Oil prices...

[sandman]

Who's to blame for $4 gas
Prices have surged over the past four years - and there's a bunch of reasons why.
By Steve Hargreaves, CNNMoney.com staff writer
Last Updated: May 20, 2008: 10:26 AM EDT

NEW YORK (CNNMoney.com) -- It's hard to imagine now, but in 1999 gasoline sold for 90 cents a gallon. How'd we get from there to $4 a gallon?

There is no short answer - many things happened, and together they formed a chain of events from cheap gas to $100 tankfuls.

2004: Demand pressure
One of the most common reasons cited for the price jump is supply and demand - we are using more oil, which accounts for 70% of the price of gas, and finding less of it.
Why we are finding less oil and using more of it is partly a result of the low prices during the 1990s. Those low prices - partly caused by low gas taxes in the U.S. compared to other developed nations - both encouraged rapid consumption domestically (think SUVs) and underinvestment in new production by the world's oil companies.
By the time 2004 rolled around - and developing economies around the globe roared to life - the world was left in a pinch.
"Our demand has skyrocketed, but our ability to supply that demand has stagnated," said Stephen Schork, publisher of the industry newsletter The Schork Report. Gasoline prices topped $2 a gallon for the first time ever in May of 2004, "and we've been off to the races since then," said Schork.
As demand grew and the supply of oil remained relatively flat, the difference between the amount of oil the world could produce and the amount it consumed narrowed. That meant a supply disruption from one place in the world could not be easily covered with spare oil from another part.

2005: The storm
This was illustrated in September 2005, when Hurricane Katrina knocked out a significant chunk of U.S. refining and gasoline prices spiked above $3 a gallon for the first time ever.
"It exposed how little surplus refining capacity we have in the U.S.," said James Crandell, an energy analyst at Lehman Brothers.
A new refinery hasn't been built in the United States in three decades, although capacity at existing refineries has been expanded.

2006: Hot tempers
The lack of spare supply has kept other geopolitical events in the forefront for the last few years. Iran and the spat over its nuclear program dominated the news in early 2006, and combined with Israel's invasion of Lebanon in the summer of that year to cause another spike in gas prices to over $3 a gallon.
Geopolitical events need not be shooting wars to attract attention. Analysts say general resource nationalism since 2004 is partly responsible for high oil prices.
In the past few years, Iran's Mahmoud Ahmadinejad, Russia's Vladimir Putin and Venezuela's Hugo Chavez have all become more bellicose on the world stage - in some cases, seeking a bigger share of the profit from foreign oil firms or threatening to cut off oil supplies if attacked.
Some say the Bush administration's provocation of Iran and Venezuela, coupled with a botched occupation of oil-exporting Iraq, has contributed to the geopolitical tension. But defenders say that, in the long run, the administration's actions will eventually lead to a more democratic - and thus stable - global supply.

2007: Tight supplies
New supplies of oil from non-OPEC countries were supposed to come online in 2007 and ease some of these supply bottlenecks. But problems in Kazakhstan and Russia - as well as sweeping drilling bans in the United States - mean global consumption is growing twice as fast as non-OPEC production.
Analysts say OPEC, which hold two-thirds of the world's oil reserves but sees a global economy humming along despite $130 oil, has little incentive to increase production.

2008: Speculators swarm
Strong demand, tight supplies and a volatile marketplace have attracted the interest of investors - the last main contributor to high prices.
"The speculator has seized upon this opportunity," said Schork. "They have recognized there is something fundamentally flawed in this market."
Since 2003, the number of oil contracts exchanged on the NYMEX has more than doubled, said Schork.
Money flowing into oil - and commodities in general - has been especially sharp over the last 6 months as investors look for good returns amid falling stock prices and an inflation hedge against a falling dollar.
That's helped push oil prices to nearly $130 a barrel and gasoline to an average of nearly $3.80 a gallon - smashing previous records even when adjusting for inflation.
Why do you think gas prices are so high? Post a comment.
Whether this investor influx into the oil market is justified is matter of debate. Some see high oil prices as necessary to boost supply and limit demand.
"You can't just point the finger at speculators," Michael Haigh, head of U.S. commodities research at the investment bank Soci?t? G?n?rale, recently told CNNMoney.com "Fundamentally, the markets are where they are supposed to be."
Others are less certain.
"The fundamental picture to us doesn't justify the price," said Lehman's Crandell. "It's kind of suggestive of a bubble."

