Oil prices tumble in biggest weekly drop ever

[defendandprotect]

Source: ap

Oil prices tumble in biggest weekly drop ever By ADAM SCHRECK, AP Business Writer
4 minutes ago



NEW YORK - The price of oil recorded its biggest weekly drop ever, and a gallon of gas finally pulled back from its record high. So is it time to declare the energy bubble popped?

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Experts won't go that far just yet.

"It's too early to say we've seen the worst of it," said Tom Kloza, publisher and chief oil analyst of the Oil Price Information Service in Wall, N.J. "We would be Pollyannish if we believe one week represents a trend."

Still, with oil recording yet another drop on Friday, some industry experts who just days ago thought there was more juice left in oil's meteoric run are reconsidering.

"If this is not the bubble's implosion, than it's a reasonable facsimile," analyst and trader Stephen Schork said in his daily market commentary. "Time will tell. Nevertheless, for the time being we no longer care to hold a bullish view."

Light, sweet crude for August delivery fell 41 cents Friday to settle at $128.88 on the New York Mercantile Exchange — well below its trading record of more than $147 a week earlier.

The average price of a gallon of regular gas fell about a penny for the day, to $4.105, according to auto club AAA, the Oil Price Information Service and Wright Express. Diesel prices dipped three-tenths of a cent to $4.842 a gallon.

Some analysts said a nationwide average of $4 or even lower could be in the offing — almost unthinkable in a summer when there has seemed to be no relief at the pump — although they cautioned that there is no guarantee prices will stay low.

"We're going to see some relief from that relentless march higher," Kloza said.



Read more: http://news.yahoo.com/s/ap/20080718/ap_on_bi_ge/oil_prices

[sakabatou]

1. It's still fucking high

Like... Bush on coke. And I don't mean the drink.

[iquiring mind]

5. Oil is priced in US $

When the value of the dollar drops, the price for a barrel of oil rises.
It's not the only factor but, it is a major cause for the current price of oil.

[sakabatou]

8. Plus speculation

[iquiring mind]

9. Speculation plays a small part

It makes for a great rant and finger pointing but, it's not what's driving this market.

http://abcnews.go.com/Business/MarketTalk/Story?id=3630951&page=1
Look at the record-high price of oil. Even if the same amount of oil is being pumped out of the ground, since it is traded in dollars and the dollar has weakened, the price of oil has increased to make up for the lost value of the dollar, creating a sort of vicious cycle.

This link also goes into other issues dealing with a weaker US dollar. Good for a VERY brief insight.

[sakabatou]

11. Well, we do know what's been bleeding us:

Bush.

[ooglymoogly]

12. Gee Polly...what accounts for those record profits

of the oil and energy industry giants....the biggest and most obscene profits in the history of the world. Could they themselves be speculating knowing beforehand where the markets are going because they make it so.

ABC news is parroting pug talking points telling us what we need to hear to quiet down. Sure the dollar is tanking and what caused that? Spending money like it is manure on reckless ventures to pad the pokets of cronies of course helps. Inside speculators also play their part in the present opportunity to gouge the last cent out of "we the people". I would not trust ABC news as far as I could throw a freight train.

[iquiring mind]

30. It's not a conspiracy!

Changes in the Price of Gasoline Compared to Other Common Consumer Items
Compared to most other products, gasoline is a bargain. Its price has increased less since the early 1980s than the average price of other consumer goods generally. Changes over time in the price of a gallon of gasoline and other consumer items are measured in the Consumer Price Index (CPI). The CPI is defined by the Bureau of Labor Statistics as “a measure of the average change in prices over time in a fixed market basket of goods and services that consumers purchase for their day-to-day living needs.”1
The below list shows how the price of gasoline has changed over the past 21 to 23 years in comparison with changes in the price of a sample of other goods and services that people buy for daily living, such as, food away from home, housing, and medical care. The CPI base period of 1982-84 is used to measure price changes. For example, with 1982-84 equal to 100, the index value for “All items” in February 2005 is 192. This means that the average price (including all taxes) of a fixed market basket of goods and services increased 92 percent
between 1982-84 and February 2005. In comparison, the index value of gasoline (166.8) shows that its price increased 66.8 percent, or about one-fourth less than the average for “All items.” The higher index value for the other consumer items demonstrates that the prices for these items have increased more than the price of gasoline.
Gasoline 66.8%
Food 88.7%
Food away from home 91.4%
All items 92%
Housing 93%
Personal Care Service 102.9%
Motor vehicle maintenance and repair 103.5%
Public Transportation 108%
Rent of Primary Residence 114.8%
Services 126.9%
Fruits and Vegetables 134.2%
Medical care 218.7%
Educational Books & Supplies 257%
Tuition, school fees & supplies 330.2%
Hospital and related services 332.6%
Tobacco & smoking products 396.1%

(1 The price data used to construct the index are collected monthly by Bureau of Labor Statistics representatives who record about 80,000 prices from
selected department stores, supermarkets, service stations, doctor’s offices, rental units, etc., throughout the U.S. See U.)

