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banquo's_bumble_puppy
2007-Nov-07, 11:21 AM
Anybody concerned over this prospect in the coming days? Not much we can do about it other than take the bus/bike/etc. to work. I heard that heating oil jumped $3.00 gal as well. So, what happens say next summer when gasoline traditionally goes up? Not to mention hurricanes, various wars, unruly Nigerian mobs, etc, etc, etc...

Ronald Brak
2007-Nov-07, 11:38 AM
If things occur that disrupt the supply of oil then the price goes higher. Personally I'm feeling good about the whole situation as my foot appears to have healed up nicely. I walked for an hour yesterday and it's given me no problems. I was worried there for a while.

Oh, the world economy, right. Well if oil prices go up too high there will be an economic slowdown, but most countries are in a much better position with regards to oil than they were in the 70's with no one except Iran and a few other oil rich countries using it for electrical generation. Hopefully they will soon get a few reactors built so we can get a slight decrease in oil prices. Oil may come down in price if there is a world recession, however I think the general trend will either be upwards or a platuex as further price increases encourage more substitution. All I can recommend is that people think very carefully about economy when buying a car and if they live in a cold area think about insulating and using heating methods other than oil.

Argos
2007-Nov-07, 01:38 PM
Prospects are grim (http://www.time.com/time/business/article/0,8599,1681362,00.html), according to Time.


"I am sorry to say this, but we are headed toward really bad days," IEA chief economist Fatih Birol told TIME this week. (...) De Margerie said companies and governments now realize that they have overestimated the amount of oil that could be extracted from places difficult to reach and costly to explore. "It is not my view, it is the industry view," he said. In other words, the message is that the current sky-high oil prices may not be a temporary burden on the world economy.

antoniseb
2007-Nov-07, 01:51 PM
I'll be doing more telecommuting in the near future.

Swift
2007-Nov-07, 01:52 PM
I am no more concerned about $100.00 per barrel than I was about $86.75 or $101.37. The round numbers on the end have no signficance above psychological. The trend is the concern and we had better get used to it. Average MPG in the Swift household (2 cars) is 42 MPG.

Parrothead
2007-Nov-07, 01:53 PM
Well with the Loonie flirting with the $1.10 US mark, it would mean a barrel of crude is only $90 Cdn. ;)

pghnative
2007-Nov-07, 01:58 PM
Well with the Loonie flirting with the $1.10 US mark, it would mean a barrel of crude is only $90 Cdn. ;)Are there any economists in the house? I'm wondering how much of spike in oil prices over the past few years is due to the falling dollar, versus how much is due to true price increases (averaged over the largest currencies).

I'd guess that most of it is a true price increase, but I'm curious how much is just "funny money" due to the falling dollar.

Oh, and re the OP, since I'd like to see more conservation and more alternative fuels, higher oil prices should help those goals.

banquo's_bumble_puppy
2007-Nov-07, 02:02 PM
according to the Business News Network it has a lot to do with the devalaution of the US dollar....they said that the Canadian dollar is rising in step with the price of oil, so that would suggest that it is the currency

Swift
2007-Nov-07, 02:08 PM
Are there any economists in the house? I'm wondering how much of spike in oil prices over the past few years is due to the falling dollar, versus how much is due to true price increases (averaged over the largest currencies).

I'd guess that most of it is a true price increase, but I'm curious how much is just "funny money" due to the falling dollar.

I don't even play an economist on TV, but I recall hearing a story related to this on the radio (NPR?) a few days ago. I dug up this story from the Wall Street Journal on-line (http://online.wsj.com/article/SB119393365240379195.html?mod=googlenews_wsj). Apparently, a lot of the mid-East currencies are pegged to the US dollar, which makes it even more complicated. If I understand it correctly, this has actually slowed the increase in crude oil prices for US buyers. If these currencies un-peg from the dollar, the rate of increase will even be worse.

Argos
2007-Nov-07, 02:14 PM
Believing that it is just an exchange effect seems like a symptom of denial. I think itīs pretty clear that extraction costs plus future uncertainties are to blame for the hike in prices.

