Oil jumps to highest levels since Iraq war

[NNN0LHI]

http://www.alertnet.org/thenews/newsdesk/L06645345.htm

LONDON, Aug 6 (Reuters) - Oil prices climbed to their highest levels since the Iraq war on Wednesday, bolstered by renewed worries of terror attacks and fresh concern over supplies from Iraq.

London benchmark Brent crude gained 51 cents to $30.44 a barrel, while U.S. light crude rose 53 cents to $32.75 a barrel in overnight trade.

"It's up as there is an increasing focus on supply tightness, with concerns over the timing of Iraqi barrels and OPEC's determination to restrict supply," said analyst Mark Iannotti of Merrill Lynch.

Iraq has struggled to return crude output capacity to pre-war levels of 2.8 million barrels per day due to sabotage and looting of its oil infrastructure. Current output stands at 1.2 million barrels per day.

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[jpak]

1. One of ChimpCo's spoils-of-war

was supposed to be the collapse of oil prices after Mission Accomplished - right????

Sustained high oil prices will kill any chance for economic recovery this year.

And all those $400 tax refunds will be used to pay for higher priced gasoline and heating oil this winter (if you get one)....

[StandWatie]

4. the absolute arrogance

These jokers went on a buying spree for the national reserve because they were so convinced that they were going to be sinking their teeth into all that light sweet crude that if they didn't the bottom would fall out of the market.

They were going to use the oil (it's the Iraqi people's oil, remember Ari saying that) to try and collapse OPEC and beat Hugo Chavez back into line.

If nothing else as I bleed money into the gas pump I'll get to enjoy a little schadenfreude concerning the neocons master oil plans backfire.

[Fovea]

7. What possible advantage

would have an oil price collapse been to the Bushes?
No, they want the price high for a while until Iraqi oil can 'save the day'...

But, of course, Iraqi oil will not really be cheap, if you add the Billions a month it will cost to secure it, never mind pump and ship with shiny new Halliburton/Brown and Root facilities.
You will pay more at the pump for the oil, and for higher state taxes based on Bush's policy of screwing the states. You will pay more in federal taxes, unless you are rich. Most of the extra will flow into the offshore accounts of the Republican parties natural constituancy, the venal hyper rich. They have no need for an economic recovery, they have theirs already.

Wanna little payback? Get a bicycle and ride it with a rack for your short trips to the store. You will save a bit of money, give yourself a bit better air quality, and eventually look good in lycra.

[HungryLoser]

13. I ride my bike everyday,

everywhere. It's a great idea, and it does keep you in great shape. Some of my friends give me crap about using it so much(?), but I save lots of money. I also take public transportation to work instead of driving. I catch up on my favorite reading as I'm watching other poor slobs sweat it out in rush hour traffic.

[PROGRESSIVE1]

15. Remember to thank the little SHRUB...

he's again hurting the economy! What a suprise. :eyes:

[kysrsoze]

16. Prices at the highest level - along with oil companies' profits

It's just sick.

[mistertrickster]

2. Right you are, JPak

We're spending 4-5 billion a month to "stabilize" oil prices and even that isn't working.

The Bushistas can't even get THAT right.

Every day brings this country closer to a Bush-free future. Let's hope we can still salvage what's left after this abortion of an administration.

[goforit]

3. Cheney not only gets his corporate war, he gets to rip us all off!!!

How convenient!!!

SATAN has no mercy!!!

[On the Road]

5. Not Good News for the Economy

[kysrsoze]

17. Combine that with spiking mortgage rates...

...and you'll have a nice double-dip recession.

[Norbert]

6. I don't care

I drive a car that averages 28MPG. Lets see gas prices exceed $2.00 for the entire country for 14 months. Let that pig Cheney and the other greedy bastards have their spoils for 14 months.

Hopefully by then bushies approval rating will be so low he won't even win the Crawford, Texas vote.

[0007]

8. Oh how I will love it!

SUV's will be cheap. We might even see $2.50 a gallon.