The oil and natural gas industry is probably the world's largest industry. Its revenues are large, but so are its costs of providing consumers with the energy they need. Among those are the cost of finding and producing oil and natural gas and the costs of refining, distributing and marketing it. The energy Americans consume today is brought to us by investments made years or even decades ago. Today’s oil and natural gas industry earnings are invested in new technology, new production, and environmental and product quality improvements to meet tomorrow’s energy needs.
The industry's earnings are very much in line with other industries and often they are lower. This fact is not well understood, in part, because reports typically focus on only half the story-the profits earned. Profits reflect the size of an industry, but they're not necessarily a good reflection of financial performance. Profit margins or earnings per dollar of sales (measured as net income divided by sales) provide a more relevant and accurate measure of a company or an industry's health, and also provide a useful way of comparing financial performance between industries large and small.
For the second quarter of 2005, the oil and natural gas industry earned 7.6 cents for every dollar of sales compared to an average of 7.9 cents for all U.S. industry. Many industries earned better returns in the second quarter than the oil and natural gas industry. For example, banks realized earnings of 19.6 cents on the dollar. Pharmaceuticals reached 18.6 cents, software and services averaged 17cents, consumer services earned 10.9 cents and insurance saw 10.7 cents for every dollar of sales.

AND this from the NYT Business Editorial
http://www.nytimes.com/2006/02/26/business/yourmoney/26every.html
Everybody's Business
What Is an Oil Company, Anyway?
Published: February 26, 2006

SOMETIMES I wish that the whole world celebrated a Teachers' Day. It would demonstrate our gratitude to the magnificent teachers we have had during our lives.
I think of Ms. Bratt, my third-year Latin teacher in high school, who had us all dress in togas and read Cicero's Catilinarian orations. I think of my great first-year Humanities and Contemporary Civilization teachers at Columbia, Mr. Fiering and Mr. Rothschild, and my disturbingly on-target teacher of Eastern European history, Mr. Rothstein.
And I especially think about my great economics teacher, C. Lowell Harriss. On the very first day of class, he changed my world view when he said, "Now, when I say 'corporate shareholders,' think 'widows and orphans.' "
This admonition comes to mind when I read the recent criticism of oil company profits. (I guess that the criticism is mostly of Exxon Mobil's profits; many other oil companies are not showing profit gains.) But when I hear representatives and senators speaking about the supposed wrongs of oil company behavior, I go back to my great Professor Harriss and think: "Wait a minute. These guys are asking us to punish oil companies. But what do they mean when they say 'oil company'?"
What is an oil company anyway? Consider Exxon Mobil, the largest domestic oil company and the largest stockholder-owned oil company in the world (though far smaller than many state-owned oil companies like Aramco or Pemex).
Exxon Mobil has about 85,000 employees. An overwhelming majority are working in oil fields producing oil, working in refineries making gasoline and heating oil from crude oil, shipping oil on large ships, taking orders for energy products, filling out forms, making sure machinery does not break down.
They are making sure that the computers are running, serving lunch in the cafeteria, writing speeches for the top executives, filling out medical care forms, driving vans. When Hurricane Katrina devastated southern Louisiana, many of them took to their boats to help people and animals stranded in the high waters, then worked full time to get their refineries running again.
Are we angry at them? I can tell you, since I am close friends with a man who wrote speeches for a top executive, that they are not wildly well paid, particularly by Wall Street or Hollywood standards. Out of the 85,000, only a few earn more than a million dollars in salary a year, which is training-wheels pay for investment banks or big Hollywood talent agencies.
Are we angry at them for high oil profits? If so, why? All they are doing is providing us with our energy and our heat and our locomotion as well as they can at reasonable pay.
I have spent some time in this space talking about executives who reap millions from their companies while their employees suffer. That is not the case at oil companies, or at least not at Exxon Mobil. Its executives pay employees decently, take care of their medical bills even in retirement and do not drain hundreds of millions of dollars out of employee pay to make themselves rich. If the executives of Exxon Mobil become rich (and some do), they do it through long years of making the company profitable, not through vampirizing their employees.
Are we angry, then, at the owners of the oil companies? Maybe, but then it's self-hatred. Roughly 41 percent of Exxon Mobil stock is owned by retirement funds, private, public (federal, state and local) and individual retirement accounts. In other words, by us.
It is demonstrable that many retirement funds hold a great deal of oil stocks, including Exxon Mobil. Of the other owners, the largest holdings by far are at mutual funds and exchange-traded funds — generally vehicles for middle-class investors and retirees.
No individuals own more than 1 percent of the stock, and the largest single personal holding, representing far less than one-tenth of 1 percent of the company, is owned by Lee R. Raymond, the retired chief executive, who took the company through some very rough sailing to arrive at its present, fairly secure position.
ONE of the largest holders is the College Retirement Equities Fund, for higher-education teachers and others. Are we angry at them? If teachers get a bigger retirement because oil company profits are up, are we sad?
So, when gasoline and heating oil prices go up — prices that are set by the markets, not in the Exxon Mobil boardroom in Irving, Tex. — why are we angry at the schoolteachers and retired police officers who own Exxon Mobil and who can now buy new golf clubs?
We can be angry at "them" all we want, but it does not make a lot of sense because, at the end of the day, "them" is us. Or as Pogo Possum, a cartoon figure of the past, used to say, "We have met the enemy and he is us." And thank you again, Professor Harriss.
Ben Stein is a lawyer, writer, actor and economist. E-mail: [e-mail].

Some of the information I provided above may be a few years old but the basis of my argument still holds true!

[ooglymoogly]

34. No it never is. In nu speak; A conspiracy or cabal is never a conspiracy or it would not work.

If big big spreads endless supplies of cash to congress and folks with influence through lobbyists to change laws to deregulate the economy in order to rob it blind; Is that a conspiracy in your book?

