Black Gold: Tops $130/barrell

[JustROLLIN]

Just curious what everyone's thoughts are on the topic of oil. I know this will likely lead to some interesting discussion/arguments, so I figured it was worth bringing up. Oil just topped the $130 mark and does not look to have a slowdown in sight. Discuss....

[ZoomZoom Diva]

The lemmings are in the hot air balloons.

[Picklz]

Average price of a gallon of gas in Saudi Arabia is $.47 :pickle:

[dmention7]

http://money.cnn.com/2008/05/01/news/international/usgas_price/?postversion=2008050109

A lot of the variation in worldwide gas prices has to do with how heavily the gas is taxed or subsidized. Not surprisingly, countries that produce a lot of oil subsidize it pretty heavily

Also pre-gallon gas taxes are relatively low in the US, so absolute price differences in the cost of gas affect us more strongly.

[AJ]

Hear my words, the gas woll go up a tad yet, but then it will break and come back down. There is a lot more impact on todays pricing by the futures trading apparently and we may be in for a rough summer, but it will break and fall, and continue to fall at similar rates to which it has increased in the fall.

[spek1098]

As long as gas prices don't go up faster then the average Joe can adapt to them, it's a good thing. It makes the previously more expensive alternative options (solar, wind, nuclear) relatively more affordable while spurring the market to adopt techs that conserve energy and encourages development of new options all without government intervention.

Our country subsidizes the world wide oil industry by the fact that our foreign policy basically revolves around protecting supplies of oil. For starters the Iraq war wouldn't have been started if it wasn't located in the middle of most of the world's supply, so there is a indirect $200 billion subsidy for the oil industry. I could dig up more examples if you like, but that should prove my point.

[JustROLLIN]

As long as gas prices don't go up faster then the average Joe can adapt to them, it's a good thing. It makes the previously more expensive alternative options (solar, wind, nuclear) relatively more affordable while spurring the market to adopt techs that conserve energy and encourages development of new options all without government intervention.

Our country subsidizes the world wide oil industry by the fact that our foreign policy basically revolves around protecting supplies of oil. For starters the Iraq war wouldn't have been started if it wasn't located in the middle of most of the world's supply, so there is a indirect $200 billion subsidy for the oil industry. I could dig up more examples if you like, but that should prove my point.

I agree, to a point... I think its a positive that we are being "forced" into alternative energies, but I also think the time of implementation is waaay too long. So yes, its good we are looking at other options, but what do we do in the down time? Pay $5/gal while we wait for the hydrogen cars to arrive. Then, when they finally arrive we dont have any money to buy because we have been spending $5/gal to power our "monolithic" vehicles... Meh.

[dmention7]

Well, even beyond automobiles, there is a fair amount of oil being used for general power generation. Every gallon not used to heat our homes for example is a gallon that can be used for other purposes.

[AJ]

http://money.cnn.com/2008/05/21/news/economy/oil_hearing/index.htm?cnn=yes

Another good read with the Oil Execs in mind.

[JustROLLIN]

Hear my words, the gas woll go up a tad yet, but then it will break and come back down. There is a lot more impact on todays pricing by the futures trading apparently and we may be in for a rough summer, but it will break and fall, and continue to fall at similar rates to which it has increased in the fall.

First off, what exactly is a tad? GoldmanSachs is predicting prices as high as $200 per barrell and they tend to have some fairly talented people. Also, from what I have been reading the futures traders are not impacting the market nearly as badly as most are claiming. *cough* government *cough*

[JustROLLIN]

Well, even beyond automobiles, there is a fair amount of oil being used for general power generation. Every gallon not used to heat our homes for example is a gallon that can be used for other purposes.

Yeah, but you still deal with the exact same issues. Its not something where the nation can flip a switch and suddenly we are powered by GE solar/wind power. Its a gradual process that will take decades to accomplish. Again, I am happy we finally focusing on it, but how realistic is it to think the solution is anywhere in the near future?

[dmention7]

Depends on what you mean by near future. I would think that over a 5-year timeframe, there is room for significant change to be made in where our power comes from. Especially since many of those solutions can be adopted at the household level without waiting for the giant power companies to make major shifts.

But are we going to see these technologies scale in real-time with energy prices? Not likely.

[Young Roids]

Oil is so high it makes me want to puke just thinking about it.:crap:

[ZoomZoom Diva]

While I agree government is a major factor in the current prices by both prohibiting drilling and refining capacity and by allowing a monopolistic system to be put in place, the speculators are adding a large quantity of false demand to the system that is also inflating prices.

[JustROLLIN]

Depends on what you mean by near future. I would think that over a 5-year timeframe, there is room for significant change to be made in where our power comes from. Especially since many of those solutions can be adopted at the household level without waiting for the giant power companies to make major shifts.

But are we going to see these technologies scale in real-time with energy prices? Not likely.

Maybe you and I are talking about different things. I dont understand what changes can be made even on an individual household level in that amount of time. Are you talking like individual power from solar? I just dont see the US public adopting these sources due to cost, construction, etc.

[spek1098]

While I agree government is a major factor in the current prices by both prohibiting drilling and refining capacity and by allowing a monopolistic system to be put in place, the speculators are adding a large quantity of false demand to the system that is also inflating prices.

