Re: Fuel Price

> The problem is as I see it (CNN and CNBC) is that it will be far longer > > than

> > a few days as you seem to think. Many oil platforms have been shut down > > and > > will require some repairs to return to full output and even after they do, > > there seems to be extensive damage to the transportation network which > > could > > take months to repair. > > Except that.... LA. isn't the only terminus. Hurricane reports on Katrina > have been coming in for almost two weeks, enough time to prepare and have a > reserve.

LOL, a reserve for how long Max. These refineries could be down for months and who knows how long it will take to fully repair the infrastructure. And BTW, they had DAYS, not weeks to prepare.

Typically dozens of tankers sit waiting for a place to offload.

Sure, and where are they going to offload too?

Storage tanks on land are for what, if not to STORE product in the event of > needing to buffer a supply.

Yea, a buffer for a few days or even weeks, not months.

Granted, oil companies tend to jack prices when > they feel like it, BUT.... anyone looking at the futures market knows that > they are raising prices in a reaction to the market price of oil.

Not only do you have to look at the futures market Max, you actually have to understand it and from what you are saying, you don't.

> Fact is, its demand on the futures market pushing the price. Why? because > people are buying oil that doesn't exist yet as a commodity. And > realistically, if I said to you, "Hey, I'll pay you more than market price > for that widget you are making, and I'll buy five of them even though you > haven't got them yet." What are ya gonna sell it for, market price, or my > offer? And if you sell me a bunch of those widgets, what price am I gonna > sell them for? More than what I paid, or market price? And if I buy five > widgets at a time, you are probably gonna make as many as you can to keep up > with my demand, so long as I'm buying.

If it were only this simple. First of all, the only way that people could drive uip the price this way is if the supplies are limited which according to you, they are not. Then there is a SIGNIFICANT risk of loss driving up the price in a market that has a ready supply because someone else can sell below what you even paid for it is supplies are plentyful. This is only the beginning and I really don't have the time to list out point by point why this is wrong and you really need to do a little reading. The only thing that I will say that the only way for the futures of something to be driven up like this is because the near future availability of of the item is believed to be in SHORT supply.

> Plenty of widgets, but the price is determined by the investor, not the > market. And the spiral goes on.....

The price is always determined by the market Max. If people will not pay the price that you want, then you lose money.

Reply to
TBone
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The futures market for anything is based on speculation. Like the stock market they go up and down daily. When oil futures go up, gas prices climb almost instantly. When they go down, gas prices take a considerable time to drop. All through this year the oil supply has been steady and stocks fairly constant. So as you say, do some reading on this.

Reply to
miles

If the supply is so damn steady, why has the price been rising steadily for the last few months. It appears to be you that need to do a little reading as well.

Reply to
TBone

Reply to
Steve Scott

Because of oil prices globally TBone!! Not too low of gas supplies. Gas prices here aren't because of US issues. It's global issues.

Reply to
miles

Yep, for starters they are betting that China will continue to increase it's demand and willingness to bid prices higher.

Reply to
miles

But if there is no problem with supply, why would China's increased demand have any effect on the price of oil??? I must admit, it is funny to watch you disprove yourself.

Reply to
TBone

Reply to
Steve Scott

Good question, TBone. Too bad what you've said doesn't answer that question.

Face it, the prices were climbing FAST before the gulf storm. Yet you continue to blame it on refinery shut downs and storm damage. Sure, thats part of it, but it wasn't part of the price climb prior to August 28th. Prices are up by 60% over the past year, yet demand isn't up that much. Nor is supply down by that much. Refinery capacity isn't down that much (7 or

11%, depending on which story you read on CNN Money) nor is production in the field. OPEC has volunteered to pump the hell out of the stuff, so no shortage of crude.

BTW, CNN also says the price of futures "sank" by $1.81 upon news of the Feds release of reserve. I guess THEY think $2 is a pretty good drop.

So what is it, if Miles and I are wrong about the specualtive market driving this rise in prices?

Reply to
Max Dodge

LOL, that depends on what question.

I did no such thing. I said the current sudden increase was due to supply and demand and the supply was cut down by the storm.

Never said that it was. That increase is caused by a strain on supply due to increasing demand, something that Miles says doesn't exist.

Really, got proof.

A major pipeline is now down due to power failures so supply is much more greatly affected than you think. Then you can add to that the fact that most of our refineries are already at 100% and a 7 to 11 percent reduction is major.

Getting more crude does not help when you can't get it where it needs to go.

Yep, and I would say that is close to the increase from pure speculation. Gee, I wounder where the rest of the increase is comming from.

It is that the supply is not what you think it is.

Reply to
TBone

LOL, we are part of the global community and our waste of resources has a huge affect on the global price of oil.

Reply to
TBone

From FT.com today "US gasoline futures surged to a record high on Wednesday after the Department of Energy reported a 500,000 barrel drop in gasoline inventories to 194.4m barrels as stocks fell for a ninth week in succession." This was through August 26, before Katrina.

Apparently demand is exceed>> If the supply is so damn steady, why has the price been rising steadily >> for

Reply to
Steve Scott

Nine weeks does not explain 9 MONTHS of rising prices.

Reply to
Max Dodge

Now Steve, stop confusing Max and Miles with such things as facts. As long as they keep their heads in the sand, everything is fine and there is enough oil to last forever at an ever increasing rate of consumption.

Reply to
TBone

Actually, yes it does but are you able to figure out how or why?

Reply to
TBone

So you think the current oil escalation in price since January is because of US waste of resources? Another bonehead statement.

Reply to
miles

Is it the whole reason, of course not and my statement says no such thing but if you think that it has no or even just a small effect, the true boneheaded statement is comming from you.

Reply to
TBone

Reply to
Steve Scott

In addition, there are already known deposits that previously were too expensive to pump due to minimal return on the investment. With higher prices on a barrel of oil, now it may be profitable to pump it out.

Also, a study done jointly by a Texas university and oil companies claims to have used radar and found that at least one well that started pumping more than expected appears to have flow in from beyond the penetration of the radar.

What this says to me is, we don't know how much oil is actually there, and neither the doomsayers nor the "oil forever" types are likely to be correct.

Reply to
Max Dodge

Is the rapid rise in oil since Jan. mostly caused by USA use? TBone, you need to follow whats been happening globally. It's not the USA thats been driving up the prices world wide. You might want to do your research on Chinas rise of oil consumption.

Reply to
miles

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