[mbperrin]

38. Little disingenuous to stop at February 2005, isn't it?

The average price for gasoline in February 2005 was $1.75. Now well over $4. So we need to add at least 150% to your 66% claim, which means that gasoline is up 216% from 84 to now. That beats everything but medical and textbooks, another couple of fine examples of oligopolies at work.

These companies are price makers or price takers. When one raises a price, the others can go along with it - they're publicly posted. No overt communication is needed, so in that sense, there is no
"conspiracy." But their business model is predicated on having just a few large companies in the market, easily watchable, and easily imitable.

For instance, in 1968, gasoline here in the Permian Basin was 13 cents a gallon, full service (there wasn't anything else back then.) This meant that someone came to the car to pump the gas, make change, clean all the windows, vacuum the floorboards, check and top all fluids, and check and add air to tires, if needed. Then, to eliminate employees and labor, they offered "self-serve". You do it all yourself and save 2 cents a gallon. Sounded good at 16 years old, but who takes care of granny's car in subzero weather up north or in the 100s down here? Nobody. And nobody checks anything, period. You can buy a 10 cent coke for $2 inside from a surly underage clerk, though.

This business model put the squeeze on the independent station owners, driving them out, and leaving the field clear to what we have now - no service and gasoline well over $4 for the cheapest grade.

That's why when I see machines where they want me to check out my own groceries for free, I say no thanks. If I had real integrity, I'd take an axe to them. But I hate being in jail, even for a bit, just for damaging corporate property. I own no stocks, period, so none of the above categories apply to me. I just pay too much money for too little product and service - the ultimate goal of the oligopoly.

Benevolent saviors of the world? Please. They sold out of this area years ago to small independents in order to get rid of their environmental liabilities and on to the next big thing. Some of the families who bought those used fields are now finding out why they were cheap - billions are due the EPA Superfund to clear up 70 years of neglectful, wasteful, and downright evil practices committed by those majors in their thirst for profits.

So now off to find another way to leave granny doing her own thing for a bunch of money for the companies. Profit is the name of the game, and oligopoly is the strategy for these large profitable mobile entities.

[iquiring mind]

39. I noted at the end of the post that data was dated

It was the most recent data I had and I was quite open about it. I would be happy to accept any data you can find that is more up to date.

Is it disingenuous for you to add the increased cost of gasoline over the last few years but hold other indices stagnant?

My point is not that "Big Oil" is the benevolent savior of the world (Never said it, never implied it), but that the irrational ranting against them as the Greatest Evil to ever visit this planet destroys credibility.

The accepted average mileage driven is 12,000 miles. Using a average fuel economy (picked from off the top of my head) of 20 mpg and an increase in gas price of $2/gallon:
12,000 miles/20 mpg = 600 gallons * $2/gallon = $1,200/yr / 12 months = $100/mt in additional gas costs for an average driver. For some people this may create unbelievable hardships like carpooling (you mean I have to spend another 30 minutes with my co-worker?), taking the bus (you mean sit next to 'those' people?), bringing your homemade lunch to work, deciding not to eat dinner at McDonald's 3-4 times a week or skipping a golf outing with the buddies (invariably stopping at Hooter's on the way home to throw more money away while believing the giggly, sexy, curvy, airhead of a waitress serving you the over priced beer is actually interested in you), stop smoking (sorry, that's just asking too much).

Back in 1968 you could by a Cadillac for about $5,000. People had one TV, one (maybe two) cars, one phone, no computers, no Wii, no cell phones, no VCR/DVR. If my 'granny' needed gas in her car we would fill it up for her. To start with we would more than likely be driving her where she needed to go. Yes, times were better, "back in the day."

One reason America is in the mess we are in is that we forgot how to live within our means. We need both spouse's working because we 'have to have':
a home in the suburbs, (with a pool, in a gated community - which happens to have its own community pool)
a TV in every bedroom, with cable!
a cell phone for every individual in the family (God forbid we have to wait an hour for somebody to get home before we can fill them in on the latest gossip at work),
a laptop for everybody over 5 years old lest they fall behind in school,
a car for everybody over 16 years of age (God forbid the teenager has to peddle their bike to their friends house after school),
a separate, individual bedroom for every child (what happened to sharing a room with your sibling).
We run our credit cards to their maximum limit and then complain that the credit card companies are holding us hostage. WTF!?! Whatever happened to personal responsibility? We don't need all this crap!
But, I digress.


We do agree about the "self check-out" machines. It's one of the reasons I quit shopping at Home Depot. I used to go there and find well qualified, knowledgeable employees in every aisle. No matter which portion of the store they worked (electrical, plumbing, mill work, etc.), he/she knew the building codes and could talk you through your home improvement project. Now, you're lucky to even find somebody near the aisle where you necessary product is located, let alone knowing what the local building codes say about its installation. On top of this they only staff one cashier and expect you to 'self check-out'! Screw that! If they want my money, staff a person to at least take my money with a smile.! I now happily shop at the Lowe's store across the street.

[mbperrin]

46. I cut you a break on the other indices. Housing is in deflation now,

for one.

Google for more recent gasoline prices. I did.

I worked in the petroleum industry for two decades (hard not to here in West Texas), and they are neither saints nor blameless for grabbing all they can. They are well-organized with a number of professional organizations (American Petroleum Institute, Wildcatters Association, Petroleum Clubs of every size and influence, trade shows like the Permian Basin Oil Show, Houston Offshore Technology Conference, and a whole lot more. They also own any number of pocket judges and other politicians.)

