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  1.    #1  

    Why is the cost per barrel of oil SOOOOOO High??? If we look back over the last 15 years it was just over $1 a gallon in the mid / late 1990s to over $4.20 a gallon in most places now. It seems that the first initial jump that set this whole thing rolling was in 1999.

    I have seen many reports about supply vs demand being the biggest factor in this continual rise in gas prices. In most of these reports of supply vs demand India & China are the evil ones causing the spike.

    Then there are reports of OPEC not opening enough drilling to meet the demand so that they can artificially raise the price per barrel.

    Then there is always the reports of the US over using by driving to work, taking their kids around, etc....

    And of course, there are the reports that the Oil Companies are earning too much profit and that we need to cap it or extra tax it.

    The challenge is....what do we believe? Is all of it true? Or are each of these just minor factors behind another culprit?

    The reason I ask, is that over the last 2 weeks, I have heard a couple stories on the various Cable News Networks that the MAIN reason for the price per barrel is none of the above, but instead market traders. Here is an article that gives the basics of what the reports I heard shared:

    An astonishing thing happened last Thursday and Friday: oil on the New York Mercantile Exchange rose by almost $17 per barrel, or roughly 14 percent. At the same time, the wholesale price for unleaded gasoline added another $0.36 per gallon, or 11 percent.

    Media and analysts were quick to blame this unprecedented spike on the declining value of the dollar, on brewing tension between Israel and Iran, and on increasing demand for oil in China, India, and other expanding economies. But this was a market event, not an economic or geopolitical one: Futures trading and speculation is unquestionably putting upside pressure on oil prices.

    Those skeptical about investors’ role in rising energy costs should be persuaded by last week’s events. The time has come to consider new commodities-futures regulations in order to prevent an unnecessary speculative oil spike, with all the collateral economic damage that will attend it.

    --------------

    In this decade, though, world oil production has continued to rise, making it difficult for simple supply and demand to explain the explosion in oil’s price from $20 in 2002. The Energy Information Association reports that since 2002, world petroleum production has risen from 76.995 million barrels per day to 84.594 million barrels per day in 2007, a 9.87 percent increase. Over the same period, demand has gone from 78.036 million barrels per day to 85.354 million barrels, a 9.38 percent increase. So total world oil production actually rose faster than demand, but prices increased by almost 400 percent nonetheless. Kind of throws a monkey-wrench into blaming this crisis on China and India’s lust for crude, doesn't it?

    The fact is, the explosion in oil futures trading on the various exchanges around the world has unquestionably been a huge factor in the nearly 200-percent increase in oil prices since January 2007. How huge? Estimates vary.

    Back on May 5 (or $24 ago) energy economist F. William Engdahl claimed that 60 percent of the $115 that oil cost per barrel (a full $69) could be chalked up to “pure speculation driven by large trader banks and hedge funds.” Mary Novak of Global Insight similarly told the Pittsburgh Tribune-Review that the speculation was the culprit in driving up the price of oil: she estimated that without such speculation, “the price of crude could plummet to $75 or $80 a barrel.”

    --------------

    Increase the Margin Requirement for Speculators
    To purchase stocks on margin, investors must put up 50 percent of the purchase price. In the commodities market, investors are only required to put up 10 percent. In oil contracts, this can be as low as 7 percent. And hedge funds might only have 1 percent of their money on the line — or even less — allowing them to purchase significantly more contracts.

    If margin requirements for traders and investors were raised, the amount of contracts they could hold for a given dollar of their own money would decline, reducing the demand for contracts. The Financial Times agrees:

    The best way to counter speculation is to make it less profitable. Step one is to protect the regular traders in the real oil economy (those who intend to close their positions by making or taking delivery of oil) and charge them a lower margin than those who have no intention of plying the oil trade. The purely financial traders must be made to pay a proper price for their speculation. This can be done simply by increasing the margin that they have to put down to trade as open interest, from the current 7 per cent to about 50 per cent.

    Source
    I heard on CNN that England is conducting a high profile investigation on how investors and traders are inflating the price per barrel with an eye of on possibly how to regulate it. Is it true that if this factor alone could reduce the price per barrel down to $60-$80?

    I am not usually one to side with gov regulations, but I am also one to see where there are times that it might be needed or beneficial.

