Oil Prices: Speculation or supply and demand?

[Dinner]

Naw, a year ago people said $4 a gallon gas would cripple the US economy. The reality is people drive less or switch to more efficient cars. Gas is currently around $10-$11 a gallon in places like the UK and Norway but their economies keep on trucking.

The US would survive as well though we'd be far less wasteful.

Edit: X-Imranned!

[Imran Siddiqui]

Originally posted by Patroklos
Oerdin said 2 dollars a gallon Irman, right now. That is enough to cripple our economy even without the current economic hicup. And the "right now" is important, because we don't have alternatives in place right now for people to switch to.

He didn't necessarily say "right now". I think he could be persuaded to phase in his plan over a 5 year period of so to get the housing bubble bust out of the way.

[Dinner]

I'd be willing to phase it in over time. In the end though it needs to happen.

[snoopy369]

I think the most damning argument about the speculation is simply the speed at which the price rose. Oil prices literally doubled within about a year - I don't remember the exact timeline - from $2 to $4 a gallon; and the $2 already was a somewhat speculation-driven price due to concerns about ME stability (the stable price in 1998 was around $1/gallon, if I remember correctly). Prices in commodities do not rise that quickly solely due to direct S&D; speculation is what caused that rise.

[Patroklos]

Naw, a year ago people said $4 a gallon gas would cripple the US economy. The reality is people drive less or switch to more efficient cars. Gas is currently around $10-$11 a gallon in places like the UK and Norway but their economies keep on trucking.

Its the pace of the increase Oerdin. An overnight 2 dollar increas in gass prices is totally different. Look at overland trucking rates for the proof. Even now, with less than a dollar increase over the span of a year profitability in this sector is pretty much extinguished, how do you think they would weather an additional two dollars instant hike?

Now in you grand social engineering plan that might night bother you, but since there isn't rail capacity for that frieght to switch to, you just crippled the economy. Good job.

I'd be willing to phase it in over time. In the end though it needs to happen.

Less painful, but still draconian to the extreme, and ultimately uneeded.

[Dinner]

Naw, you just don't tax diesel. Problem solved. Which BTW is also the solution in Europe and Japan which both tax gasoline very heavily.

[Patroklos]

Your blatant pandering to buisness is disturbing. How do you think "can't eat meat in Ohio" would deal with your tax?

[Imran Siddiqui]

The fatties would lose some weight

[BlackCat]

Originally posted by Oerdin
Naw, you just don't tax diesel. Problem solved. Which BTW is also the solution in Europe and Japan which both tax gasoline very heavily.

That was right in 1991, but not today - there is about 75 cents pr liter tax for business use.

Diesel used in private cars are actually more expensive than gasoline, though mostly due to higher demand.

[Spaced Cowboy]

I'm not so sure about supply and demand. Usually when there is a greater demand than supply prices go up and there are shortages, have you heard of any shortages anywhere? That being said, I think supply is tight, but not outstriping demand. Just got back from China last month and there were more cars on the road than last year when I was there, however, China banned motorcycles, so that is part of the increase.

Right now, you can't make money in the stock market, stocks are mostly diving, interest rates suck, so bonds and cash are a losing proposition. Maybe real estate, whoops, that is a bust, so what is left, in a word, commodities.

Even I tried to get into commodities a few months back, but my broker does not offer them and I would have had to open an account with someone else, so I did a pass as I don't have time to deal with another investment house.

So basically you have a huge surge of monry going into the commodities market, that in itself will up the price of everything, including oil.

But I do agree that the US is way too spread out, from the suburbs, to the far flung cities. This model relies on cheap personal transportation. I wish I could buy a cheap electric car, and keep a gas one for longer trips.

[Patroklos]

The fatties would lose some weight

Alright, I'm onboard

[Victor Galis]

Originally posted by Saras
Speculation is demand now, supply later, or, in case of shorting, supply no, demand later. So how is speculation NOT supply and demand?

The speculators don't trade in actual oil. They buy/sell futures (contracts for delivery at a future date). They then resell/buy those futures or settle the transaction for cash. No actual oil trades hands as a result.

For them to actually affect the oil market they would have to actually buy oil and stockpile it somewhere, thus creating more demand.

[Victor Galis]

You mean incessant meddling in people's lives.

Yeah, why have government do anything at all? I mean the police exist just to meddle in the lives of murderers and burglars anywhere

Which is another problem in itself; they shouldn't be getting state health care to begin with.

And the second hand smoke...

Oerdin said 2 dollars a gallon Irman, right now. That is enough to cripple our economy even without the current economic hicup. And the "right now" is important, because we don't have alternatives in place right now for people to switch to.

Well, except we never will unless until gas becomes super expensive. $2 right now might be excessive though. We need to ensure gas never again becomes so that we'll actually develop alternatives this time unlike with the 70s shock when everyone forgot again once gas got cheap.

Naw, a year ago people said $4 a gallon gas would cripple the US economy. The reality is people drive less or switch to more efficient cars. Gas is currently around $10-$11 a gallon in places like the UK and Norway but their economies keep on trucking.

The US would survive as well though we'd be far less wasteful.

Honestly not unless people moved out of the suburbs and back to the cities. The US suffers from this crazy notion that everyone should own his own house. (Not unlike the notion that the poor should be able to buy luxuries that fed the credit bubble.)

I think the most damning argument about the speculation is simply the speed at which the price rose. Oil prices literally doubled within about a year - I don't remember the exact timeline - from $2 to $4 a gallon; and the $2 already was a somewhat speculation-driven price due to concerns about ME stability (the stable price in 1998 was around $1/gallon, if I remember correctly). Prices in commodities do not rise that quickly solely due to direct S&D; speculation is what caused that rise.

Isn't that also the year when the dollar fell like 30%? Furthermore, the price of almost all commodities is rising including the ones that aren't speculated in.

[Kuciwalker]

Originally posted by Victor Galis
The speculators don't trade in actual oil. They buy/sell futures (contracts for delivery at a future date). They then resell/buy those futures or settle the transaction for cash. No actual oil trades hands as a result.

For them to actually affect the oil market they would have to actually buy oil and stockpile it somewhere, thus creating more demand.

Actually, all they have to do is get someone else to stockpile the oil in order to meet the futures contracts.

[Dinner]

Originally posted by Patroklos
Your blatant pandering to buisness is disturbing. How do you think "can't eat meat in Ohio" would deal with your tax?

She doesn't own a car so I don't see how it would effect her. Best case scenario she gets off her fat ass and actually gets a job instead of pretending her "depression" from an accident 15 years ago is the reason she can't work.