Let me give you an example: Ector County was and is one of the top oil and gas producing counties in Texas, beginning in 1929 and continuing right on to today. Local schools should have been flush with money, yet they weren't even air conditioned until 1988. That is because the largest oil company in the county had a representative who attended each school board meeting and sat in the front row and shook his head yes or no to various proposals under consideration by the board. I started school here in 1959.

We learned to "play piano" using 1x4 boards painted white and black like keys. The music teacher had no piano, either, but she did have her own record player she brought from home. The first school bus here was used and was bought from another ISD. Even when parents bought air conditioners for the schools, they were refused because of the cost of electricity to run them. Peak production occurred in Texas in 1972, and a decade later, the majors were pretty well out of west Texas. A few years later, with political power scattered among many independents, the schools were finally able to assess a decent amount of money to get air conditioning, libraries, new buses, and other improvements. Schools are better now, but still lag average expenditures per student in Texas by several thousand dollars a year and still struggle with a 50% population with not so much as a high school diploma.

I've seen many individual companies forced into bankruptcy when a major oil company took a year or more to pay their accounts, meanwhile pushing these local companies to give all their energies and resources to the majors, later settling for pennies on the dollar while pushing on to the next "prestigious" awarding of their large contracts to another local. These are the worst kinds of sharks and crooks, with strategies and resources in place to get money for themselves regardless of the human cost to others.

That's all I'm saying. I don't worship in their church. I'm a converted petroleum atheist.

Thanks for the agreement on the self check out. They really do annoy me. Oh, and I didn't drive my granny anywhere. She was the head of two veterans' organizations here, an active Eastern Star, the donor of the land for the second largest church in the city, and the first person I ever heard say the F word (it was to my 6th grade principal when he assigned a group punishment of picking up trash for one person talking in line), and she lined him up with a lecture on ethics and comparative economics systems. She came here from Germany at age 7 in 1891 without knowing a word of English, and she lived to be 93, driving all but the last year of her life. I miss her, even if she was a sailor, and if more people would slip the leash and take off the muzzles they're wearing, we'd be a better country.

[iquiring mind]

48. Oil companies are not unique

I'm sure what you describe as the political corruption and misfeasance in Ector County, unfortunately occurred and continues to occur in many company towns.

I've seen companies go bankrupt when a movie production company comes into town and rents venues and purchases supplies and services. Everybody is so excited about being part of a movie production that they take leave of their common sense. The production company will incorporate as a business just for that movie then dissolve right after production. Never paying their bills and leaving their venues trashed. The shine of Hollywood quickly tarnishes when innocent souls are left bankrupt and their property in shambles.

Construction companies also can screw an unsuspecting homeowner. The homeowner signs a contract with a General Contractor (GC) to renovate their home and pays 50% or more as down payment. This GC higher sub-contractor to do the actual work then never pays the sub-contractor. The sub-contractor is actually allowed to then lien the home to force the homeowner to pay a second time. The owner of the GC can dissolve the company and start up another literally the next day. Debt free and able to screw another homeowner and sub-contractor. All while living comfortably with his nice house and toys untouchable from those harmed.

There should be laws holding the executives of these companies personally responsible. Allowing them to use incorporation laws to screw people is immoral.

Some fixes are definitely needed but, we don't need to "throw out the baby with the bath water." ( I'm not saying that this is what you've advocated )

My high school (East Coast of Central Florida, graduated '82) had A/C in only 20% of the fixed concrete buildings. None of the 10 wooden 'portables' (basically wood mobile homes) had A/C. I remember lifting my arm up off my desk and the paper sticking to my arm due to the sweat. They didn't get A/C until around 1990. We were still one of the best rated schools in the state. My point here is that too many 'advocates' want money spent to build pretty new schools with all kinds of amenities when they should focus on textbooks and libraries. Ultimately, the success of a student rests with the parents. If the parent doesn't care the child is at a severe disadvantage. If the parents care, a child can still succeed in a poor school. Even the worst schools produce valedictorians and the best schools produce dropouts! The difference is responsible parenting.

[mbperrin]

53. Nothing unique at all. Common business model.

You're right when you say that responsible parenting can be part of the solution. Problem here: culture has been anti-education for so many generations that Census Bureau records show that only 50% of adults over the age of 25 in Ector County have a high school diploma or equivalent.

And current figures are just as bad: The two high schools here had nearly 2400 sophomores in 2006, yet they graduated only about 1300 seniors between the two of them in 2008. So we're still losing 50% of our kids, even the ones who make it as far as high school.

Big culprit? Many still believe they can make great money in the fields here without an education. Every bust takes them by surprise just like it never happened before.

Of course, I was lucky. My grandparents all came from elsewhere: two from Germany, one from Prussia, one from France, and all believed in education. That's why I teach now. And I was especially lucky that one of my grandfathers was an organizer in the oilfields of west Texas for the IWW. It gave me some alternate background while I earned my economics degree.

That old man was tough. He was left for dead after being beaten with clubs by company reps in 1931 with literally every bone in his body broken. In bed 4 years. Worked till 86, raised 4 kids and 5 of his grandkids after his oldest son died young and his daughter in law literally was institutionalized for the rest of her life. All 5 grandkids graduated from Texas Tech. Not too bad for an old German who began learning English at 14, I don't think.

