its current for,)

2006 Federal Tax Deduction for Hybrids (http://www.hybridcars.com/tax-deductions-credits.html)

You might get even more money from state and local governments in some communities.

It would certainly help the rest of us if people didn't think they have to drive a Hummer in order to get around. Seriously, why would a person buy an expensive car and live in a shit apartment? Having a dependable vehicle should be more important then looking good.

That's why I'm looking at a Prius, Insight or something like a Civic for my car after I get out of college. One of the cool things about OSU is that it's totally walkable so I can go anywhere I want on campus without a car...I can even walk down High Street to downtown Columbus!

Whatever the reasons may be, I'm still going to vote Democrat in November so I guess I'm not associating Bush with low gas prices. :cool:
But it's fine to associate him when they go up :cool:


I just filled up at $2.12/gal on base (tax free). The prices have been steadily going down in the past few months. I'm not an expert on oil economics, but I'd expect the prices to stabilize around the $2 mark (give or take), with a minor exeption in winter when consumption goes up.
And we were all scared of $5/gal :rolleyes:

I remember those days before the embargo. Twenty-five cents a gallon for regular at a discount station. Two bucks would actually do something to an empty tank. I don't think anyone actually expected dollar a gallon gas, as most pumps had a '1' tacked on in front of the 99.99 cents digits.

Also, we have a long way to go before we see record prices, no matter what Katie Couric says.

Cool chart PD.

Very true! I recall one Arco station back in the day that was selling for 10 CENTS a gallon, just to empty the tanks because the owner wanted to sell the station. :D

As for gas prices, I found this interesting!
http://www.energy.ca.gov/gasoline/statistics/gasoline_cpi_adjusted.html

1981
Peak Price per gallon: $1.660
In 2006 dollars: $3.0803

...we've been here before, it seems.

Up to an $3,150 tax credit on a Prius!: (However, you only have until Sept. 30 to claim the credit this year, but it continues at least to 2010 in its current for,)

2006 Federal Tax Deduction for Hybrids (http://www.hybridcars.com/tax-deductions-credits.html)

You might get even more money from state and local governments in some communities.

Wow, yet another reason to get a hybrid. Now I am shocked more aren't trying to get one with THAT kind of incentive.

That's why I'm looking at a Prius, Insight or something like a Civic for my car after I get out of college. One of the cool things about OSU is that it's totally walkable so I can go anywhere I want on campus without a car...I can even walk down High Street to downtown Columbus!

Lucky you. Downtown Cincinnati is a bit distant from UC, not that I feel there is a lot to do there anyway. :p

I just filled up at $2.12/gal on base (tax free). The prices have been steadily going down in the past few months. I'm not an expert on oil economics, but I'd expect the prices to stabilize around the $2 mark (give or take), with a minor exeption in winter when consumption goes up.
And we were all scared of $5/gal :rolleyes:

I remember a thread back in June or so where we were talking about $4 gas by August...I ended up being the one who guessed correctly that it wasn't going to hit $4 but would actually be at around $2-$2.50 by September.

But then again, we really got spared by the hurricane season...even so, this is one boost that the economy really needs right now. It might provide a pretty solid boost to Q4 GDP and could drive an overall rebound from the slowdown we've seen so far.

Wow, yet another reason to get a hybrid. Now I am shocked more aren't trying to get one with THAT kind of incentive.

People are buying them...they only make up about 2% of US sales but that's been growing along with gas prices. Each automaker has a cap on the number of hybrids that qualify for the deduction, and it was filled by June of this year. I imagine this cap will be increased in the next few years so more hybrids will qualify for the deduction.

Lucky you. Downtown Cincinnati is a bit distant from UC, not that I feel there is a lot to do there anyway. :p

Not really...unless you want to go for an incredibly dangerous trip to Over-the-Rhine? Or you could see the P&G building?

Mason was a lot cooler than Cincinnati, and it was a suburb 20 miles away from the actual city. Plus, we had Kings Island and a bunch of cool stores...and the Kings Auto Mall!

People are buying them...they only make up about 2% of US sales but that's been growing along with gas prices. Each automaker has a cap on the number of hybrids that qualify for the deduction, and it was filled by June of this year. I imagine this cap will be increased in the next few years so more hybrids will qualify for the deduction.

Wow. I can only hope more people take advantage of this. Perhaps if there are less monster vehicles there will be less reason to have prices rise again.

Not really...unless you want to go for an incredibly dangerous trip to Over-the-Rhine? Or you could see the P&G building?

Mason was a lot cooler than Cincinnati, and it was a suburb 20 miles away from the actual city. Plus, we had Kings Island and a bunch of cool stores...and the Kings Auto Mall!

I think I'll pass on the trip to Over-the-Rhine. Have to go through it on my bus ride and that is good enough for me, thank you. Besides, I find the Fifth Third Building more interesting. :p

I can certainly agree that a trip to Kings Island would be great, assuming I had the money at least. Nope, the only thing around campus is a few bars. Not exactly a way I'd like to spend my time. In my opinion anyway. ;)

Kings Auto Mall is the place to have a fun time isn't it? :D

Wow. I can only hope more people take advantage of this. Perhaps if there are less monster vehicles there will be less reason to have prices rise again.

They will at some point; even if gas prices go down now, you know they'll be up again soon. Oil's starting to reach the end of its productive life, so price increases are going to get more and more common and decreases smaller and smaller.


Kings Auto Mall is the place to have a fun time isn't it? :D

Hey, our family got our 1995 Plymouth Voyager minivan there...it lasted six years until it got in an accident.

They will at some point; even if gas prices go down now, you know they'll be up again soon. Oil's starting to reach the end of its productive life, so price increases are going to get more and more common and decreases smaller and smaller.

It is those rising prices and dwindling supply that make me wonder why people are always so shortsighted and not want to try to switch to other forms of energy. Oil is not going to last much longer and as the rest of the world advances they will require more oil themselves. Continuing to be so dependent on it is so foolish it really is upsetting.

