Price of oil drops 24% in 2 months

[SlowwHand]

7-Eleven dropping Citgo gas

11:25 AM CDT on Wednesday, September 27, 2006
Associated Press


DALLAS — Convenience store operator 7-Eleven Inc. is dropping Venezuela-backed Citgo as its gasoline supplier at more than 2,100 locations and switching to its own brand of fuel.

The retailer said Wednesday it will purchase fuel from several distributors, including Tower Energy Group of Torrance, Calif., Sinclair Oil of Salt Lake City, and Houston-based Frontier Oil Corp.

A spokeswoman for Dallas-based 7-Eleven said its 20-year contract with Citgo Petroleum Corp. ends next week. About 2,100 of 7-Eleven's 5,300 U.S. stores sell gasoline.

Citgo is a Houston-based subsidiary of Venezuela's state-owned oil company, and the foreign parent became a public-relations issue for 7-Eleven because of comments by Venezuelan President Hugo Chavez.

Chavez has called President George W. Bush the devil and an alcoholic. The U.S. government has warned that Chavez is a destabilizing force in Latin America.

7-Eleven spokesman Margaret Chabris said that, "Regardless of politics, we sympathize with many Americans' concern over derogatory comments about our country and its leadership recently made by Venezuela's president Hugo Chavez."

Chabris said a boycott of Citgo gasoline would hurt the 4,000 employees of the U.S. subsidiary, who have no connection to Venezuela.

7-Eleven had been considering creating its own brand of fuel since at least early last year. Company officials said at the time they had spoken with independent fuel distributors.

[chequita guevara]

Originally posted by Flubber
Che

If everything is a conspiracy why are the natural gas companies and countries permitting natural gas prices in North America to go so very very low?

I didn't say everything was a conspiracy. I didn't even say this was a conspiracy. I have no evidence of collusion. My limited understanding is that it was largely driven by the unregulated investment by hedge funds.

I would read the Senate report. It's rather an interesting read, though if you don't want to follow the whole thing, you could just read the executive summary. Quickly, it says that speculation pushed prices up $20-$25, that the world inventory is greater today than at any time in the past 8 years, and demand is not significantly higher.

[lord of the mark]

Originally posted by chegitz guevara

Originally posted by Flubber
Che

If everything is a conspiracy why are the natural gas companies and countries permitting natural gas prices in North America to go so very very low?

I didn't say everything was a conspiracy. I didn't even say this was a conspiracy. I have no evidence of collusion. My limited understanding is that it was largely driven by the unregulated investment by hedge funds.

I would read the Senate report. It's rather an interesting read, though if you don't want to follow the whole thing, you could just read the executive summary. Quickly, it says that speculation pushed prices up $20-$25, that the world inventory is greater today than at any time in the past 8 years, and demand is not significantly higher.

its not regulated. And no good argument is presented here for regulating it, other than the case of the electric power industry, which as we said is quite different.

and yes, speculation results in prices that dont match current market conditions. Thats the IDEA behind speculation, and the function it serves in the market place - the speculator gathers info on FUTURE conditions, so that market prices impound all future information. SOMETIMES that future info turns out to be wrong.

Mr. Guev, if YOU know for sure that such info is wrong, or that it TENDS to be wrong (in one direction or another) than it would not be difficult to consistently bet against the hedge funds. If you are right, you could become very rich. You could finance and lead your own socialist party.

[Flubber]

Originally posted by lord of the mark


and yes, speculation results in prices that dont match current market conditions. Thats the IDEA behind speculation, and the function it serves in the market place - the speculator gathers info on FUTURE conditions, so that market prices impound all future information. SOMETIMES that future info turns out to be wrong.

Exactly-

Originally posted by lord of the mark


Mr. Guev, if YOU know for sure that such info is wrong, or that it TENDS to be wrong (in one direction or another) than it would not be difficult to consistently bet against the hedge funds. If you are right, you could become very rich. You could finance and lead your own socialist party.

Too bad that it is incredibly difficult to outguess the market on a regular basis. Che might actually put forth a platform that is somewhat reasonable (for a commie wannabee )

[Adam Smith]

Yes, but ...