Keep parenting, friend. And keep working for those fixes. Personal liability would be a great start!

[iquiring mind]

64. Ector County

Reading what you've written about Ector County made me curious, so I "Googled" it.
http://www.co.ector.tx.us/
$26,000 to start as a Deputy
$40,000 to start as a Teacher
Good starting salaries! I was surprised the way you speak of things. I was expecting $16,000 & $20,000 respectively.
http://quickfacts.census.gov/qfd/states/48/48135.html
68% High School graduates, 2000
12% Bachelor's degree, 2000
19.3% below poverty, 2004
http://en.wikipedia.org/wiki/Ector_County,_Texas
According to CDC reports the teen pregnancy rate in Ector County is the highest in the United States with 22.9%.
http://www.ector-county.k12.tx.us/002.html
This surprised me the absolute most. New Bible Curriculum Information! They teach the bible in school there? When I read the statement of purpose http://www.ector-county.k12.tx.us/files/4CD72AADEAE34001AD984D125A1D4318.pdf, I felt better but still, WOW.

On a side note, I feel they should go a step further and teach the foundations of all major religions: Judaism, Christianity, Islam, Hinduism, Buddhism. I would say, in a school with six grading periods in a school year (I don't know how many school districts use this but this is what I grew up with); each of these religions could be taught exclusively in a grading period, then the last grading period would be used to review & compare/contrast these religions. This would knowledge would go a long way to understanding people of other walks of life. Understanding is the first step towards accepting.

In general, from my brief read about Ector County, your home town does not seem as dismal as you portray. Of course, you lived there, I didn't. You know it intimately. I guess I'm the same way with my home county. It has it's good points and bad, some people love it and move back (if they ever left); but I couldn't stand it.

Kudos to your grandparents! The first/second generation of immigrants always seem to be the hardest working. They have a true knowledge of true poverty and oppression. Too many of us are spoiled and expect things to be handed to us.

[ooglymoogly]

47. I call it the Federal re$erve model....(Federal not) nt

[420inTN]

52. Record profits are from diversification...

Actually, giants such as ExxonMobil receive the majority of their incomes from the "upstream" market (oil exploration, extraction, transportation, and wholesale markets) --> http://en.wikipedia.org/wiki/ExxonMobil

their 10% profit margin is smaller than other industry giants such as Intel ($1.6 Billion in profit this past quarter on about 30% margins).

[mbperrin]

57. I'd ask a good CPA about that 10%.

The owner of an oilfield supply company owned three different stores during the late 70s. I was the administrator for the main one, and we grossed $1 million per month in sales with about $300,000 in total expense. You and I would think that's a 70% profit. But these stores "bought" and "sold" from each other, and the end result was nearly no taxable profit at all. Yet, he was buying large vacation homes in the Rockies, on the Gulf Coast, and in Palm Springs, had a private jet with a pilot retired from the Air Force, and lots more.

Yet according to his certified accounts, he was making hardly anything at all!

So be careful in an integrated market when the same company owns so many income streams.

[AlphaCentauri]

32. Should be higher

Oil is a non renewable source of energy it is priceless. Time to move to other energy sources.

[StClone]

2. Oh my was it the threat to control the Speculation Market?

To ease but not end the practice are they cooling the market to get the heat off?

[Blue_In_AK]

3. So why have Anchorage gas prices gone UP this week,

now at $4.44?

[iquiring mind]

6. Cause and effect are not immediate

It will take a while for the cheaper oil to be refined and make it's way to the market place.

Besides, you should be happy the price of gas is high. Primarily because:
If gas is expensive, people will drive less and cause less pollution.
If gas is expensive, alternative (Green) sources of energy will be more cost competitive.

Also, be glad you're not in Europe where they're paying close to $9.00/gallon.

[classof56]

17. Has gas in Europe been at $9/gallon for awhile now?

I've always heard that it's much, much higher than the U.S., cause for us to be grateful, but I find myself wondering if Europeans have to decide between paying for gas and buying food? Paying rent? Praying they don't get sick like the 47 million uninsured and millions more underinsured Americans do? Working two jobs to afford to raise and educate their kids (like my grown children do)? Wonder how on earth they're going to afford the coming major increase in utility bills? Watch their savings and retirement accounts dwindle? Pawn their belongings to hold body and soul together? Face foreclosure of their homes? Yes, it's fine that expensive gas will cause people to drive less and reduce pollution, but what about those for whom their vehicles is their only option to get to their jobs, both or maybe all three of them, and then there's that vehicle insurance requirement where the premiiums go up and up whether one drives the vehicle or not. I'm all for alternative energy sources--have been for many, many years, but as long as Big Oil rules the world, I don't see it happening in the foreseeable future.

Okay, my rant is done. I'm happy for the people in Europe and for the Americans for whom sky-high gas prices cause no disruption in their lives. I'm retired and coping, have had to go back to work to do so, but mostly I'm angry and frustrated that apparently my grandchildren's futures have been co-opted by a bunch of money-grubbing, evil corporations who have the power, care nothing for the "common person" and laugh as we struggle to get by. A pox on them all!