[pilferk]

We need more govt oversight on oil. No reason in hell it should be rising due to the circumstances that actually exist.

Interesting. So you want more government?

The system we have on how oil is priced is broken. It is not going to fix itself. Are the oil companies or speculators going to do anything about it? No, they are making record profits.

There is no doubt the record oil prices are putting a drag on our economy. No particular industry should deserve to make record profits at the country's expense.

I am generally against more government, and I am for for effective and efficient govt.  In a situation like this the govt should get involved.

Sounds like socialism to me.

Me too.  Bordering on communism (AND NO, I'M NOT CALLING THE GOOD SENATOR A COMMIE!!!).

You substitute health care into the above explanation and it's just as apt....

[AxlsMainMan]

Oil price hits record high 130.47 dollars on wave of supply angst

Agence France-Presse

LONDON - The price of oil soared past 130 dollars a barrel for the first time on Wednesday in a wave of anxiety about stretched supplies and strong demand for energy, and as the dollar weakened, analysts said.

New York's main oil futures contract, light sweet crude for July delivery, reached a record pinnacle of 130.47 dollars. It later pulled back slightly to stand at 130.15, still a rise of 1.17 dollars on Tuesday's close.

Light sweet crude for delivery in December 2016, the most forwardly-traded contract, stood at 138.38 dollars.

In London, Brent North Sea crude for July hit a historic high of 129.92 dollars a barrel on Wednesday. Later it traded at 129.46, up 1.62 dollars.

The market was awaiting the latest weekly snapshot of energy inventories in the United States -- the world's biggest consumer of oil -- being published by the US government at 1430 GMT.

"Crude futures made fresh record highs above 130 dollars (Wednesday) as the US dollar depreciated to a one-month low ... which prompted further interest in crude as a means of hedging against US currency exposure," said Sucden analyst Nimit Khamar.

"From observing the price movements over the last six months it can be seen that prices retrace back about 10 dollars after hitting each psychological mark, so perhaps the break above 130 dollars a barrel could now see a retracement back to 120 dollars before the next leg up," Khamar added.

Crude futures have jumped by nearly a third since the start of 2008, when they struck 100 dollars a barrel for the first time, as investors reacted to geopolitical unrest in oil-producing countries amid tight supplies and strong Asian demand for energy.

Tony Nunan, of Mitsubishi Corp.'s international petroleum business, said concerns over supplies not keeping up with demand were driving prices higher.

"The market is technically and fund-driven right now," he said on Wednesday, referring to investors buying into oil in hopes for higher returns.

David Moore, a commodity strategist at the Commonwealth Bank of Australia, said a weaker US dollar and "the recent trend for analysts to revise higher their oil price forecasts" are helping to push up prices.

Analysts added that a need for diesel-fuelled power generation in earthquake-affected areas of China was boosting demand for the fuel.

"If there is an upside driver in energy these days, it is the diesel markets," said MF Global analyst Ed Meir.

"Sentiment here continues to remain very bullish on concern that much diesel needs to be imported into China to power generators."

The Chinese government said on Wednesday that the death toll from the 8.0 magnitude earthquake that devastated the nation's southwest on May 12 had risen to 41,353.

Venezuela's oil minister has blamed market speculators for the spiraling international price of crude and rejected increased production as a way to calm the market.

"Prices have risen spectacularly because of speculation, because of the devaluation of the dollar and world inflation," the minister, Rafael Ramirez, said late Tuesday after a meeting with OPEC secretary general Abdullah el-Badri.

Ramirez said "any rise in production would be immediately put in stock and this would have a negative impact on prices."

As the price of a barrel of crude headed for 130 dollars, Ramirez insisted the problem was "not linked to supply and demand". "There is enough oil on the market," Ramirez declared.

The minister said that the "financial actors" are now more interested in futures contracts "which they consider safer than other investments."

Analysts said a decision by Saudi Arabia -- the world's biggest oil producer -- to raise output had not done much to lower crude prices.

Many officials belonging to the Organization of Petroleum Exporting Countries argue that record oil prices are being driven by speculators seizing on geopolitical unrest, such as in Nigeria -- Africa's biggest exporter of crude.