    What do you think the reason is for the rising oil cost. Then share what we need to do counter the reason you believe is the cause.
    Last edited by HobbesIsReal; 06/10/2008 at 01:46 PM.
  2. #2  
    Quote Originally Posted by HobbesIsReal View Post
    ...What do you think the reason is for the rising oil cost. Then share what we need to do counter the reason you believe is the cause.
    Economic chaos provides a suitable backdrop for non-democratic power shift
  3. #3  
    drill here, drill now, drill....did i say DRILL in the US? go to www.americansolutions.com and sign the petition to get congress to allow drilling.
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  4. #4  
    Quote Originally Posted by bling300c View Post
    drill here, drill now, drill....did i say DRILL in the US? go to www.americansolutions.com and sign the petition to get congress to allow drilling.
    Shoot, I read a study months ago that if we started now we would not see an impact for at least 5 to 10 years.... if you are talking about drilling in new places.

    We could decrease our dependence on oil in maybe 20 years (my guess from reading, no sources). I don't believe it would be sooner than that... and that is from the date of some law or "real activism" from Americans... maybe a combination of both. Something drastic, like $7 to $10 gas might do it... maybe even a mass shortage of gas....

    No argument, I agree with you, just sucks it would take so long to have an impact... we are in a bad place right now.

    Funny thing is that we have not pursued other technologies.... we learned NOTHING in the 70s.... And even though we have had things like solar panels for the last 20 years. Well, I know 20 years at least because the guy down the street had them put on his house at least 18 years ago... if they made it out in those boonies, then solar panels had to be around longer than that. lol

    Point is we do nothing but complain... opec will make their money then give us the oil we need to shut us up for another 15 to 20 years... then jack the price back up.

    Reason for high oil prices? Lower availability... lower output... low dollar... Americans not learning from past... Americans not drilling... Americans not using Iraq to the best of our ability... take your pick....

    edit: I'd leave the profits of the oil companies alone... they made the profits... if I make 1 billion dollars in profits with my company this year, please DON'T you tell me I made too much in profits. Politicians are dwelling on the fact that many don't understand the definition of profit or how a "profit" is made. I think people need someone or something to attack... oil companies are an easy target....
    Last edited by theog; 06/10/2008 at 03:07 PM.
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  5.    #5  
    Quote Originally Posted by shopharim View Post
    Economic chaos provides a suitable backdrop for non-democratic power shift
    From what I understand some of this is re-establishing some form of regulations that were removed at the end of Clinton's Admin.
  6.    #6  
    Quote Originally Posted by bling300c View Post
    drill here, drill now, drill....did i say DRILL in the US? go to www.americansolutions.com and sign the petition to get congress to allow drilling.
    Quote Originally Posted by theog View Post
    Shoot, I read a study months ago that if we started now we would not see an impact for at least 5 to 10 years.... if you are talking about drilling in new places.

    We could decrease our dependence on oil in maybe 20 years (my guess from reading, no sources). I don't believe it would be sooner than that... and that is from the date of some law or "real activism" from Americans... maybe a combination of both. Something drastic, like $7 to $10 gas might do it... maybe even a mass shortage of gas....

    No argument, I agree with you, just sucks it would take so long to have an impact... we are in a bad place right now.
    I have always been for domestic drilling. Even if you take Alaska out of the picture, there are loads of opportunities along each coast and in the Gulf of Mexico. If we had started this between 1998 - 2001 when many of these proposals were shot down by mostly Dem votes (I think) we would be starting to reap the benefits right about now...which would have been perfect timing.

    Even if it takes 5-10 years to reap the benefits, we never will unless we start.

    I have heard estimates by those that oppose domestic drilling that domestic drilling will not help us become more oil independent but only keep our current level of independence. Which is fine with me...we are still decreasing our future independence.

    Quote Originally Posted by theog View Post
    Funny thing is that we have not pursued other technologies.... we learned NOTHING in the 70s.... And even though we have had things like solar panels for the last 20 years. Well, I know 20 years at least because the guy down the street had them put on his house at least 18 years ago... if they made it out in those boonies, then solar panels had to be around longer than that. lol

    Point is we do nothing but complain... OPEC will make their money then give us the oil we need to shut us up for another 15 to 20 years... then jack the price back up.
    I fully agree that this admin had many great claims for furthering alternative fuel research, but I haven't seen much follow up on it at all. The 70s should have been a wake up call for both domestic drilling and alternative fuel research....but we ignored it and lost the last 35 years of opportunities.