Truly amazing! Just a couple months ago you yould be glad to play $3.00 but today I saw that the Shell station was charging only $2.00 for it. I must have been missing out on the news stories because I can't figure out why exactly the prices are dropping like they are. Anyone know why? Whatever is the cause it is certainly terrific.

Whatever the reasons may be, I'm still going to vote Democrat in November so I guess I'm not associating Bush with low gas prices. :cool:

It's supposed to go down to 1.15 per gallon (dollars) here in the US by spring, if we have a mild winter.

It's supposed to go down to 1.15 per gallon (dollars) here in the US by spring, if we have a mild winter.

$1.15 retail? How? The only way I could think of is either a huge recession or a big bump in supply...although we may end up with a mild slowdown and a moderate boost in supply which could have the same effect.

That's a wholesale price of $23.10/barrel! My God, if you were to short crude oil futures for the March and April contracts you'd make a fortune...but that's assuming it will happen.

$1.15 retail? How? The only way I could think of is either a huge recession or a big bump in supply...although we may end up with a mild slowdown and a moderate boost in supply which could have the same effect.

That's a wholesale price of $23.10/barrel! My God, if you were to short crude oil futures for the March and April contracts you'd make a fortune...but that's assuming it will happen.

http://news.yahoo.com/s/ap/20060915/ap_on_bi_ge/ipsos_consumer_confidence_1

Already 1.85 in Missouri.
http://autos.msn.com/everyday/GasStations.aspx?zip=65616&m=1&l=1

From The Seattle Times:


Analyst predicts plunge in gas prices
By Kevin G. Hall

McClatchy Newspapers

WASHINGTON — The recent sharp drop in the global price of crude oil could mark the start of a massive sell-off that returns gasoline prices to lows not seen since the late 1990s — perhaps as low as $1.15 a gallon.

"All the hurricane flags are flying" in oil markets, said Philip Verleger, a noted energy consultant who was a lone voice several years ago in warning that oil prices would soar. Now, he says, they appear to be poised for a dramatic plunge.

Crude-oil prices have fallen about $14, or roughly 17 percent, from their July 14 peak of $78.40. After falling seven straight days, they rose slightly Wednesday in trading on the New York Mercantile Exchange, to $63.97, partly in reaction to a government report showing fuel inventories a bit lower than expected. But the overall price drop is expected to continue, and prices could fall much more in the weeks and months ahead.

Here's why:

For most of the past two years, oil prices have risen because the world's oil producers have struggled to keep pace with growing demand, particularly from China and India. Spare oil-production capacity grew so tight that market players feared that any disruption to oil production could create shortages.

Fear of disruption focused on fighting in Nigeria, escalating tensions over Iran's nuclear program, violence between Israel and Lebanon that might spread to oil-producing neighbors, and the prospect that hurricanes might topple oil facilities in the Gulf of Mexico.

Oil traders bet that such worrisome developments would drive up the future price of oil. Oil is traded in contracts for future delivery, and companies that take physical delivery of oil are just a small part of total trading. Large pension and commodities funds are the big traders and they're seeking profits. They've sunk $105 billion or more into oil futures in recent years, according to Verleger. Their bets that oil prices would rise in the future bid up the price of oil.

That, in turn, led users of oil to create stockpiles as cushions against supply disruptions and even higher future prices. Now inventories of oil are approaching 1990 levels.

But many of the conditions that drove investors to bid up oil prices are ebbing. Tensions over Israel, Lebanon and Nigeria are easing. The hurricane season has presented no threat so far to the Gulf of Mexico. The U.S. peak summer driving season is over, so gasoline demand is falling.

With fear of supply disruptions ebbing, oil prices began sliding. With oil inventories high, refiners that turn oil into gasoline are expected to cut production. As refiners cut production, oil companies increasingly risk getting stuck with excess oil supplies. There's already anecdotal evidence of oil companies chartering tankers to store excess oil.




All this is turning financial markets increasingly bearish on oil.

"If we continue to build inventories, and if we have a warm winter like we had last winter, you could see a large fall in the price of oil," said Gary Pokoik, who manages Hedge Ventures Energy in Los Angeles, an energy hedge fund. "I think there is still a lot of risk in the market."

As it stands now, the recent oil-price slump has brought the national average for a gallon of unleaded gasoline down to $2.59, according to the AAA motor club. In the Seattle area, prices per gallon have fallen to $2.856 currently from $3.071 a month ago, a decline of 7 percent, according to AAA.

Should oil traders fear that this downward price spiral will get worse and run for the exits by selling off their futures contracts, Verleger said, it's not unthinkable that oil prices could return to $15 or less a barrel, at least temporarily. That could mean gasoline prices as low as $1.15 per gallon.

Other experts won't guess at a floor price, but they agree that a race to the bottom could break out.

"The market may test levels here that are too low to be sustained," said Clay Seigle, an analyst at Cambridge Energy Research Associates, a consultancy in Boston.

On Monday, the oil-producing cartel OPEC hinted that if prices fall precipitously, OPEC members would cut production to lift them. But that would take time.

"That takes six to nine months. If we don't have a really cold winter here [creating a demand for oil], prices will fall. Literally, you don't know where the floor is," Verleger said. "In a market like this, if things start falling ... prices could take you back to the 1999 levels. It has nothing to do with production."

Hey think yourselves lucky guys uk diesel and petrol prices (especially here in Scotland) are £1 per ltr (£5ish per gallon),:mad:

It is those rising prices and dwindling supply that make me wonder why people are always so shortsighted and not want to try to switch to other forms of energy. Oil is not going to last much longer and as the rest of the world advances they will require more oil themselves. Continuing to be so dependent on it is so foolish it really is upsetting.