Tired Old Cynic

[iquiring mind]

31. European gas price inflation

http://www.eia.doe.gov/emeu/international/prices.html#Motor



Also, I'm sure Europeans have the same life worries we have in the US. They also have to decide where to spend their money: gas, food, rent, children, retirement, etc. ( I left out health insurance because that's a completely different thread and I don't want to get sidetracked from the topic)

Big Oil rules the world? Nobody rules you unless you you give them the power. Don't want to be held hostage to gas prices? Move closer to work, ride a scooter/motorcycle, turn off the lights, insulate your house. In essence, change your behavior! Don't just sit there and bitch about how bad things are! Change the equation!

[classof56]

35. Thank you so much for enlightening me. And welcome to DU!

In all my 70 years I'd never considered changing my behavior, moving closer to work, riding a scotter/motorcycle, turning off the lights, insulating my house. So glad for your suggestions. And thank you for telling me to quit my bitching and change the equation. Been working on that for the last 7 years but I'll take your advice and try harder from now on. I hope you have caught the sarcasm here, but in case you haven't, I'll just say I don't need and don't appreciate your post and in fact, I am putting you on ignore right now. Well, as soon as I post this. I do welcome you to DU, and I hope another member will take you to task much better than I have. Good luck to you--I'm thinkin' there's a lot of life lessons ahead of you. Just hope you're a quick learner.

[Hannah Bell]

40. cause & effect are not immediate only when oil prices go down. when they go up,

gas goes up immediately.

[DJ13]

4. ........a gallon of regular gas fell about a penny for the day.........

So in about 6 months it might be a resonable price?

[Politicalboi]

7. Gas stations are

Quick to raise the price but never quick to lower it.

[RoyGBiv]

10. Not exactly ...

I once changed prices five times in one 24 hour period, both up and down.

Current gasoline prices almost never have a direct correlation with the current price of crude. Gasoline can go up when oil drops and go down when oil rises. There are many other factors involved in the retail price of gasoline.

The contract that is determining the price of gasoline today is, in most places, partly a reflection of a crude oil price a month ago.

[Speed8098]

43. Ok, I've got a question for you

You said: I once changed prices five times in one 24 hour period, both up and down, which I assume means you are a gas station owner or manager.

If you are in fact an owner or manager then please tell me if you had 5 different deliveries of product in that 24 hour period.

I ask this because I assume your cost for the gas currently in your underground tanks only changes if you get another delivery of product.

Hypothetical Example: 20,000gal of regular 87 Octane was delivered to you this morning and the price you charge in order to meet your overhead and profit is $4.25 per gallon.

How do you justify raising or lowering the price you charge your customers since the price you paid for that gas is constant until your next delivery? If I'm wrong about how this works, I apologize but it just doesn't make sense to me how stations can make several changes to outgoing prices without having incurred several changes in their purchase prices.

[hack89]

45. Isn't the price charged based on the replacement cost of the gas you are selling?

If your next delivery is more expensive then how else do you get the money to pay for it other than raising your prices?

The price you paid for the gas you have in your tanks now is irreverent - what if it does not provide enough money to refill your tanks?

Gas futures are one of the drivers of todays gas prices.

[jzodda]

54. Well it Certainly Feels like the price goes up right away when oil rises

From what I see around here the price of oil was going up up up and the next day gas would go higher. Whenever there was a drop in price and now its like $20 off the highs, there has been no lowering. So even though there are other factors involved it feels like we are getting the shaft with prices that always rise when oil goes up and not the other way when oil falls.

I also can't figure out why as soon as I cross from NY into NJ the price of gas falls by almost 40c a gallon right now. Is NY taking all that difference in tax? This oil business has had me very angry all summer.

[ohio2007]

16. It's "the rocket and feather" dynamic.

prices shoot up with the bbl of oil takes a spike upward
but gently float downward when crude takes a tumble.
Maybe this time next week gas will be reported in some parts of the country to be @ $3.75/gal bc of the current dip.

but
the price has to remain down over the next week......

[Gamey]

13. Oh great! Let's export some more!

While the U.S. oil industry wants access to more federal lands to help reduce reliance on foreign suppliers, U.S.-based companies are shipping record amounts of gasoline and diesel fuel to other countries.

A record 1.6 million barrels a day in U.S. refined petroleum products were exported during the first four months of this year, up 33 percent from 1.2 million barrels a day over the same period in 2007. Shipments this February topped 1.8 million barrels a day for the first time during any month, according to final numbers from the Energy Department.

http://www.cnbc.com/id/25518912

[ohio2007]

14. They said the "oil bubble" will burst by september. so..... I'll take a wait and see

if the saber rattlers can prevent the bubble from bursting over the next seven weeks.

[dipsydoodle]

23. To do so

it would need to at least halve in price. At present a few dollars here and there are insignificant in comparison with the damegae which has been done.

[ohio2007]

26. The weak dollar would need to be factored in also . It's 1/2 of what it use to be.

inflation , another factor in passing the oil rise cost on to consumers.

At least we don't have Zimbabwe level of inflation.

[dipsydoodle]

28. I'da said 70%

I recall that Feb '02 it was c. $1.40 : £1.00 and now it's $2.00 @ £1.00 The change may be greater against the Euro I guess. I think the death knell is sounding for the petrodollar anyway. However - its loss would create even higher oil prices in the USA.

[ohio2007]

36. I was using the EU's currency as the oil value measure.

Much like the Eu's gasoline products sent to Iran in exchange for its oil pegged to the Euro,
the refined oil products the US sends back to Mexico and Canada fetch some trade balance for the $.