Ronald Brak
2007-Nov-07, 02:19 PM
Let's just pretend that the price of oil is stable at $100 a barrel. (Or liter if you feel like panicing.) If the U.S. dollar falls in relation to the Euro oil will become more expensive for Americans and cheaper for Europeans. This means the U.S. will buy less imported oil and less imports means less downward pressure on the dollar. Cheaper oil for Europeans means they will use more oil, or at least slow the rate at which they economise. This means they import more than they would otherwise causeing less upwards pressure on the Euro, bringing things back into balance. It all operates pretty smoothly provided no one gives the system any sudden whacks. Unfortunately there are a lot of whackos around.

Doodler
2007-Nov-07, 02:20 PM
The real driver of oil prices, as near as I've been able to extrapolate, is the futures market. Right now, there's nothing amiss in the oil supply. The US is hurting somewhat from refining constraints from outages due to maintenance and Noel, but largely, the crude supply is flowing nicely. The rise in gas prices is directly related to the weak dollar, because the US is importing more gasoline to cover reduced refining output.

However, with regard to crude prices, the speculators on the futures boards are predicting trouble on the horizon with increased demand from India and China, along with what they believe is likely instability with Iran, and are betting high on their contracts. This leads the market to gravitate in that direction, given the willingness of buyers to tolerate the higher price.

Ronald Brak
2007-Nov-07, 02:23 PM
Believing that it is just an exchange effect seems like a symptom of denial. I think itīs pretty clear that extraction costs plus future uncertainties are to blame for the hike in prices.

Trust me, it's not just an exchange effect. Because oil contracts are denominated in U.S. dollars America has had roughly similar oil product increases as the rest of the world. As new contracts are negotiated I will expect the U.S. to have higher oil price increases than much of the rest of the world.

Ronald Brak
2007-Nov-07, 02:50 PM
By the way Doodler, I have a couple of questions for you on the zero population growth thread.

Tucson_Tim
2007-Nov-07, 03:00 PM
Average MPG in the Swift household (2 cars) is 42 MPG.

Dang! I don't even get that kind of MPG with my motorcycles. :confused:

Noclevername
2007-Nov-07, 05:28 PM
Anybody concerned over this prospect in the coming days?

Nope.

It's an arbitrary number, nothing magical happens when you hit 100.

Argos
2007-Nov-07, 05:33 PM
Yeah. For the stock market people it is an arbitrary number that screams: run for your lives! :)

pghnative
2007-Nov-07, 05:52 PM
Believing that it is just an exchange effect seems like a symptom of denial.
???

Who's in denial? I asked a simple question. Given that the OP seems to hint at effects on the rest of the world, I was ultimately wondering how oil has increased for non-US world occupants. If oil prices (in $s) double in the same span that the $ falls 25%, then oil goes up by 50% (on the average) for everyone else.

(assuming my math is correct)

Argos
2007-Nov-07, 06:07 PM
No, I donīt think you are in denial. :)

However, generally speaking, it seems that many people are. Many insiders insist that it all has to do, as I said earlier, with extraction costs, increasing demand, and market uncertainties. Ronald Brak has already made the case for the currency aspects. Since I have much respect for the opinion of the people here, I reserve my judgment, for the time being.

Doodler
2007-Nov-07, 06:47 PM
By the way Doodler, I have a couple of questions for you on the zero population growth thread.
Will hop over.

Argos
2007-Nov-09, 11:07 AM
Just when we thought the world was ending...

Oil discovery rocks Brazil (http://www.cnn.com/2007/WORLD/americas/11/08/brazil.oil.ap/index.html)


"Brazil's reserves will lie somewhere between those of Nigeria and those of Venezuela,"

This could pull prices down a couple of dollars.

Ronald Brak
2007-Nov-09, 11:24 AM
This could pull prices down a couple of dollars.

This is an interesting article, but a key word is ultra-deep. This means that it's oil that will be expensive to extract. Of course the news could cause oil prices to drop. The futures market is a fickle beast. But oil discoveries like this are not unexpected. As the price goes up companies are looking for oil in places where it would have been too expensive to extract it in the past. The bad news is that the energy required to extract this ultra deep oil could easily end up making it worse for the environment than the oil we currently use.

Argos
2007-Nov-09, 12:16 PM
You could have a point here, but it is known that Brazilīs ultra-deep is cheaper than someone elseīs ultra-deep [I donīt know to what extent, though].