I think oil and gas are still too cheap to really change habits; the only way we'll see a major change is if oil and gas stay expensive for several more years. However, I do think many of the alternative technologies are going to be at a point where they can compete with oil at any price within the next few years so that will have a huge effect on consumer habits.

If you think about it, $3 gasoline is still cheap compared to historical levels; if oil prices had kept up with inflation since the end of WWI, gas would cost $3.09/gallon. If gas were to take up the same share of income as it did in the 1960's, we'd have to pay prices of at least $6 per gallon and if it took up the same share of income as it did in the 1920's, we'd have to pay over $10 per gallon.

Consider what 1.15 dollar a gallon gasoline will do to consumer confidence...

Consider what 1.15 dollar a gallon gasoline will do to consumer confidence...

I would have to shit myself if i saw that.

I would have to shit myself if i saw that.

Get some toilet paper.
The recent sharp drop in the global price of crude oil could mark the start of a massive sell-off that returns gasoline prices to lows not seen since the late 1990s — perhaps as low as $1.15 a gallon.

I nearly had a heart attack when I saw premium (what my car takes) for $2.85. :eek:

Wow. I can only hope more people take advantage of this. Perhaps if there are less monster vehicles there will be less reason to have prices rise again.



I think I'll pass on the trip to Over-the-Rhine. Have to go through it on my bus ride and that is good enough for me, thank you. Besides, I find the Fifth Third Building more interesting. :p

I can certainly agree that a trip to Kings Island would be great, assuming I had the money at least. Nope, the only thing around campus is a few bars. Not exactly a way I'd like to spend my time. In my opinion anyway. ;)

Kings Auto Mall is the place to have a fun time isn't it? :D

Dayton FTW. Nice to see some fellow Buckeyes here.





On topic: Correct me if I'm wrong, but isn't the supply of oil actually above that of our needs, it's the processed gasoline and oil that's low?

http://news.yahoo.com/s/ap/20060915/ap_on_bi_ge/ipsos_consumer_confidence_1

Already 1.85 in Missouri.
http://autos.msn.com/everyday/GasStations.aspx?zip=65616&m=1&l=1

Wow...if we were to have rising world supply, combined with a major slowdown in China and easing of geopolitics we could see prices hit as low as their 1998 bottom of $10 per barrel. And, to put that in perspective, that would be the lowest real price for oil in the history of the product. Honestly, it's looking less and less like a correction and more like a bear market; if it turns out that oil has been pumped up to levels above fundamentals, this market will collapse like it did in 1986.

And here's to hoping that it does; as much as I love alternative energy and reducing oil consumption some falling energy prices would be great for our economy and for our incomes.

One of the biggest problems is that due to all the litigation, there are over 300 blends of gasoline in the US today.

So, for example: Connecticut 87 octane gasoline, while identical as gasoline to Maryland 87 octane gasoline, can't be sold in that state.

Even if we could reduce it down to 50 blends, odds are that alone (ease of distribution) would lower fuel prices 10-25% per gallon.

I think oil and gas are still too cheap to really change habits; the only way we'll see a major change is if oil and gas stay expensive for several more years. However, I do think many of the alternative technologies are going to be at a point where they can compete with oil at any price within the next few years so that will have a huge effect on consumer habits.

If you think about it, $3 gasoline is still cheap compared to historical levels; if oil prices had kept up with inflation since the end of WWI, gas would cost $3.09/gallon. If gas were to take up the same share of income as it did in the 1960's, we'd have to pay prices of at least $6 per gallon and if it took up the same share of income as it did in the 1920's, we'd have to pay over $10 per gallon.

Look on the bright side, is that it? I guess so, though it really doesn't help my annoyance everytime I see an SUV with only the driver inside it.

Consider what 1.15 dollar a gallon gasoline will do to consumer confidence...

Despite what some analyst may try to claim I somehow doubt that gasoline will ever get that cheap again. Other nations demand will only continue to grow and I can't see how the world's supply will ever be able to meet the demand in the coming years.

On topic: Correct me if I'm wrong, but isn't the supply of oil actually above that of our needs, it's the processed gasoline and oil that's low?

Generally, yes. The problem over the past couple years has been refining capacity problems; however, new capacity is catching up with demand and that surplus crude that couldn't be refined is being refined and sold, bulking up inventories of products and pushing the whole complex down.

It is very important to note that this decline began with gasoline futures; the contract has collapsed as supplies rise and now more and more sellers are dumping their contracts as the fundamentals shift to a very bearish mode. In particular, oil stockpiles in the US are at five-year or more highs and supplies of gasoline, diesel, jet fuel and heating oil are all climbing rapidly. There have been no hurricanes and geopolitics is fairly quiet...at present, the main trend is down.

Here's a few graphs:
Nymex Light Crude (http://www.wtrg.com/daily/clfclose.gif)
Nymex Unleaded Gasoline (http://www.wtrg.com/daily/hufclose.gif)
Nymex Natural Gas (http://www.wtrg.com/daily/ngfclose.gif)

Get some toilet paper.

:eek: Dear God. Gas is almost like a whore; I am happy when they are both very cheap.

Look on the bright side, is that it? I guess so, though it really doesn't help my annoyance everytime I see an SUV with only the driver inside it.

Yeah, I know...there's nothing we can do to really change peoples' decisions other than to simply sit and hope for the best. However, it's usually pretty encouraging to read sites like The Energy Blog or Green Car Congress if you want to see the progress being made in alternative energy. I mean, this industry is on fire and the progress is huge...it's pretty exciting, actually.

Despite what some analyst may try to claim I somehow doubt that gasoline will ever get that cheap again. Other nations demand will only continue to grow and I can't see how the world's supply will ever be able to meet the demand in the coming years.

I wouldn't necessarily rule it out. We have to remember that oil demand is not very transparent, so it can be impossible to tell what is "real" demand and what is "paper" demand caused by speculation. In fact, many brokerages and other commodities trading firms have been stockpiling oil and gas in order to take advantage of the "contango" in the markets (when the price of oil in 2011 is more than the price now, it's called contango).

