Ok other than they are a part of the system can somebody really explain how oil manages to behave like stock when it comes to prices, rising and falling for for little or no actual reason and how this game to be? We all know that oil demand and more than that availability doesn't actually fluctuate much on a daily basis and the majority of that adjust ment is always going to be in and upward direction never ever down (unless some poor country is wiped out) so WTF?
Comments
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D6fer said on Jul 16, 2008....
The value of the dollar is the single largest reason for the price of oil today.....the dollar has been decreasing in value for some time now on world markets and buys less oil.....what is a barrel of oil worth in euros?
Now the question shifts to "who is responsible for the fall of the dollar?"
Could it be all of these people who took out mortgages that they could not afford?
Do you know who is holding those notes?
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D6fer said on Jul 16, 2008....
we have become a nation of consumers more so than a nation of producers.....if we were to increase production of anything of value it would increase the value of the dollar and bring down the price of oil....especially if we increased production of any form of energy....oil, electricity, coal, nuke....doesn't matter....production is production it will effect the economy....the dollar...oil.
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D6fer said on Jul 16, 2008....
whether anyone wants to admit it or not....GWB is doing something right again by lifting the ban on offshore drilling.....we need to get behind him on this. -
SeanRenaud said on Jul 16, 2008....
As I understand it it it doesn't matter if he lifts the ban if Congress doesn't jump on board. I agree that we've become a nation of consumers but this is largely a matter of the left and not something we are likely to see change in the near future. -
brit said on Jul 16, 2008....
Sean, I asked my dad to explain it (he trades stocks for a living) and he said there has been more supply and less demand for oil, so that's why oil has gone down. He also told me that oil is traded in the Future's Exchange, so that may have something to do with it if I understand him correctly.
BTW~ thank you for explaining more about taxes in your other post. The discussion that came about was informative.
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silverwhisper said on Jul 17, 2008....
brit's father is of course quite right: oil is a commodity that trades so its value fluctuates, just like a stock does. commodities are generally resistant to inflation and hence are viewed by investors as a good investment vehicle when the market is down, also known as a bear market. oil and other commodities possess an intrinsic value, so generally its value generally cannot really go down all that much: but that security comes at the price of its generally not going up all that much, either.
that's why.
ed -
bloc said on Jul 17, 2008....
off shore drilling won't do anything to solve this problem. The problem is that the demand for fossils fuels will continue to outpace the supply due to other countries striving for our lifestyle. -
curmudgeon said on Jul 17, 2008....
This also has to do with speculation as to what the price of oil will be some months down the road. These are contracts that change hands several times before delivery is actually taken. It reminds me of the airline industry - same seat, same plane, yet the price of that seat on that plane changes on a daily basis.It would be interesting to see what the initial price of a barrel of oil is versus the price the barrel actually fetches upon delivery. With this sudden ten-dollar drop, I imagine that quite a few speculators have just lost an incredible amount of money. I know that in many cases these are pension funds we're talking about, but I really don't have a lot of sympathy right now.I don't know if it's just journalism's innate emotionalism, but the first paragraph of any news story on oil these days is "oil shot up amid fears that..(supply, demand, instability, etc)" and now it's "oil prices dropped sharply due to concerns..." It seems to me that these speculators are ultimately rooting their decisions in fear, not fact. No one ever seems to report whether or not speculators' calculations are ultimately accurate once oil contracts are actually fulfilled. As an investor, that's the first thing I'd want to know.Unfortunately we won't see a proportional drop in gas prices, at least in the very near term. The gas we buy today is from oil that was delivered for a certain price months ago. Retailers will be loathe to eat that cost.Bloc has a point - if gas prices decline to under 3 bucks later this summer, will we simply go back to our old ways? Demand is reportedly down right now largely because we've altered our driving habits. Sadly for us, nothing seems to change our behavior more effectively than a pain in the wallet. -
bloc said on Jul 17, 2008....