[Hannah Bell]

41. Dollars to Euros 2003-08

12/03: $1.23
12/04: $1.34
12/05: $1.19
12/06: $1.32
12/07: $1.45
6/08: $1.56

http://research.stlouisfed.org/fred2/data/EXUSEU.txt

So the dollar's lost .33 cents of its value v. the Euro, or -27%, since 12/03.

The run-up in oil prices started '05.

[AlphaCentauri]

33. Not exactly bubble but the new contracts for US oil companies in Iraq

thats what is driving the price down, speculation that there will be more oil in the market soon.

[defendandprotect]

15. Speaker Pelosi is on Bush's tail to RELEASE the OIL RESERVES .........

Watched her yesterday on C-span . . . she's after him!


Btw, she gave numbers and e-mail for us all to send messages . . .

one was "[e-mail]

I think the other was a telphone number for the White House . . .

I think we should also be after Congress to release the reserves ---

but also to keep after the Global Warming issues --- and new energy technology

- plus pushing for electric cars.

[ohio2007]

18. The GOP Tries On Jimmy Carter's Sweater ( June 2001 article)

a look back at the 9/10 world view

The GOP Tries On Jimmy Carter's Sweater CNN

snip

Bush delivered his Thursday pep talk at the Department of Energy after touring an exhibit of fuel-cell-powered energy-efficient cars, and the headline of the speech was to dress up conservationist policies in business-friendly clothing (or possibly the other way around). Fuel cells. Energy-efficient appliances. Putting the federal government "squarely on the side of innovation."


snip
In May, convinced the nation was terrified of going California and hungering for a steak-and-eggs energy plan, Bush sold his plan as an aggressive drill-and-dig, anti-regulatory prescription to shoo away the tree-huggers and get the nation — and the economy — humming again.

Two months later, a New York Times/CBS poll released last week found that not only do two-thirds of the nation think Bush and Cheney are too beholden to oil companies, 60 percent think the pair made the whole energy crisis up.

snip


http://www.time.com/time/nation/article/0,8599,165957,00.html

Ever wonder what the price of oil would be today if drilling was started back then ?

Maybe this curent unified threat to drill will be all that is needed to get the OPEC oil barons nervous about competition.

Maybe the US should stop buying oil over the next several months thzt gets put into the strategic oil reserves. That would put a big chunk of unsold oil back on the market.

[Tutonic]

19. Does Rupert Murdoch own the AP? Can we get some real

headlines? So what if it drops $4.00. How about a $40 or $50 dollar drop so that we can get more than a ten cent reduction? Do they assume that everyone over 25 that can reason has been shipped off to Iraq and that everyone left behind has the intelligence of a bag of beans?

[Dave From Canada]

20. Probably all the talk of drilling, and Bush's lifting of the executive ban. Seriously, I'm not sure

why you guys don't use the oil reserves you have. We do.

[skoalyman]

21. we spend most our time doing thing ass backward

and upside down

[ozymandius]

24. It's talk alright. But not talk about drilling.

Traders are not saying, "Whew! Thank goodness we have a plan to curb supply strains with offshore drilling."

Even if holes were drilled into the ground today - oil would not come to market for another ten years. About the executive ban: the Congressional ban is still in place. So that's a non-starter.

Prices fell for a number of reasons. First the market is a volume business. Prices rise too high; consumption falls. What is a guaranteed return on investment yields smaller returns. Next step: goose the market. Reinforce the behaviors that increase oil consumption through psychological manipulation.

Other reasons, too many and complicated for this post, start with the Forex markets - the exchange value of the dollar against other currencies; overseas demand for oil; seasonal changes crimping consumption; then we have the SEC, a toothless and corrupt SEC, acting as though its barking mad about naked short selling of shares and its ridiculous inquisition about those who spread rumors about economic bad news.

Oh - and there is that thing about Iraq pullout timelines and establishing a diplomatic presence in Iran. Trends toward peace in the Middle East break oil's upward price momentum. And then there's more talk.

Market manipulation (i.e. speculative short selling) is under scrutiny. So you can expect those who are engaged in this activity to lay low for awhile.

[WilyWondr]

22. Oil companies are not even drilling

on the leases they already have and have had for a long time. It is like having money in the bank to them to have those leases. Attempting to get more leases is all an attempt by oil companies to get as much as they can before their oil man leaves the white house.

http://www.newsdaily.com/stories/wbt009440-congress-house-oil/

WASHINGTON, July 17, 2008 (Reuters) — The White House on Thursday threatened to veto legislation being considered by the U.S. House of Representatives that would force oil companies to give up undrilled federal leases and ban the export of crude drilled in Alaska.

Ever heard of http://www.phibro.com ?

Phibro is the old Philipp Brothers trading firm that has resided secretly and quietly on Nyala Farms Road in Westport, Connecticut as a subsidiary of the banking/brokerage behemoth, Citigroup, since the merger of Traveler’s Group and Citicorp (parent of Citibank) in 1998. Traveler’s Group owned Phibro at the time of the merger. Despite the fact that Phibro has provided Citigroup with $2 billion in revenue over the past three years, the 205-page annual report for Citigroup in 2007 carries only the following one-sentence footnote on commodity income that acknowledges the existence of this company. “Primarily includes the results of Phibro Inc., which trades crude oil, refined oil products, natural gas, and other commodities.”

http://www.counterpunch.org/martens06212008.html

Read up on what Marc Rich(yeah the Marc Rich that Bill Clinton pardoned) has been doing for the past 8+ years.