Yea, I hope that is true, because if it is they will eventually cause a relative bust in the market kind of like what’s happening to housing right now. With the drilling, some things are more important to me then how fat my wallet is or isn't. Take a trip to the BWCA and you might come away with a new appreciation for untouched wilderness.

The house just past a bill, like 400-80 or something, to allow the government to sue OPEC members as they can sue US based corps for monopolistic practices. As it is with all the best ideas, like stem cell research, are most wise and exalted leader is threatening to veto it.

[spek1098]

Maybe you and I are talking about different things. I dont understand what changes can be made even on an individual household level in that amount of time. Are you talking like individual power from solar? I just dont see the US public adopting these sources due to cost, construction, etc.

Conservation maybe? They say there is alot of possiblity for energy savings there. Those costs are relitive remember, so it is quickly becoming more and more economical to install such systems all while the prices of these systems are coming down with the increased sales and production of such systems. Thank you Ford for your contributions to mass production.

[ZoomZoom Diva]

The act to sue OPEC is symbolism over substance, since the law would lack any power of the members of OPEC (which are foreign entities). You cannot hold other soverieign nations to unilateral U.S. legislation, and if OPEC decides not to play, that would simply make matters worse.

That said, I grew up surrounded by wilderness, and while preservation is important and something that is really great to have, the need for affordable and reliable sources of energy is essential. It simply is not feasible to try to preserve everything, and it is possible to extract the necessary resources in ways that keep the impact to a minimum.

[spek1098]

The entire problem is that oil would never reach the lower 48. It would be destine for the open market, ie Asia, on top of taking over a decade to reach any nominal levels of output. Doesn't make much sense to me.

On top of that, there is something to be said about leaving it in the ground as a reserve for the US. I don't think anyone has a clue where the US and the world will be in fifty years, and there could come a point where we really NEED that oil, rather then trying to use it now as a buffer to lower world oil prices slightly.

Yea, I understand that it's only symbolic, but it's something when I don't see much else they could do. You listed a few other things the goverment could do, ie with allowing monopolies. I would like to understand how they have allowed this? You mean by allowing all these different fuel standards there by fragmenting the market and allow monopolistic control?

[dmention7]

+1 to everything Jurgen said.

[ZoomZoom Diva]

The destination and even to an extent the price of the oil could be determined by the legislation opening the areas for exploration as part of the terms of the lease.

The government has allowed monopolies by not requiring refineries to compete against each other, by allowing excessive and massive mergers and acquisition. Minimum markup laws and other pricing regulations that limit not how HIGH prices can go, but rather how LOW they can go only makes matters worse, and eliminates an important incentive to compete. States have made matters worse by legislating the different formulations and blends, often for political reasons (see ethanol). Since the citizens have had the power of choice taken from them by government, the citizens are entitled to some protection and stability in the price that would have occurred naturally in a truly competitive environment.

[spek1098]

The destination and even to an extent the price of the oil could be determined by the legislation opening the areas for exploration as part of the terms of the lease.

The government has allowed monopolies by not requiring refineries to compete against each other, by allowing excessive and massive mergers and acquisition. Minimum markup laws and other pricing regulations that limit not how HIGH prices can go, but rather how LOW they can go only makes matters worse, and eliminates an important incentive to compete. States have made matters worse by legislating the different formulations and blends, often for political reasons (see ethanol). Since the citizens have had the power of choice taken from them by government, the citizens are entitled to some protection and stability in the price that would have occurred naturally in a truly competitive environment.

I agree with much of that. The direction the government has been taking since Carter though has been that of deregulation, not increased regulation. Fixing the issues you state won't happen until politics becomes less polarized and the repubs and dems can find the middle ground again.

With the drilling, in the end it still goes into a world market, it will only mean that we import 5% less oil, that is if we can get at least a million barrels a day from up there. I also don't think many companies would be willing to sign leases like that. But ok, the government puts price controls on the crude that comes from up there. Then how is the government going to translate that into lower prices for the consumer (rather then increased profits for the refineries, wholesalers, and gas stations) without regulation over the entire oil industry?

[spek1098]

Oh, I guess I thought of a way. They set a price for the oil. Say $100 a barrel. Say oil is $130 a barrel. The $30 difference could be taken as a tax and give back to the public as a rebate. But there are tons of issue with that, like can we trust the government to actually give the money back and not spend it. Yea, not likely.

[ZoomZoom Diva]

It's a combination of excessive government intrusion preventing the exapansion of drilling and refining capacity and government simply allowing de facto monopolies and collusion to run rampant.

The competitive measures would take care of excessive profiteering. When companies truly compete, or are required to act as if they are in a competitive market, consumers will receive the benefit as companies now have to compete for business. It would provide an incentive for oil companies to produce their products less expensively.

[DrWebster]

Hear my words, the gas woll go up a tad yet, but then it will break and come back down. There is a lot more impact on todays pricing by the futures trading apparently and we may be in for a rough summer, but it will break and fall, and continue to fall at similar rates to which it has increased in the fall.

Maybe, but I highly doubt we will ever see gas below $3.50/gallon again.