If there is a significant amount of oil and gas demand driven by this speculation, and the traders are forced to dump their stockpiled inventories to prevent losing even more money the price will collapse. The problem is, we don't know what kind of demand comes from "paper" barrels and what comes from real consumers in China, India, the US, Europe or anywhere else in the world.

One of the biggest problems is that due to all the litigation, there are over 300 blends of gasoline in the US today.

Even if we could reduce it down to 50 blends, odds are that alone (ease of distribution) would lower fuel prices 10-25% per gallon.

Here's where it gets really bizarre: some of these "boutique" areas have cheaper gas than non-boutique areas because they have more refining and pipeline capacity, so the cost of fuel is reduced due to more stable supply from refineries.

The main way to eliminate the boutique problem is to standardize the RFG areas to one high standard and eliminate the local blends in favor of a better national requirement. Also, boosting refinery capacity in states like California and Connecticut would push prices lower by reducing the need for costly imports.

Here's where it gets really bizarre: some of these "boutique" areas have cheaper gas than non-boutique areas because they have more refining and pipeline capacity, so the cost of fuel is reduced due to more stable supply from refineries.

The main way to eliminate the boutique problem is to standardize the RFG areas to one high standard and eliminate the local blends in favor of a better national requirement. Also, boosting refinery capacity in states like California and Connecticut would push prices lower by reducing the need for costly imports.

Yep, spot on!

I wouldn't necessarily rule it out. We have to remember that oil demand is not very transparent, so it can be impossible to tell what is "real" demand and what is "paper" demand caused by speculation. In fact, many brokerages and other commodities trading firms have been stockpiling oil and gas in order to take advantage of the "contango" in the markets (when the price of oil in 2011 is more than the price now, it's called contango).

If there is a significant amount of oil and gas demand driven by this speculation, and the traders are forced to dump their stockpiled inventories to prevent losing even more money the price will collapse. The problem is, we don't know what kind of demand comes from "paper" barrels and what comes from real consumers in China, India, the US, Europe or anywhere else in the world.

Well in that case I suppose the only real answer is that whether the prices will stay relatively low or spike even higher then they did this year is unknown. Besides, wouldn't any dump on the market just be temporary? The price would rise back to the current levels anyway.

Dayton FTW. Nice to see some fellow Buckeyes here.

Nice to be here, though I really do consider myself still a Massachusetts person though I've moved here. :)

Still, the Ohio State football team looks good especially after that game against Texas. :)

Now back to our regularly scheduled discussion.

Well in that case I suppose the only real answer is that whether the prices will stay relatively low or spike even higher then they did this year is unknown. Besides, wouldn't any dump on the market just be temporary? The price would rise back to the current levels anyway.

Not necessarily; if there was a dump of oil on the market, it would have to be absorbed which means a lot of it will go in to storage at refiners. The oil will either be refined in to gasoline and sold or stockpiled at the refiner, and either way it will push prices down.

Also, it can take a while for production to change; if, for example, OPEC cuts production it can take weeks or even months for the flow of crude to change and that might be just enough oversupply to push prices down. That's exactly what happened in 1986 and 1998, and it ultimately pushed prices down to $10 in December of 1998.

However, I wouldn't read too much in to the decline yet; even though some key technical levels have been broken, oil might stabilize at its current levels. If this downtrend remains generally intact, I'd say we will have a good way farther to go down. The next few months will be critical to seeing the direction of oil in 2007; I think if oil breaks $60 by December we will see it fall further.

However, I wouldn't read too much in to the decline yet; even though some key technical levels have been broken, oil might stabilize at its current levels. If this downtrend remains generally intact, I'd say we will have a good way farther to go down. The next few months will be critical to seeing the direction of oil in 2007; I think if oil breaks $60 by December we will see it fall further.

That's the thing, once winter comes the prices will probably go up anyway. I don't want to sound paranoid or anything but this jumping of the gun on the direction of as prices sounds just like political bullshit.

I can see that it would take months either way for prices to be effected whatever OPEC chooses to do but a stockpile will be exausted, especially if Americans feel it is ok to start buying gas guzzlers again and other energy wasting things.

That's the thing, once winter comes the prices will probably go up anyway. I don't want to sound paranoid or anything but this jumping of the gun on the direction of as prices sounds just like political bullshit.

I think it will be mild; we've got a record amount of natural gas in storage (nearly 11% above the six-year average) and oil stockpiles at a five-year high. Add in rising production worldwide and the possibility of slowing demand and it's possible that prices will not rise significantly.

Oil/gas will rise, but not by very much and might fall even further come spring. Ironically, it was the totally unjustified spike to $15 last winter that has a lot to do with the $4.98 natural gas we have now...the bubble burst.

I can see that it would take months either way for prices to be effected whatever OPEC chooses to do but a stockpile will be exausted, especially if Americans feel it is ok to start buying gas guzzlers again and other energy wasting things.

Consumer habits take a long time to change; I think you'd need a couple years of low prices to really get the SUV bandwagon going again, and I think it would be less enthusiastic because the market has changed. Suburbans just don't have the cool factor that they did in the 1990's.

The new fashion trend in vehicles is the "crossover SUV" which keeps the roominess of a truck-based SUV but sacrifices some towing capability for significantly better gas mileage. So, if these things really take off and replace a lot of our old truck-based SUVs we might end up improving fuel economy rather than worsening it.

Green tech is becoming cool, and I think that's going to affect the market even if prices moderate.

I think it will be mild; we've got a record amount of natural gas in storage (nearly 11% above the six-year average) and oil stockpiles at a five-year high. Add in rising production worldwide and the possibility of slowing demand and it's possible that prices will not rise significantly.

