• SeanRenaud said on Nov 10, 2008....

  Out of control speculation was truly the driving force, the global market collapsing, which lowered the demand for oil around the world and the strengthening of the US dollar helped tremendously though.

• ALIENated said on Nov 10, 2008....

  
  I am developing an engine that burns cow manure. Now that the Democrats
  have taken control, there will be no shortage of that.
  
  

• bloc said on Nov 10, 2008....

  i'm trying to figure this out too. Sean's ideas sound reasonable to me. 

• Expendable said on Nov 11, 2008....

  Alien, I'm holding all politicians responsible for global warming. All that hot air, doncha know? Besides, doncha know Republican boys love democrat girls? They'll marry Republican girls but they want to have some fun first.

• travelr712 said on Nov 11, 2008....

  masters group did a study and submitted it to the senate in july. they concluded that it was speculators who had driven the prices up so high, not peak oil or driving habits. true, driving habits have curbed a few percentile in this country, but not 50% that would be inline with the dramatic drop in prices. and peak oil? well there's less now than there was a month ago, so just like in the 70's, it's a myth propogated by the oil companies to justify their windfall profits.
   
  the senate is working on a bill now that will regulate speculators in the energy market. that coupled with the financial, housing and credit market collapse has forced these speculators to sell their future contracts (like warren buffet and bill gates) to avoid bankruptcy covering their losses in the other markets, splitting up the huge monopoly a few people held on future oil prices and distributing those contracts among many many more, causing pricing competition to come back inline with the true state of our economy which caused a rapid decline in price/bbl of oil, which gasoline prices are pegged to. couple that with the fact that the major oil market advocates, gwb and cheney, are now out of power and no longer protecting their friends' interests, and you've got less than $2/gal gas. it's not so hard to understand really.

• Hegemone said on Nov 11, 2008....

  Expendable ... here's my idea, well not all mine ... in general the people around me, this is what we've decided ... gas prices are low because of the election.  It's one less thing for us voters to have complained about.  Happens around this time every election period.  But Trav, well put indeed.

• bloc said on Nov 11, 2008....

  peak oil is not a myth. Seriously, there is a finite about of oil and global demand has continually grown.
  
  A nobel prize winning economist convinced me that speculation was not a primary contributor to the price of oil. If anyone can explain to me how speculation would affect price then I'm all ears.
  
  Here is a nasa scientist on peak oil.
  

• Expendable said on Nov 11, 2008....

  Did you know there's different grades of crude? What's selling now is light sweet which I'm told is easy to convert. There's a lot of heavy sour crude that can be used but refineries will have to make some changes.
   
  So maybe it's not as dire as people believe Peak Oil to be.
   
  The price dropped dramatically from July 16, when many of the futures contracts expired. So speculation I can believe.

• travelr712 said on Nov 11, 2008....

  if it were due to the elections expendable, the price would not continue to fall, it would begin to rise again.
   
  peak oil does not mean that the world is running out. it means that demand matches supply, so there is no surplus. it is a theory that was introduced to the world conciousness in the 70's. we were supposed to have run out by now. that didn't happen.
   
  speculation caused the massive rise because the oil industry puts futures contracts on the market. as long as there are excess futures contracts, the prices stay low. when these contracts are purchased, it causes the price to rise, just as with any other stock or commodity. basic economics bloc.
   
  the proof that it is futures market and nothing else is in the fact that gas prices started to fall days after the stock market began to fall also. this was because those who held the futures contracts began to sell them off, causing the price of oil to drop, causing the price of gas to drop. the only control that the government has on the oil market is the national reserves. in 1996, the democrats, who were in charge of that reserve, released some of it to the american market to stave off a spike. that helped to get clinton re-elected.
   
  another major contributing factor to the fall of oil prices is this deal. this single deal alone proves that peak oil is a myth.

• bloc said on Nov 11, 2008....