@curmI've been trying to figure out the speculation thing, and the best explanation I've seen is this. -
curmudgeon said on Jul 17, 2008....
bloc - futures price v. spot price. I've learned something today! It's surprising to see that the future price runup has actually been lagging behind spot prices lately. Thanks very much for this! -
monkeyboyx said on Jul 17, 2008....
in Ca. Arnold is against off shore drilling.Fossil fuel? really? -
locater said on Jul 17, 2008....
There was an article in the paper about most of this.Everyone should read this. -
D6fer said on Jul 17, 2008....
notice that when the government starts talking about drilling the prices fall.....down to 127 a barrel today.......you cant tell me that drilling wouldn't have an effect, when the speculation of it does. -
bloc said on Jul 18, 2008....
I don't buy your premise that the drop is related to "talking about drilling" -
SeanRenaud said on Jul 18, 2008....
Then what is it related to? There seems at the least to be a correlation. (though we'll see if it manages to keep dropping rather than yo-yoing which is what I suspect it will do.) -
monkeyboyx said on Jul 18, 2008....
Yes,it will be a roller coaster price wise
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bloc said on Jul 18, 2008....
it could be many things. As you point out all such systems naturally oscillate. Also, arguing about drilling (which we've been doing well before this drop so there isn't even a correlation) has no effect on supply and demand. I'd love to hear an explanation of how politicians arguing about drilling affects supply and demand if you have one!Me: hey sean I have this oil to sell you for $150/barrelSean: No way, didn't you hear them arguing about drilling. I'll only give you $140Me: Damn, since you put it that way I'll sell it to you for $140 -
SeanRenaud said on Jul 18, 2008....
The way I'm understanding it is closer to this.
bloc: I'll sell you this oil for $150 a barrel you know you're gonna need it soon
Sean: Didn't you hear they're gonna start drilling here soon, I'll be able to buy it at 80 a barrel and you know I've been stock piling
bloc: Ah, how bout $140, you never know congress might block it.
Sean: Are you kidding they'll all be voted out of office if they do that. how's $130?
bloc: Fine.
And we've been arguing about drilling for years. But Bush only recently lifted the ban on offshore drilling which until (unless) Congress follows suit its still technically just talk, but it's talk with a teeny bit of action behind it.
Oil prices don't seem to accurately shift along supply and demand the way one would expect. http://www.randomuseless.info/gasprice/gasprice.html Just a cursory glance at gas prices over the last twenty odd years shows that. I grant that China and India are stepping into the modern world, but gas prices remained pretty much constant from 1980 until 2000. I don't need to look at a chart to prove that just in the US alone demand has gone up the last twenty years. But the price didn't significantly rise.
So there must be some x factor involved some place.
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bloc said on Jul 18, 2008....
on the radio on my way home an economist said that the drop was primarily due to a decrease in demand in the US compared to last year." I don't need to look at a chart to prove that just in the US alone demand has gone up the last twenty years. But the price didn't significantly rise. "Your mistake is that you are only thinking about demand. The supply was also increasing! This is the whole peak oil theory. -
bloc said on Jul 19, 2008....
here is a good summary of the situation. -
catch22 said on Jul 19, 2008....
The oil market is simply being manipulated.We supply food to the oil producing countries.Why don't we warn them to lower oil prices,or the price of food will go through the roof.Food for oil.This sounds more than fair.Don't forget the oil companies are making record profits,as are the rich who invest in oil.The money game goes on. -
bloc said on Jul 19, 2008....
well, there are only a few countries with a lot of light crude, and most countries can produce food. They don't need us for food, we need them for oil. -
monkeyboyx said on Jul 19, 2008....
dream on -
ALT said on Jul 21, 2008....
U really don't know anything! Sean is a dorkamatic.Dumdum delux!
God!.....U have nothing of value to add to this or any conversation that we can find.
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GODwaterwalker said on Jul 22, 2008....
Leave God out of this
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