Oil/gas will rise, but not by very much and might fall even further come spring. Ironically, it was the totally unjustified spike to $15 last winter that has a lot to do with the $4.98 natural gas we have now...the bubble burst.

Consumer habits take a long time to change; I think you'd need a couple years of low prices to really get the SUV bandwagon going again, and I think it would be less enthusiastic because the market has changed. Suburbans just don't have the cool factor that they did in the 1990's.

The new fashion trend in vehicles is the "crossover SUV" which keeps the roominess of a truck-based SUV but sacrifices some towing capability for significantly better gas mileage. So, if these things really take off and replace a lot of our old truck-based SUVs we might end up improving fuel economy rather than worsening it.

Green tech is becoming cool, and I think that's going to affect the market even if prices moderate.

Rational arguements that gasoline isn't going to cost $5 a gallon next year or worse. Ok, I can see that if things are done right then prices will remain cheaper then they have been.

As for the SUV I don't think anything will be changing our love of them, just look at the hybrid SUV. I think a SUV getting decent gas milage is a contradiction. Doesn't really make much sense. ;)

Truly amazing! Just a couple months ago you yould be glad to play $3.00 but today I saw that the Shell station was charging only $2.00 for it. I must have been missing out on the news stories because I can't figure out why exactly the prices are dropping like they are. Anyone know why? Whatever is the cause it is certainly terrific.

Whatever the reasons may be, I'm still going to vote Democrat in November so I guess I'm not associating Bush with low gas prices. :cool:

How the hell are you getting 2 bucks a gallon? I live in Houston and gas here is 2.40. I thought we had some of the cheapest gas in the US.

Rational arguements that gasoline isn't going to cost $5 a gallon next year or worse. Ok, I can see that if things are done right then prices will remain cheaper then they have been.

There's a ton of "what-ifs" in this market; still, I don't think the economy could handle $5 gasoline and the price would tumble to compensate for the huge slowdown.

I think $1.50-$3.00 is going to be the range for the next several years.

As for the SUV I don't think anything will be changing our love of them, just look at the hybrid SUV. I think a SUV getting decent gas milage is a contradiction. Doesn't really make much sense. ;)

No, it doesn't...except the hybrid Escape is pushing 31 mpg combined! :eek:

Once a major automaker produces a line of full-size SUVs that get 35-40 mpg they are going to make more money than they ever thought possible...the money made during the SUV boom of the 90's will be nothing compared to this.

How the hell are you getting 2 bucks a gallon? I live in Houston and gas here is 2.40. I thought we had some of the cheapest gas in the US.

Ohio is getting the second cheapest gas in the country I believe.

http://www.gasbuddy.com/gb_gastemperaturemap.aspx

There's a ton of "what-ifs" in this market; still, I don't think the economy could handle $5 gasoline and the price would tumble to compensate for the huge slowdown.

I think $1.50-$3.00 is going to be the range for the next several years.

Optimism. I like it. :)

No, it doesn't...except the hybrid Escape is pushing 31 mpg combined! :eek:

Once a major automaker produces a line of full-size SUVs that get 35-40 mpg they are going to make more money than they ever thought possible...the money made during the SUV boom of the 90's will be nothing compared to this.

Now this I can definately believe. SUVs getting actual gas mileage? Well, it still leaves the Hummers which are getting more popular. Somehow I don't see a hybrid Hummer ever coming out. :D

Demand has plummeted. The market in action. Such high prices were no longer sustainable, so the market did what it does best.

Optimism. I like it. :)



Now this I can definately believe. SUVs getting actual gas mileage? Well, it still leaves the Hummers which are getting more popular. Somehow I don't see a hybrid Hummer ever coming out. :D

Except for the designs the military is looking at.

Except for the designs the military is looking at.

*raises eyebrows*

Wasn't aware of that. Still, the civilian ones are just to make a person feel like a badass, not to give them proper gas mileage. Even with those "mini" Hummers.

Optimism. I like it. :)

The optimists tend to be right more often than the pessimists, especially when it comes to economics. ;)

Now this I can definately believe. SUVs getting actual gas mileage? Well, it still leaves the Hummers which are getting more popular. Somehow I don't see a hybrid Hummer ever coming out. :D

Now, here's where it gets even weirder: The Hummer H3 gets better mileage than the Ford Explorer and can tow more as well as handle off-road conditions better. Somehow, this thing manages to be on the more efficient end of the full-size SUV category.

There's no excuse for the H2, however...9 miles per gallon city and 11 highway with EPA numbers. That's easily as low as 7 city and 9 highway if you take in to account other factors. Thank God sales of those have sunk like a lead balloon over the past couple years. I mean, even if gas was $0.01 per gallon you couldn't force me to drive one of those gaudy, chrome-clad pieces of quasi-military garbage...

*raises eyebrows*

Wasn't aware of that. Still, the civilian ones are just to make a person feel like a badass, not to give them proper gas mileage. Even with those "mini" Hummers.

Yeah, pretty much. I despise the H2 and H3, both horrendously expensive and overrated.

http://www.evworld.com/archives/conferences/evs14/humvee.html
Here's a link about the military design.

How the hell are you getting 2 bucks a gallon? I live in Houston and gas here is 2.40. I thought we had some of the cheapest gas in the US.
I'm not too far from you, in Oklahoma City, I saw gas for $2.08. It depends a lot on where you're at.

Optimism. I like it. :)



Now this I can definately believe. SUVs getting actual gas mileage? Well, it still leaves the Hummers which are getting more popular. Somehow I don't see a hybrid Hummer ever coming out. :D
Hummers more popular? I see more Civics and Focus than I see Hummers, even the H3.

Except for the designs the military is looking at.
The military IS moving towards engines that can take a variety of fuels, not just our vehicles, but also our jets. On base, we have an 'alternative fuels' station, which dispenses mainly ethinol, I think. I noticed a few stickers on some USAF S10s over the gas tank that said 'use alternative fuels only' or something to that effect.
But, yeah, the process has already begun for us.