  @travelr
  the implication that there is no such thing as peak oil because predictions in the 70s were wrong is a non sequitur. It's like saying I know someone that smokes 3 packs a day and didn't die of lung cancer therefore there's no risk to smoking.
  
  Regarding futures, I still don't understand how futures could affect price. Let's say that Bob extracts oil from the ground. Tim buys oil from bob. Joe buys futures in oil. If Bob extracts and sells the same amount of oil to time how in the world would Joe's purchase of futures affect the price?
  
  "the proof that it is futures market and nothing else is in the fact that gas prices started to fall days after the stock market began to fall also."
  
  This is not proof. I can show you that the temperature of the earth has risen at the same rate that the number of pirates in the world has fallen. This does not mean that the number of pirates causes global warming.
  
  And that deal in no way proves that peak oil is a myth. How in the world can anyone say that peak oil is a myth. Do you believe that the supply of oil is infinite?
  

• SeanRenaud said on Nov 11, 2008....

  Let's say that Bob extracts oil from the ground. Tim buys oil from bob. Joe buys futures in oil. If Bob extracts and sells the same amount of oil to time how in the world would Joe's purchase of futures affect the price?

  Because futures is all about telling the future and selling accordingly.  You buy up gas now at what you assume it will be worth later factoring in that China is exploding and will want more gas (and they would have too if they hadn't lowered how much they subsidized oil in their nation).  The way I understand it part of the equation is the assumption that Bob (and everybody else) will produce the same amount of oil, no more and no less (or atleast that any change will be easily observed and accounted for.) 

  I think it's faulty thinking that proof of the futures is the way it seems tied to the stock market though.  I think it ignores the fact that literally the week that Bush removed the federal ban on off shore drilling that oil started dropping.  That it paused for a bit near 100 dollars, then when Congress let the ban expire it continued it's downward spiral.  Reason being that futures by definition aren't really all that concerned about how hard it is to get gas right now, but rather how hard it should be to get oil ten years from now.

  Peak Oil is obviously a fact.  What isn't a fact is how long it takes oil to form in the ground, how much is actually there and if (like whale oil) we'll find an alternative soon enough.
  

• bloc said on Nov 11, 2008....

  "You buy up gas now at what you assume it will be worth later"
  
  You are saying that buying 10 barrels of futures is literally buying 10 barrels of oil. I do no believe this is the case.
  

• travelr712 said on Nov 11, 2008....

  you seriously need to take a class or two in economics bloc. peak oil has nothing to do with how much oil is left. it has everything to do with how much is available and how much is consumed. since there was another 40 billion barrels dumped on the market 3 weeks ago, the available amount exceeded the demand once again and the prices began to fall. coupled with the mass selloff by the major investors of their futures contracts, which hold the controlling interest in how much is sold to refinaries and thus to the public, has caused this drastic reduction. just as with stock in a company, the more you control, the more you influence price and availability of the product. do a little research into the basic principles of economics and then we can talk.

• SeanRenaud said on Nov 11, 2008....

  Peak Oil has everything to do with how much oil is left.  Trav.  You are talking about the Supply and Demand aspect but Peak Oil is about how much oil is in the earth and how once we reach the peak of production supply will rapidly drop off until it's all gone.

• travelr712 said on Nov 11, 2008....

  "It is important to note that peak oil is not about running out of oil, but the peaking and subsequent decline of the production rate of oil."
   
  peak oil is about production rates and demand curves, not about available future supplies. every time this or that scientist says we're running out, another reserve is opened up and the market is once again flooded.

• bloc said on Nov 11, 2008....

  "every time this or that scientist says we're running out, another reserve is opened up and the market is once again flooded."
  
  This is a non sequitur and even if it weren't it falls into the same trap as one of your earlier statements. There is a finite amount of oil. Demand keeps rising. Many of the known reserves are not easily extracted. Are you suggesting that either oil is finite or that demand is shrinking? If not then how is peak oil, whenever it happens not a problem?
  

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