Its true that changes in future conditions change current market prices. That's what futures markets do. But its also true that traders can have an incentive to overinvest in futures contracts, as KH recently pointed out. (See Jack Hirshleifer, "The Private and Social Value of Information and the Reward to Inventive Activity", American Economic Review, 1971 for a more general version of the argument.) This causes prices to become more volatile than they otherwise would be. How big a problem is this? Not easy to say. Can we fix this problem without messing up the benefits of the futures markets themselves? Even harder to say. But it is a problem, a form of rent seeking we find throughout the economy.

p.s.: I wish our politicians would be as concerned about economic efficiency in other cases such as agricultural subsidies, trade, deregulation, tax reform, social security, etc as they appear to be in this case.

[pchang]

for some reason

everyone hates big oil. All those other cases involve well funded lobbies that for some reason or other, not very many people hate.

[KrazyHorse]

Re: Yes, but ...

Originally posted by Adam Smith
social security

Why would politicians want to change a system which lets them extract forced loans from working people at rates ridiculously below the market?

[Imran Siddiqui]

[q=LOTM]Mr. Guev, if YOU know for sure that such info is wrong, or that it TENDS to be wrong (in one direction or another) than it would not be difficult to consistently bet against the hedge funds. If you are right, you could become very rich. You could finance and lead your own socialist party.[/q]



[q=Victor Galis]It does. The only problem is determining when we will hit "peak oil." He believes it is imminent, while other people might think it's centuries away. I personally believe it will be reached within my lifetime, though not any time soon (I'm only in my 20s).[/q]

It depends what you are meaning when you say "peak oil". Most people believe oil will hit peak production at some point. However, some people believe that right after this happens prices will very rapidly increase and world markets will go into chaos (And that is what those that crow most about "peak oil" seem to believe). They, of course, ignore fuel sources that become profitable at higher prices, allowing prices to stablize along the way (ie, a far, far less rapid rise in prices). And, of course, alternative fuel becomes more economically feasible as price of gasoline rises. No economic collapse is needed.

[Victor Galis]

Originally posted by Imran Siddiqui
It depends what you are meaning when you say "peak oil". Most people believe oil will hit peak production at some point. However, some people believe that right after this happens prices will very rapidly increase and world markets will go into chaos (And that is what those that crow most about "peak oil" seem to believe). They, of course, ignore fuel sources that become profitable at higher prices, allowing prices to stablize along the way (ie, a far, far less rapid rise in prices). And, of course, alternative fuel becomes more economically feasible as price of gasoline rises. No economic collapse is needed.

I think price will increase slowly when we hit a production peak, which will make more fields profitable, which will drive prices back down, but then we'll hit another peak. This will repeat until the declines in existing fields can't be covered by new fields at any cost. Then it will take sometime to figure out that this time it's the last peak, when that discovery dawns on people... that's when the prices shoot up. Now, if I were an optimist I'd believe that before we get to this scenario one peak will instead of making other fields profitable, make decreasing consumption permanently the ideal solution.

[Bosh]

Eventually we'll reach a point when biofuel gets to be cheaper than petrofuel extracted from most fields. I don't see that as a bad thing...

[MrFun]

I have not even read any of the posts beyond the OP. So if someone else already mentioned this, oh well.


Here is a somewhat paranoid, conspiracy-belief thought I have had about the drop in gas prices at the pump. Could it be merely a convenient coincidence that gas prices have dropped at the same time we are having Republican representatives campaigning in different parts of United States? I just wonder how much influence Washington politicians can have with oil and/or gas prices when rubbing shoulders with oil corporate lobbyists at Washington D.C.?

Yeah -- many people can explain away the price drop to supply and demand and that it really is just a coincidence that we have seen such a dramatic drop in time for U.S. representative elections. I vouche that we will see gas prices skyrocket again after these elections -- then of course, people can explain that away by saying that it is just coincidence that as the weather gets colder and people use gas more for heating and so forth, that it will rise -- nothing to do with allowing gas prices to skyrocket once Republican representatives are done with the elections, right??

[Victor Galis]

Well, conspiracy theory or not: fall consumption is actually smaller than either summer (travel) or winter (heating) demand. All other things being equal, price will always fall during a campaign season due to seasonal demand changes.

[LordShiva]

Prices fell elsewhere in the world, too, where the Republicans aren't as actively campaigning.

[MrFun]

Originally posted by LordShiva
Prices fell elsewhere in the world, too, where the Republicans aren't as actively campaigning.

I get your point, jackass.

[Victor Galis]

Originally posted by LordShiva
Prices fell elsewhere in the world, too, where the Republicans aren't as actively campaigning.

Well the market for oil is global... there are no individual country prices really.