Yeah, pretty much. I despise the H2 and H3, both horrendously expensive and overrated.

http://www.evworld.com/archives/conferences/evs14/humvee.html
Here's a link about the military design.

I've got a friend, who is a surveyor. He owns a Hummer, H-1, or whatever the original model is. It's as good as it gets for driving in unimproved areas. Of course, he uses it for personal use, too, but he's got a unique situation.

Still, I can't work up much animosity over someone's choice for transportation. If someone wants to buy a tank and drive a hundred miles to work, I guess that's okay.

Yeah, pretty much. I despise the H2 and H3, both horrendously expensive and overrated.

Wait for the new Hummer H4 ;)

http://okatuning.com.ru/images/oka-w-hummer-2.jpg
http://okatuning.com.ru/oka-w-hummer-.htm

Wait for the new Hummer H4 ;)

http://okatuning.com.ru/images/oka-w-hummer-2.jpg
http://okatuning.com.ru/oka-w-hummer-.htm

heh! At that rate, we'll have the Hummer H5 soon:
http://images.forbes.com/images/2002/10/18/chevette.jpg

Where was this? We're still at $2.60-something here.

Yeah, pretty much. I despise the H2 and H3, both horrendously expensive and overrated.

http://www.evworld.com/archives/conferences/evs14/humvee.html
Here's a link about the military design.

*drools over vehicle*

;)

I've got a friend, who is a surveyor. He owns a Hummer, H-1, or whatever the original model is. It's as good as it gets for driving in unimproved areas. Of course, he uses it for personal use, too, but he's got a unique situation.

Still, I can't work up much animosity over someone's choice for transportation. If someone wants to buy a tank and drive a hundred miles to work, I guess that's okay.

Sure, someone can drive what they like but the idea that people are willing to sacrifice their gas efficiency just to feel arrogant in their big vehicle is really pathetic. Your friend needs an offroad vehicle for his job so that is different. People who live in L.A. and drive a Hummer now, I'll go back to pathetic.

Where was this? We're still at $2.60-something here.

Cincinnati. Like I said in an above post, Ohio has the second cheapest gas in the country according to the link. Lucky us. :)

Cincinnati. Like I said in an above post, Ohio has the second cheapest gas in the country according to the link. Lucky us. :)

Oh. *sigh* Well, I'd rather live in Maryland than Ohio anyway. :cool:

Oh. *sigh* Well, I'd rather live in Maryland than Ohio anyway. :cool:

Better than New Jersey anyway. ;)

Besides, there seems to be some reasonable arguements that the price of gas will continue to slide. One can only hope.

Oh. *sigh* Well, I'd rather live in Maryland than Ohio anyway. :cool:

Having lived in Maryland for 12 years, in its most prosperous county, I'd rather live in Virginia, where I live now.

The optimists tend to be right more often than the pessimists, especially when it comes to economics. ;)


Yep ... the optimists were certainly right when they said stagflation couldn't happen. Or in 1929, when they said that the stock market had reached a "permanently high plateau". :)

Yep ... the optimists were certainly right when they said stagflation couldn't happen. Or in 1929, when they said that the stock market had reached a "permanently high plateau". :)

They were also right when they predicted the Internet boom, the fall in commodities prices during the 1980's and 1990's, the success of the PC, the Apollo missions, and the potential of the telephone, television, radio, airplane, and automobile. ;)

Every single time the pessimists were proven wrong...they have gotten many, many more things wrong than the optimists.

They were also right when they predicted the Internet boom, the fall in commodities prices during the 1980's and 1990's, the success of the PC, the Apollo missions, and the potential of the telephone, television, radio, airplane, and automobile. ;)

Every single time the pessimists were proven wrong...they have gotten many, many more things wrong than the optimists.

Ah, now you are citing things that have nothing to with Economics though. They may have been right about the internet boom, but pessimists were right about the tech bubble bursting.

Anyway, all of this is only relevant if you expect past patterns to hold idefinitely, or if you see history as an eternal dichotomy between optimists and pessimists where one has to be right. In reality, for any given situation, there are a large number of possible predictions, and we tend to remember best those that were proven right rather than the thousands upon thousands that were proven wrong (except for the really spectacularly wrong ones ... we tend to remember those too).

Well anyhow, I think the economy is finally going to get over its oil problems. No more hurricanes thank God, which also means Florida isn't going to be the next "victim" of global warming. I also got to commend Isreal for getting everyone spooked up, without a little over reaching and over-dramatic display of force in a secluded part of Southern Lebenon we could have had a war war, not some little snit between Iran and Isreal.

Ah, now you are citing things that have nothing to with Economics though. They may have been right about the internet boom, but pessimists were right about the tech bubble bursting.

Both sides were rightl; the Internet has changed every aspect of our lives, and its potential is far from tapped, but the irrational exuberance of the period led to a major loss for many people and compaines. The same is true with the railroad or personal computers; all of them had speculative bubbles that burst spectacularly, but in the end the technology irrevocably altered the world for the better (not all technologies would necessarily fall in to that category).

Optimists encourage and pump up the technology, pessimists bring it back down to Earth in the and in the end the optimistic realists win. In some cases, it's the other way around; there have been a number of inventions and companies that have failed spectacularly and there will be more to come in the future.

Anyway, all of this is only relevant if you expect past patterns to hold idefinitely, or if you see history as an eternal dichotomy between optimists and pessimists where one has to be right. In reality, for any given situation, there are a large number of possible predictions, and we tend to remember best those that were proven right rather than the thousands upon thousands that were proven wrong (except for the really spectacularly wrong ones ... we tend to remember those too).

Past patterns generally hold true only on either the very short or very long term; it's the intermediate term that has the most uncertainty, because anything can happen in the weeks/months/years between the start of an event and its conclusion.