http://www.khaleejtimes.com/DisplayArticleNew.asp?section=opinion&xfile=data/opinion/2008/june/opinion_june19.xml

International oil trading is now dominated by a handful of firms such as Glencore (founded by Marc Rich and part owner of the Footsie 100 copper and nickel mining giant Xtrata) and Gunvor (whose bosses include a German speaking ex KGB judo black belt oligarchs with an old relationship with Putin from his St. Petersburg mayor office trade). Gunvor and Glencore are among the world's largest oil trading companies, with revenues in the $70-80 billion ranges, arguably the biggest private businesses on earth. They own no refineries, no gas fields, no oil wells, no fleet of supertankers, and no petrol stations. Yet they lift the vast majority of the world's oil and gas, sell the black gold treasures of Gazprom, Rosneft, Sibnet and the Opec state oil companies in nebulous, opaque deals no government can really police, though the CIA, M16, Mossad, the FSB and their Third World peers routinely conduct vigilant surveillance on oil tanker movements.

Speculation is the reason oil is the price it is.

[liberal N proud]

25. I am sure the oil companies will use it as an excuse to raise prices

[ohio2007]

27. Trying to reason with hurricane season ?

[Better Believe It]

29. Oil Speculation Is the Main Cause Of High Prices

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x3606939

[neverforget]

37. Since oil is a finite resource, increasing demand on a finite resource is

going to cause price increases. We, human beings, cannot continue to expect infinitely growing consumption (growing and expanding economies) to continue to exist as they are today on finite resources on which infinite growth is dependent upon.

[robcon]

42. EVERY resource on earth is finite.

"increasing demand on a finite resource is going to cause price increases" is a false statement. Demand for oil skyrocketed in the 20th century, but until about 1970, the price of oil had declined to less than $5 a barrel. When foreign steel manufacturers came on line in the 70's and 80's, and scrap steel became more available, the price of steel declined despite increasing demand.

It's both SUPPLY and DEMAND that set the price. There is only one earth, and every product: iron, aluminum, water, agricultural products, etc. is finite, but not every product is increasing in price.

[neverforget]

49. You proved my point. Demand is high and supply is tight right now thus

the price increases. However, scrap steel is a bad analogy as once a barrel of oil is used, it's gone.

[robcon]

56. Supply is tight. Prices have gone up.

Your original idea that simply because there is a "finite amount" of oil that prices will go up is ridiculous, with hundreds of counter-examples, both for oil and other commodities, as well as for manufactured products.

There is a finite amount of everything on our planet. Supply, determined by investment, capacity, technology, costs, political factors, etc., is just as important, and as variable, as demand.

[neverforget]

58. The world has consumed 123.7 billion barrels in the last 4 years.

Total Oil consumed in 2004: 30,441,000,000
Total Oil consumed in 2005: 30,879,000,000
Total Oil consumed in 2006: 31,171,000,000
Total Oil consumed in 2007: 31,207,500,000
Total Oil consumed in last 4 years: 123,698,500,000

Where are we finding that amount of oil to replace what we have used?

What is ridiculous is expect infinite growth on finite resources.

[420inTN]

51. Actually, Oil can be created...

through processes such as Thermal Depolymerization (TDP). TDP can create oil, natural gas, minerals, and water from any organic compound (pretty much everything but ceramic, glass, and metals).

[neverforget]

55. I guess our problems are solved. This process only needs to produce

31 billion barrels of oil per year at current oil consumption rates. (85,000,000/day x 365 = 31,025,000,000)

What is the Energy Return on Energy Invested (ERORI) with this process?

[420inTN]

59. IIRC, about 85% efficient

For every 100 units of energy produced, about 15 are used to sustain the process.

Of course, this does not include the energy required to fabricate and construct the plant.

And different source stocks yield different returns (i.e. used plastics will produce more oil than turkey offal which produces more oil than untreated sewage, etc.)

For more information about the process, check out the wiki: http://en.wikipedia.org/wiki/Thermal_depolymerization

[mmonk]

44. Oil producing countries will need a stronger dollar

to justify oil trading in dollars or they will move to another currency. This will be quite interesting to see how deep in hock we are.

[CJCRANE]

50. The announced Bushco diplomacy with Iran

could also have had an effect on calming the speculators.

[Xenotime]

60. It's because Obama is in the middle east.

He is already stabalizing things there.

[NickB79]

61. Going back up past $130 as of 7-21-08

I was wondering what would happen this week.

The oil markets seemed to stabilize last Friday, only dropping 40 cents after dropping $15 in the previous two days. I was just telling a coworker on Saturday that if the prices start going back up on Monday, we might have seen the true effect that speculation was having on the oil markets.

If that's the case, so much for seeing oil drop below $100/barrel any time soon.

[Imagevision]

62. Gas could go down to $80.00 per barrel and would still be $4.-$5.00 at the pump...!

how long will it take Bush & Cheney do give in?

[struggle4progress]

63. Oil up from six-week low

(07-22 00:21)

... Crude oil for August delivery rose 58 cents, or 0.5 percent, to US$129.46 (HK$1,009.78) a barrel at 11.2am on the New York Mercantile Exchange. Futures are up 71 percent from a year ago.

Futures settled at US$128.88 on July 18, the lowest close since June 5. Prices dropped 11 percent last week, the most in more than three years ...

http://www.thestandard.com.hk/breaking_news_detail.asp?id=792&icid=1&d_str=20080722