[kysrsoze]

18. That's the only thing which will force increased MPG in cars

I'm all for the higher prices, but it's absolute BS that the oil companies' profits dramatically increase during these times. The old 'cost-plus' pricing scheme. In most other industries except healthcare, firms are forced to do whatever they possibly can to slash costs and keep an acceptable profit. There is no such thing as supply and demand for oil. It's all about price and profit.

[section321]

9. You know, this actually makes a lot of sense....

The real goal of gaining control of Iraq's oil was to disrupt supplies and keep oil prices high. That way the BFEE and their oil friends could enjoy the higher profits of high oil prices.

Every time one of Saddam's people blows up the pipeline their happy as can be.

How truly EVIL.

[ProfessorGAC]

10. Very Good Catch!

When oil prices are high, the oil companies like it. The commodity price of refined gasoline is based upon "crude, Plus". The cost of manufacturer, the cost of distribution, and a fixed margin on the total cost.

When the cost of crude is high, the fixed margin is a percentage of a bigger number. The profit margin is the same per million gallons of gas, but the dollar volume is higher. So, they make more money on the same number of gallons over that time period.

Big oil doesn't really want cheap oil. It would require a complete overhaul of their pricing strategy. They're so used to the one they have now, that would seem, to them, like a bunch of work for nothing.
The Professor

[peterh]

11. Uhhh..Prof., I’ve got a problem with your rather simplistic take..

First off: there is no such think as a fixed margin in this biz…never has been and I doubt there ever will be. Market forces are such that profits are never a certainty. At least for the 23 years I’ve been here.

Second: your generalization that oil companies like high oil prices is misleading in the big picture. While exploration / production companies and divisions of large integrated companies tend to realize big profits at these levels, it’s not always the same for the downstream (refining to retail) operations.

Without getting to elaborate in this, a more accurate generalization would be that production companies favor high crude prices and non-integrated companies (those without crude reserves) tend to favor low crude prices while tightly integrated (production & downstream) are more comfortable (currently) with having crude somewhere in the 20’s. There are a lot of global economic reasons for this and they are in sync with OPEC’s desired price band of $22 to $28.

The fact that WTI is currently running in the low 30’s is more the result of an industry choosing to exist on low inventories during what is arguably a very volatile geopolitical climate. Is our little twit in the WH contributing to that volatility? Very much so. Does the industry favor volatility? Believe me…they don’t.

[kysrsoze]

19. Is that why Texaco raked in huge 2nd quarter profits?

What competition is there anymore? Even many of the so-called discount gasoline distributors like Speedway often charge the same rates as Shell and BP. They don't have to discount b/c people will buy it anyway.

[peterh]

20. I’m going to assume you meant ChevronTexaco…

Because Texaco, by itself, doesn’t exist any longer….and yes, profits for any large integrated oil company, especially with the reserves ChevronTexaco has, were handsome to say the least. But, if you look at the large non-integrated companies like Tesoro or Valero, you might see the difference in having your own crude and not having it.

As for Speedway, they were famous for using regular as a “loss-leader”. They slowly found out that you can’t exist solely on those 300% markups on sundries in the C-store. Using a high volume product as a loss-leader isn’t the greatest recipe for success.

[section321]

21. Good drill down on the topic.

You're right, profitability will depend very much on where a company exists in the process.

Without checking too closely, it seems that the BFEE, Cheney and the rest guys in the WH are very much upstream folks. Halliburton is all about exploration & production. These are the guys that would profit from the situation I described.

Plus their Saudi buddies.

[DeathvadeR]

12. We will extinct ourselves over extinct dinosaurs.

The catastrophic event that keeps on giving. whahahahahaa

[samsingh]

14. watch inflation start to go up

not good for economy or jobs

[catmandu57]

22. Higher prices make bubba and bubbette go whha?

and for that I'll put up with some pain. Many of the kick Iraq's ass crowd were expecting cheap gasoline as a spoil of war. When you see them filling up and scratching their head over why gas isn't .80 a gallon, might be a good time to plant ideas in their feeble little brains.