Generally, it's neither the pessimists nor the optimists who end up right; it's the realists who avoid the hype and exuberance or the doom and gloom and instead look at the fundamentals behind whatever they're analyzing, be it stocks, economics, new technology, literary movements, history or anything else that can be analyzed.

Generally, it's neither the pessimists nor the optimists who end up right; it's the realists who avoid the hype and exuberance or the doom and gloom and instead look at the fundamentals behind whatever they're analyzing, be it stocks, economics, new technology, literary movements, history or anything else that can be analyzed.

Agreed. Although even the "realists" have been known to be wrong from time to time. Personally, I prefer to hope for the best, and plan for the worst.

Agreed. Although even the "realists" have been known to be wrong from time to time. Personally, I prefer to hope for the best, and plan for the worst.

We can all hope that gas prices will remain low but I for one am not going to believe it.

At the moment however, the price is now $1.98 a gallon. It has broken the $2 dollar mark! :)

And the futures markets aren't even open. Seems weird to me.

bush told his buddies: "Allright, thats enough money for now, lay off guys."

I blame the Martians.

its easy gas neve cost the almost 3 something a gallon to produce, but as time went on every time oil costs went up temporarily they would raise gas prices then not lower them near as much as they had raised them even though oil price back to original price. They repeatadly did this and as not enough people complained when it started they have gotten away with selling us gas at a 200-300% mark up on the gas after cost of producing it.

It actually costs somewhere around that. Even oil exporters don't have something like buck per gallon.

It actually costs somewhere around that. Even oil exporters don't have something like buck per gallon.

Well, here's a simple formula: Crude oil at the wholesale level (where refiners buy it) costs $64/barrel, and there are 42 gallons in a barrel. So, divide $64 by 42 and you get $1.52/gallon.

It costs oil refiners at least $1.52 to produce a barrel of gasoline, and add on another $0.60 for taxes and you end up with at least $2.12/gallon (things like refining margins, transportation, marketing etc. excluded)

Well, here's a simple formula: Crude oil at the wholesale level (where refiners buy it) costs $64/barrel, and there are 42 gallons in a barrel. So, divide $64 by 42 and you get $1.52/gallon.

It costs oil refiners at least $1.52 to produce a barrel of gasoline, and add on another $0.60 for taxes and you end up with at least $2.12/gallon (things like refining margins, transportation, marketing etc. excluded)

Well you still have to add some on so that the gasoline companies make a profit. This way they just break even. :)

Even without taxes - remember that gasoline is only a fraction of oil. So $2/gallon is actually dirt cheap, and $3/gallon a quite low price. I wouldn't be surprised if it rises, and surely wouldn't expect any price drops.

Well you still have to add some on so that the gasoline companies make a profit. This way they just break even. :)

Most of their profits are made at the crude level; it costs as little as $2-3/barrel to produce oil, and additional transportation costs usually push it up higher to $10 or so. The additional money is gradually siphoned away through various stages of production; refining oil is generally a loss, but it is necessary in order to sell the stuff.

It may cost you another $10 in profit to refine oil, but oil is worthless if no engine can use it.

Well, here's a simple formula: Crude oil at the wholesale level (where refiners buy it) costs $64/barrel, and there are 42 gallons in a barrel. So, divide $64 by 42 and you get $1.52/gallon.

It costs oil refiners at least $1.52 to produce a barrel of gasoline, and add on another $0.60 for taxes and you end up with at least $2.12/gallon (things like refining margins, transportation, marketing etc. excluded)

If this is accurate, and I believe it is, then is makes sense to me that the speculators are dumping the excess stocks of gasoline that they had stored and were keeping it off the market to keep the prices artificially high hoping to sell at a even higher price. This, I believe, is what needs to fixed in the futures market. the hoarding of commodities with the purpose of sellling the commodities at a higher inflated price.

If this is accurate, and I believe it is, then is makes sense to me that the speculators are dumping the excess stocks of gasoline that they had stored and were keeping it off the market to keep the prices artificially high hoping to sell at a even higher price. This, I believe, is what needs to fixed in the futures market. the hoarding of commodities with the purpose of sellling the commodities at a higher inflated price.

Surely you aren't saying that we need to make sure the people are buying products at a fair price and that we should make sure that companies don't artificially inflate prices to make themselves wealthy and hurt the consumer! :eek: :p

I doubt anyone in power wants to kill the profit these companies are getting. After all there must be a "trickle down" effect when these companies get rich, yes? :rolleyes:

gas is still to high. I was never happy to pay 3$

and they make more money out of crude then just gas, so if they break even on the gas at the station they are making a killing. Oil is used in more then just gas

I bought gas yesterday for $2.39 a gallon- Its significantly lower than it was a few months ago, but I'm still not happy with it- I'd like to see it under $2.00 a gallon for the winter.

I bought gas yesterday for $2.39 a gallon- Its significantly lower than it was a few months ago, but I'm still not happy with it- I'd like to see it under $2.00 a gallon for the winter.

Right now, it's 1.85 in Missouri.

Surely you aren't saying that we need to make sure the people are buying products at a fair price and that we should make sure that companies don't artificially inflate prices to make themselves wealthy and hurt the consumer! :eek: :p

I doubt anyone in power wants to kill the profit these companies are getting. After all there must be a "trickle down" effect when these companies get rich, yes? :rolleyes:
Price controls would only result in shortages. That's why there were bread lines in the USSR and why there are waiting lists for Canadian hospitals.

I don't see there being many "casual" gasoline users. Everyone has to go to work, run errands etc. I can certainly say that my parents are leaping for joy inside. The prices last month were crushing now it is tolerable.
While most people have to consume gas (I don't, incidentally - I use gas only very rarely when I rent a car), most people do engage in casual consumption. Most people could consume less gas than they do. They could walk more. They could buy groceries in bigger batches. They could carpool.

Remember the joke: How many people fit in an SUV? One, usually.