Eric Wittenauer, analyst at Wachovia Securities, said reports about growing tensions between Washington and Tehran heightened concerns about a conflict that could affect oil supplies in Iran and the wider Middle East.

He said the market reacted to an article in the Jerusalem Post that said US President George W. Bush "intends to attack Iran before the end of his term."

"We have certainly not ruled out the possibility of conflict later this year," Wittenauer said.

http://www.abs-cbnnews.com/storypage.aspx?StoryId=119022

[AxlsMainMan]

An attack on Iran is probably in the cards, just imagine oil prices then..

But hey, let's keep voting Republican..

[Dr. Blutarsky]

An attack on Iran is probably in the cards, just imagine oil prices then..

But hey, let's keep voting Republican..

An attack on Iran is not going to happen unless Iran has the bomb and is threatening to use it.

[SLCPUNK]

I wish these cry baby socialist "republicans" would quit asking Uncle Sam for a handout when things get tough. Cheap gas is not guaranteed anywhere in the Constitution.

Quit yer bellyachin' and pull yourself up by your bootstraps!

[SLCPUNK]

An attack on Iran is probably in the cards, just imagine oil prices then..

But hey, let's keep voting Republican..

An attack on Iran is not going to happen unless Iran has the bomb and is threatening to use it.

Iraq didn't have WMD or threaten anybody, yet we killed about a million people over there so far.

[Perfect Criminal]

Too bad we didn't go into Iraq for the oil (as many here thought we had).  If that had happened, maybe all of our gas prices would be lower.   

I'm for government intervention into the oil business.  But health care is totally different.  Goverment healthcare will hurt millions of americans in order to favor millions of americans.  Government intervention into the oil crisis may end up hurting a few gazillionaires to help billions.  That's why one is more socialism and the other isn't.

[Dr. Blutarsky]

Too bad we didn't go into Iraq for the oil (as many here thought we had).  If that had happened, maybe all of our gas prices would be lower.   

I'm for government intervention into the oil business.  But health care is totally different.  Goverment healthcare will hurt millions of americans in order to favor millions of americans.  Government intervention into the oil crisis may end up hurting a few gazillionaires to help billions.  That's why one is more socialism and the other isn't.

Good post 

Oil prices and health care are totally different types of issues, which require two totally different approaches.

Yeah, it is too bad we did not go into Iraq for oil 

[TAP]

Too bad we didn't go into Iraq for the oil (as many here thought we had).  If that had happened, maybe all of our gas prices would be lower.   

Of course Iraq was about oil. The people who profit aren't about to share it with the gullible fools who empowered them though.

I'm for government intervention into the oil business.  But health care is totally different.  Goverment healthcare will hurt millions of americans in order to favor millions of americans.  Government intervention into the oil crisis may end up hurting a few gazillionaires to help billions.  That's why one is more socialism and the other isn't.

You think only gazillionaires work for oil companies? Weird.

[Dead N' Bloated]

I just drove past a shell servo here in Newcastle and fuel was 159.9 per litre. Thats the dearest I've ever seen it. Yesterday it was 136.9. How the fuck does that happen?


 

[Dr. Blutarsky]

Oil Companies Defend Large Profits Before Senate Judiciary Committee

Wednesday, May 21, 2008

AP


WASHINGTON ?
Top executives of the five largest oil companies tried to shift anger over high prices to a debate over supplies Wednesday, leading a senator to accuse them of acting like "hapless victims" while racking up record profits.

Patrick Leahy, D-Vt., told the executives there's "a disconnect" between normal supply and demand and the skyrocketing price of oil ? surpassing $130 a barrel even as the oil leaders testified ? that the industry has yet to explain.

J. Stephen Simon, executive vice president of Exxon Mobil Corp., said profits have been huge "in absolute terms" but must be viewed in the context of the massive scale of the industry." He also said high earnings are needed "in the current up cycle" to pay for investments in the long term when profits will be down.

"'Current up cycle,' that's a nice term," replied Leahy with sarcasm, "when people can't afford to go to work" because gasoline is costing close to $4 a gallon.

He asked Simon what his total compensation was at Exxon, a company that made $40 billion last year. Simon replied it was $12.5 million annually.

Two other executives, John Lowe, executive vice president of ConocoPhillips Co., said he didn't recall his total compensations as did Peter Robertson, vice chairman of Chevron Corp. John Hofmeister, president of Shell Oil Co., said his was "about $2.2 million" but was not among the top five salaries at his company's international parent. Robert Malone, chairman of BP America Inc., put his compensation at "in excess of $2 million."