    Quote Originally Posted by theog View Post
    edit: I'd leave the profits of the oil companies alone... they made the profits... if I make 1 billion dollars in profits with my company this year, please DON'T you tell me I made too much in profits.
    I have traditionally agreed with this. I am not set on it though. But when you look at the percentages of investment vs profit it is something like 20% return....which is acceptable and not outrageous. It is just such large numbers of monies that are invested in research, searching for oil, etc... that the percentage of profit sounds soooo mind blowingly huge.
    Last edited by HobbesIsReal; 06/10/2008 at 04:33 PM.
  7. #7  
    Quote Originally Posted by HobbesIsReal View Post
    I have heard estimates by those that oppose domestic drilling that domestic drilling will not help us become more oil independent but only keep our current level of independence. Which is fine with me...we are still decreasing our future independence.
    Yea, I've seen that talked about to death on other forums... liberals bla, bla... Yes, the dems did it... but they want to protect nature. The Arctic National Wildlife Refuge is of importance so I understand. Plus, in the big scheme of things, it would not help much anyway. Or at least that is the argument against... some use the argument that we should not use up our reserves...

    There was even a recent study that said that oil is produced by the planet and that there is an abundance of oil... vs being in short supply in the oil fields from dead material. I've never bought the animals dieing thing when it comes to oil.. seemed silly to me, even when I was a child. lol... I don't know why..... Anyway, who knows for sure.... seems silly to me, but it could be that animals and dead plants produce oil.



    fully agree that this admin had many great claims for furthering alternative fuel research, but I haven't seen much follow up on it at all. The 70s should have been a wake up call for both domestic drilling and alternative fuel research....but we ignored it and lost the last 35 years of opportunities.
    I think all admins from the 70s until now failed... at least from Regan, Bush, Clinton and Bush. Then again, we failed ourselves... no one stepped forward to put something in production.

    If you want to read a great story, read about Brazil and their move to remove oil from their system (well, reduce their dependence on oil). It is amazing what they were able to accomplish since 1975. Their gov't pushed hard for change though....



    I have traditionally agreed with this. I am not set on it though. But when you look at the percentages of investment vs profit it is something like 20% return....which is acceptable and not outrageous. It is just such large numbers of monies that are invested in research, searching for oil, etc... that the percentage of profit sounds soooo mind blowingly huge.
    Guess my entire thing is have they done anything illegal. As I sit here, I don't think they have. I don't know... I don't assume to know if they have, but I'd think that many people have looked into it and nothing is there. Matter of fact, I do remember the supreme court case where they said the oil companies were not in collusion to raise prices (or something like that -- too tired to look it up... case in '07).

    Could there be something there? I don't know... with the info I have right now, I'm against the plans I've read from obama going after the oil profits...
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  8. fishera's Avatar
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    #8  
    I love the image first posted because its so true.

    Its $4.49 here at the lowest station and $4.81 for the highest, and sometimes you don't have a choice because your low so you just buy two gallons to make it to the next town, jeez I sound like im in the middle of the desert lol

    I get my license in October and have always been environmental but gas prices have become obscene. I looking at energy efficient cars. Toyota Yaris Sedan S, Honda Civic coup, used Honda Insight, Scion xA, etc.

    anyone have any suggestions? Im a student and have to pay for my own gas, and car. So... basically i won't be driving much.
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  9. #9  
    Get a scooter!
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  10. tirk's Avatar
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    #10  
    Quote Originally Posted by HobbesIsReal View Post
    Gas Prices Going Thru The Roof....Who Is To Blame??? How Do We Fix It?
    Does it need fixing? Is it really such a bad thing, if climate change is real?
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  11. #11  
    One group of scientists and their speaker says yes, another says no. I vote with the no group. I also am against the additional taxes Obama is wanting - we cannot tax ourselves out of this mess our representatives have gotten us in. Also find his placing the entire blame on the current administration to be way off. The Democrat party has blocked every attempt at increased production and now look what is happening in our back yard with China and Cuba going steady. At what point is the American public going to say enough is enough. Frankly, our representatives need to work for us, not against us.

    Remember, they cannot even run their own cafeteria.
  12. #12  
    Doesn't the hydrogen car produce an after product that is considered to be a green house gas?

    Quote Originally Posted by fishera View Post
    I love the image first posted because its so true.

    Its $4.49 here at the lowest station and $4.81 for the highest, and sometimes you don't have a choice because your low so you just buy two gallons to make it to the next town, jeez I sound like im in the middle of the desert lol

    I get my license in October and have always been environmental but gas prices have become obscene. I looking at energy efficient cars. Toyota Yaris Sedan S, Honda Civic coup, used Honda Insight, Scion xA, etc.

    anyone have any suggestions? Im a student and have to pay for my own gas, and car. So... basically i won't be driving much.
  13. #13  
    Yeah, a scooter - drive it between 80 and 100+ miles a day. No way. I wonder what Nancy and Harry drive and also what they eat for lunch.