If this is accurate, and I believe it is, then is makes sense to me that the speculators are dumping the excess stocks of gasoline that they had stored and were keeping it off the market to keep the prices artificially high hoping to sell at a even higher price. This, I believe, is what needs to fixed in the futures market. the hoarding of commodities with the purpose of sellling the commodities at a higher inflated price.

Well, that would actually make the situation worse. Companies and traders buy commodities and stockplie them in order to profit off of spikes in prices; this may seem like it's a ripoff, but it is a very important part of the market. Prices generally spike only when something affects the demand/supply balance; the stockpiled commodities can be released in the market to maintain stability and prevent shortages.

If there was no futures trading or stockpiling, the rationing effect would be many times more severe than it currently is. An event like Katrina might have produced an increase in oil prices of 400 or 500%; instead of paying $3 gas you might have to pay $6 or $7 per gallon...that supply cushion of stockpiles and futures trading is vital to the stability of the oil markets.

Remember the joke: How many people fit in an SUV? One, usually.

And there are two things you almost never see with them: a towing hitch or piles of heavy equipment or goods. Hell, the worst of the lot, the H2, is barely able to go offroad; the H3 is far more capable of heavy-duty work making the H2 nothing more than a laughable suburban utility vehicle.

Most SUVs are driven by people who neither tow things nor use them for heavy duty purposes, offroading, or construction; I know for a fact that you can do grocery shopping for a family of four using a mid-size sedan, and an individual could easily do their shopping in a subcompact.

We can conserve a lot; most people can afford $3 gas, so it's going to take more to seriously affect consumption habits.

Having lived in Maryland for 12 years, in its most prosperous county, I'd rather live in Virginia, where I live now.

Which county was that? Howard or Montgomery?

Even without taxes - remember that gasoline is only a fraction of oil. So $2/gallon is actually dirt cheap, and $3/gallon a quite low price. I wouldn't be surprised if it rises, and surely wouldn't expect any price drops.

That's the thing, demand for gasoline is continuing to fall, because of several factors relating to how people have changed their driving habits, the kinds of cars they drive and several other things. By Thanksgiving the average national price could be 2.00 a gallon or less.

Demand is one thing. Supply is another. As said above, cost to produce gasoline is over $3/gallon. In fact, in oil-exporing countries it costs right that, around $3/gallon, but they don't need to transport oil and can have lower internal prices.

So it might be cheap somewhere if the company must urgently free the tanks - but not generally. Things are unlikely to be sold for less that they cost to produce.

Demand is one thing. Supply is another. As said above, cost to produce gasoline is over $3/gallon. In fact, in oil-exporing countries it costs right that, around $3/gallon, but they don't need to transport oil and can have lower internal prices.

So it might be cheap somewhere if the company must urgently free the tanks - but not generally. Things are unlikely to be sold for less that they cost to produce.

Where does it say that the cost to produce gasoline is over three dollars a gallon?

See above. Oil is about $1.54/gallon, gasoline is less than half of oil (well, the rest is used - but count $2 at least), add production costs, add taxes.

I was out last night and saw that while one gas station is keeping the price at $1.99, two others had leapt up to $2.24 a gallon! Hmmm. I don't know what could have happened to cause such a jump. Perhaps the stations are tired of selling gasoline so cheaply?

last night in my dream i dreamt that i filled my car up for only a $1.09 at a gas station that was hidden from plain view that i only just discovered.

i have weird dreams

Next time try to dream about filling a tanker truck.

Right now, it's 1.85 in Missouri.

So-there is hope...

I dont have enough jerry cans to make it worth that trip. :p

I was out last night and saw that while one gas station is keeping the price at $1.99, two others had leapt up to $2.24 a gallon! Hmmm. I don't know what could have happened to cause such a jump. Perhaps the stations are tired of selling gasoline so cheaply?

Crazyhorse, a well in the GOM operated by BP, came out today and said it may not be back in full production until 2008 due to damage from Katrina. This meant that the EIA had to lower its forcast for nonOPEC oil production for 2007 and 2008 by 75,000 barrels/day.

People need to realize that this is not going away. While I respect Vetalia because he obviously does his homework, I do mine, too. The fact is that if taking a mere 75,000 barrels/day off the market for two years can force the price of oil back up by 40 cents a barrel, as it did today:

CL06V Last: 64.25 Change: +0.45 +0.71% Volume: 45 11:03am 09/19/2006 Choose your broker



Open: 64.10 Yield: n/a Shares Out: n/a

High: 64.45 P/E Ratio: n/a Market Cap: n/a

Low: 63.40 EPS: n/a 52wk High: 7/14/2006 80.00

Bid: 72.70 Ex Date: n/a 52wk Low: 11/29/2005 58.95

Ask: 72.95 Dividend: n/a Avg Volume: 6.74M
Then that means that even with all the projects opening up in the next four years, even with forcasted production of "alternative" fuels up for the next several years, even with the "15 billion barrel" discovery by Chevron in the Lower Tertiary of the GOM, people who buy and sell oil and who know a lot about the supply and demand balance in the world expect to be able to sell their oil for more than $64/barrel for the foreseeable future.

We had a hurricane scare that never materialized. We had brewing conflict in the Middle east that has settled down for now. Our driving season is over. Those three supporting dynamics have now been removed and we are left with what looks like a floor above $60/barrel. That's just projected supply and demand with a little fear premium due to instability. Last year after Hurricane's katrina and the other one the price of oil shot up to $71/barrel, everyone thought the crisis was over when it fell back to $55. This year it was as high as $78 and now has slid back to about $64. In 2004 it went as high as $55 and slid back to $45 during the same time period.

What's next year going to bring? A jump to above $85 and a fall back to $73 in the Fall? I can see it next October.

"Oh, man! gas is only $3/gallon here."

All the polyannas, as I have watched them do now for four years running, will be predicting a fall back to $50, just as in 2003 they predicted a fall back to $20.