Sen. Arlen Specter, R-Pa., said Exxon's annual profits increased from $11.5 billion to $40.6 billion in the past five years and there was no explanation for "why profits have gone up so high when the consumer is suffering so much."

The five companies earned $36 billion in the first quarter of this year.

The executives, appearing under oath before the Senate Judiciary Committee, said they know high prices are hurting people, but they said the cause is not company profits but global supply and demand. And they sought to use their appearance before Congress to argue against new taxes on their industry

"I urge you to resist these punitive policies," said Hofmeister.

Senate Democrats recently announced an energy package that would tax "windfall" profits of the five companies. That might have public appeal, Lowe told the senators, but oil companies should not be viewed as "a scapegoat" for high prices.

That was not what many senators wanted to hear.

You have "just a litany of complaints that you're all just hapless victims of a system," Sen. Dianne Feinstein, D-Calif., told the executives. "Yet you rack up record profits ... quarter after quarter after quarter."

"I'm sorry to sound like a victim. I don't feel like a victim at all," replied Robertson of Chevron, saying that he was proud of his company's investments in future supply.

Sen. Richard Durbin, D-Ill, accused the corporate executives of ignoring the plight of people suffering because of high energy prices. "Where is your corporate conscience?" he asked them.

"The issue is simple," said Leahy. "People we represent are hurting, the companies you represent are profiting."

http://www.foxnews.com/story/0,2933,356885,00.html

[fuckin crazy]

This ain't nothing. Most of the people on this board will see $500-$1000 a barrel. Oil is a finite resource, that will be gone in 50 years. Lucky for me I'll be dead by then.

[SLCPUNK]

I'm for government intervention into the oil business.  But health care is totally different.  Goverment healthcare will hurt millions of americans in order to favor millions of americans.  Government intervention into the oil crisis may end up hurting a few gazillionaires to help billions.  That's why one is more socialism and the other isn't.

You can't dip into social programs on your terms, then vilify those who also propose programs with tax payer money. 

Too bad we didn't go into Iraq for the oil (as many here thought we had).  If that had happened, maybe all of our gas prices would be lower.   

It's anything but cheap, it's the opposite of cheap.

Nobody here said we went into Iraq for cheap oil. But rather oil contracts later, which is true and already established in the Iraqi Constitution (with America's generous hand of course.) But nobody said anything about cheap. The right parades around that strawman around quite often though.

If Colonel Sanders had been put in the White House in 2000, and a extra crispy was selling at 15 bucks a piece today, would you be the least bit suspicious?

[Bodhi]

you know, when we are busy killing milliions of innocent women and children over there as we continue to wage this illegal war, would it kill our military to grab a few barrels of Oil?  50 bucks to fill my tank...what the fuck?

[SLCPUNK]

Good post 

Oil prices and health care are totally different types of issues, which require two totally different approaches.

As oil becomes more expensive, it puts a financial strain on your family. Cheap oil is your right, and the government should put a cap on it because you are entitled to a comfortable American lifestyle.

Those who feel that affordable health care is their right, or feel the financial strain from astronomical prices (sometimes while gravely ill), are lazy and shouldn't suck off the government teet at our expense.

I get it now.

[SLCPUNK]

you know, when we are busy killing milliions of innocent women and children over there as we continue to wage this illegal war, would it kill our military to grab a few barrels of Oil?  50 bucks to fill my tank...what the fuck?

The price bothers you?

Poor baby, work harder and pay up! Don't come around here looking for a handout.

[Bodhi]

you know, when we are busy killing milliions of innocent women and children over there as we continue to wage this illegal war, would it kill our military to grab a few barrels of Oil?  50 bucks to fill my tank...what the fuck?

The price bothers you?

Poor baby, work harder and pay up! Don't come around here looking for a handout.

haha are you kidding me..its only 10 bucks more than it usually costs me....sarcasm flew over your head on that one...either that or im not as funny as i think I am...no that cant be it....

[SLCPUNK]

Your posts are usually so inane, any attempt at sarcasm makes little or no difference.

[SLCPUNK]

So, let me get this straight, who wants a cap on gas prices? Who wants the government to step in and do this?