    Quote Originally Posted by pdxtreo View Post
    Get a scooter!
  14. #14  
    Quote Originally Posted by bclinger View Post
    One group of scientists and their speaker says yes, another says no. I vote with the no group. I also am against the additional taxes Obama is wanting - we cannot tax ourselves out of this mess our representatives have gotten us in. Also find his placing the entire blame on the current administration to be way off. The Democrat party has blocked every attempt at increased production and now look what is happening in our back yard with China and Cuba going steady. At what point is the American public going to say enough is enough. Frankly, our representatives need to work for us, not against us.

    Remember, they cannot even run their own cafeteria.
    I often think that "we" got ourselves in this mess.... But I understand what you are saying though...

    obama's plan does not attempt to tax us out of this mess. Either way, we face pain in the coming years or more serious debt. Sooner or later we will face higher taxes... it is inevitable.... we can't continue running the country with a budget deficit. Our national debt is 9.4 Trillion...
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  15. #15  
    Hobbes, I think that in answer to the "why are prices so high" question, the only truthful answer is "all of the above".

    As a society, as individuals and through our elected leadership, we:
    - Refuse to allow new refinery construction which would both increase supply and increase production efficiency.
    - Require "boutique blends" that differ by specific location/state and necessitate batch fuel processing, and which, if demand is not accurately forecast for each blend, result in short supplies for that blend. And which raise production costs.
    - Refuse to drill for domestic oil where we know it to be (ANWAR and the Gulf Coast for example).
    - Insist on larger, less efficient vehicles.
    - Fail to invest in workable alternative energy production (as opposed to demonstrably unfeasible approaches). For example, Ethanol, produced with current technology, is patently unworkable in the US. That does not mean we should not continue R&D in the area, but neither should we be using feed crops to produce it while ignoring the resultant detrimental effect on food costs.
    - Refuse to significantly alter our energy use behavior.
    - Refuse to learn what the actual costs of fuel production are (ie. crude oil production and/or purchase, refining, federal, state and local taxes, distribution, etc.).
    - We cry "foul" on oil company profit numbers, but cannot define and differientate between profit and profit margin. It is illogical to condem an oil company for an 8% margin while other large industries are lauded for having 10-15% profit margins, or more.

    Does any of this mean that there is not something broken in the system? Absolutely not. Neither does it mean that there is a "silver bullet" solution, which is what it looks to me that the public expects.
  16. #16  
    Quote Originally Posted by bclinger View Post
    Yeah, a scooter - drive it between 80 and 100+ miles a day. No way. I wonder what Nancy and Harry drive and also what they eat for lunch.
    I used to commute that on my motorbike, no problem, not even in British climate... so in Hawaii it should be a breeze
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  17. #17  
    Surely one should ask what they would do if prices increased even further. If it means driving a scooter, why not do it now?

    Imagine the impact of moving 10% of the driving population from 20 mpg to 80-100 mpg on a scooter.

    Apparently the average commute is about 30 miles round trip, meaning one gallon of gas per day for a larger car. Using a scooter it would come down to 1.5 gallons per week.

    Surur
  18. #18  
    Why do I have a feeling that by the time we start drilling locally and are able to bring it to market, we will have drastically reduced our dependance upon oil to the point where it is almost completely exported?

    Unfortunately the changes that need to take place are mostly smaller items that need to be done by society at large. Governments cannot dictate the changes in our usage and opinions effectively. Market costs have much more of an impact upon industry and society than what government can do without strong arming the people.
  19. #19  
    Quote Originally Posted by theog View Post
    edit: I'd leave the profits of the oil companies alone... they made the profits... if I make 1 billion dollars in profits with my company this year, please DON'T you tell me I made too much in profits. Politicians are dwelling on the fact that many don't understand the definition of profit or how a "profit" is made. I think people need someone or something to attack... oil companies are an easy target....
    I agree as well here--unless as you touch upon later: Did they do it illegally?
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  20. #20  
    Quote Originally Posted by cavingjan View Post
    Unfortunately the changes that need to take place are mostly smaller items that need to be done by society at large. Governments cannot dictate the changes in our usage and opinions effectively. Market costs have much more of an impact upon industry and society than what government can do without strong arming the people.
    I live in UK,and the government here loves strong-arming people. I live in London and I hate my local government due to the Congestion charging, but I am sure they have actually caused a change in road and vehicle use.

    Its all about attitude in the end - if fuel was expensive due to a war people would be more willing to change for example.

    Surur
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