Oil Prices: Speculation or supply and demand?

[Patroklos]

and diversifying our electricity plants away from fossil fuels.

Coal is cheap as ever and has nothing to do with oil prices. You can attaclk it on global warming/air pollution lines if you want, but neither are relevant to the problems of this thread.

Though I agree with pretty much everything else but the tax hike.

[rmsharpe]

Originally posted by Kuciwalker


Speculators are just great scapegoats.

Exactly. All of this is garbage.

[Dinner]

Originally posted by Maniac


Unfortunately this only works if not everyone does it. Apparently if all the world used nuclear power for their electricity needs, all uranium reserves would be exhausted in two years.

Naw, I've heard that story and the truth is even if uranium was the only fissile material, and it is not we could always just use plutonium or thorium, the truth is we have a near unlimited supply in our oceans and I'm positive there would be new supplies found. They've been closing uranium mines since the 80's when we stopped making new nuclear bombs.

[Dinner]

Drilling will help (in 5-10 years) but the reality is we'll never produce enough oil to fill our own demand again. We currently get about 1/3 of our supply domestically and if we drilled all known reserves right now then we'd only get up to about 40%. If we were wildly successful and found more oil then we dreamed then maybe, just maybe, we might reach 50%.

That's why we also have to aggressively cut demand as well to help close the gap.

[One_more_turn]

Current light water reactors must burn U235, a very rare form of uranium. The new breeder type reactors can burn U238, and that fuel can last thousands of years at current rate of usage. The problem is that breeder reactors must preprocess U238 and are thus expensive. Only if the U3O8 price goes above $200/lb does it make sense to build breeders, but U3O8 costs only $60/lb at moment.

[Dinner]

Originally posted by rmsharpe

Exactly. All of this is garbage.

Did you even read the thread?

[Imran Siddiqui]

Originally posted by Vanguard
It isn't caused by supply and demand of oil.

It is cause by supply and demand of money.

The huge amount of debt in the world today, brought about by very high leverage of overvalued assets, is basically the same thing as printing money. It has resulted in the phenomenon that Austrian economists call "Flight to the Real", where everybody tries to get out cash and get into real assets---- any real assets.

It doesn't matter how much those assets cost. It is still better than staying in cash.

This is definitely a point missed when speculators are slammed. I think I read somewhere the price is so astronomical in the US because of the weak dollar as well, which has driven price per barrel much higher than it would have been, say, in the late 90s with the same conditions otherwise. Still would have been very high, but probably would be closer to $80 a barrel.

[SlowwHand]

Speculation.
If it's oil, charge for the refining. Saudi Arabia and others have the oil, what they don't have is the refining capability. We could end this oil fiasco quickly.

[Seeker]

Inflation.

Bernanke opted to 'avert a second great depression' by using inflationary measures.

I'm just surprised we haven't seen more inflation, I'm sure it's just beginning.

Oil is rising...but the problem is more the dollar and Co. vs everything else.

[Dinner]

Originally posted by Imran Siddiqui

This is definitely a point missed when speculators are slammed. I think I read somewhere the price is so astronomical in the US because of the weak dollar as well, which has driven price per barrel much higher than it would have been, say, in the late 90s with the same conditions otherwise. Still would have been very high, but probably would be closer to $80 a barrel.

The weak dollar definitely plays a part. The four main reasons for the weak dollar are 1) low interest rates which the Fed is using to try to kick start the economy and give hard hit banks breathing room 2) Government printing to much money to cover debts without taxing (this is so 3rd world it is embarassing) 3) Big budget deficits (see 2) and 4) big trade deficits which push lots and lots of dollars over seas.

[SlowwHand]

Trade deficits? Nothing is manufactured here anymore. HELLLLLOOOO!

[Imran Siddiqui]

You numbnuts! More stuff is manufactured here than 30 years ago. It is just that it is mostly automated now in the US (requiring less workers, but a greater percentage of the workers left are far more highly skilled) and our demand for goods has shot through the roof, where by foreign countries can and do supply labor intensive manufactured goods.

http://www.industryweek.com/ReadArticle.aspx?ArticleID=14159

as the National Association of Manufacturers (NAM) points out, when you consider that manufacturing accounts for $1.5 trillion in gross domestic product (GDP), if U.S. manufacturing was a country, it would be the eighth largest economy in the world.

In any event, the United States remains the largest manufacturer in the world in terms of total output, and while the country faces numerous challenges both domestic and abroad, that No. 1 status is not likely to change any time soon.

[Maniac]

Originally posted by One_more_turn
Current light water reactors must burn U235, a very rare form of uranium. The new breeder type reactors can burn U238, and that fuel can last thousands of years at current rate of usage. The problem is that breeder reactors must preprocess U238 and are thus expensive. Only if the U3O8 price goes above $200/lb does it make sense to build breeders, but U3O8 costs only $60/lb at moment.

Good to know.

[Saras]

regarding the OP - can anyone explain how speculators can stimulate demand without providing some supply at a future date, other than by storing the physical oil in some vast secret crude oil lake?

[Arrian]

Oil Prices: Speculation or supply and demand?

Um, both (mostly S&D)?

edit: and yeah, the weakness of the dollar.

-Arrian