Ronald Brak
2007-Nov-10, 08:50 AM
If anyone's interested, from September 4th to October 23rd these countries had the following oil price increases:

U.S.A. 15%
Japan 13.8%
Euro area 10%
Canada 6.1%

As you can see the country with with greatest currency fall, the U.S. had the highest price increase, followed by Japan, a country which imports all its oil. Canada, presumably due to its raising dollar had the least price increase. (Note that oil is internationally traded so being an oil producer does not mean your citizens won't have to pay higher prices, but raising oil prices will tend to strengthen an oil exporter's currency.)

Fraunkensteen
2007-Nov-11, 02:09 PM
Anybody concerned over this prospect in the coming days? Not much we can do about it other than take the bus/bike/etc. to work. I heard that heating oil jumped $3.00 gal as well. So, what happens say next summer when gasoline traditionally goes up? Not to mention hurricanes, various wars, unruly Nigerian mobs, etc, etc, etc...

The value of the US$ has dropped 66% since 1991 relative to the Euro. This alone makes the "cost" of oil at about $33.00 US per barrel compared to the value of other currencies. This is historically an not uncommon price for "black gold, Texas tea", as multi-billionaire Jed Clampett might say. The Federal Reserve is printing money like it were water to pay for the promises polititions make to their voting constituencies.

Ronald Brak
2007-Nov-11, 02:27 PM
The Federal Reserve is printing money like it were water to pay for the promises polititions make to their voting constituencies.

The Federal Reserve works to maintain inflation at around 3% and is technically free from political interference and is not printing money for politcal reasons. If increasing the money supply were responsible for the falling U.S. dollar it would be obvious in U.S. inflation figures. However the U.S. budget deficit does contribute to a weaker dollar.

The wikipedia article outlines what the Fed does: http://en.wikipedia.org/wiki/United_States_Federal_Reserve

Manchurian Taikonaut
2008-Jan-02, 05:44 PM
Oil Traders Eye $100 Crude Next Year
http://ap.google.com/article/ALeqM5i5TtajgUpSm7KY5jf-lCJGHBB-tAD8TSLJJ00

Doodler
2008-Jan-02, 05:56 PM
http://www.msnbc.msn.com/id/12400801/

Scratch that, welcome to $100.00 oil.

NEOWatcher
2008-Jan-02, 06:33 PM
Scratch that, welcome to $100.00 oil.
Scratch?
It just means Manchurian's article was right. It was written based on the close of 2007. It IS next year.

Doodler
2008-Jan-02, 07:33 PM
Scratch?
It just means Manchurian's article was right. It was written based on the close of 2007. It IS next year.

Ack, alright, my mistake...saw the orange box and thought it was more recent...

Yeesh, I hate this time of year. Never fails that I'll walk out the door and hear someone say "See you next year" and almost walk into a wall in confusion.


That said, I doubt they were expecting it so soon.

NEOWatcher
2008-Jan-02, 08:15 PM
Ack, alright, my mistake...saw the orange box and thought it was more recent...
Yep; I hate that. They take an older article and either don't date it, or date it as of it's last update, and don't change the time references.
Here's a good example...
TV Conversion Coupons Available Next Week (http://www.newsnet5.com/news/14956378/detail.html)

WASHINGTON -- Millions of $40 government coupons become available Tuesday
Yesterday or next week?


Yeesh, I hate this time of year. Never fails that I'll walk out the door and hear someone say "See you next year" and almost walk into a wall in confusion.
Just like about a month ago, a local furniture store was advertising no payments until 2008. :rolleyes:

Bogie
2008-Jan-02, 08:30 PM
Yep. We touched $100 today. It doesn't help to say that it will probably fall back because the economy is nearing recession. Out of the frying pan and into the fire.

Launch window
2008-Feb-28, 04:40 AM
more bad news :(

At the pump, gasoline prices added a penny overnight, rising to an average of $3.152 from $3.142 (http://www.foxnews.com/wires/2008Feb27/0,4670,OilPrices,00.html)

according to AAA and the Oil Price Information Service. At this time last year, drivers were paying an average of just $2.37 a gallon. Industry observers say prices will top last May's peak of $3.23 a gallon as stations begin to switch to more expensive summer-grade fuel.

Bernanke signals another rate cut (http://www.boston.com/business/articles/2008/02/27/fed_chief_assessing_economys_health/)

The pound is poised to breach the psychologically significant $2 mark, while the dollar has dipped below key support levels against the yen to sink to Y106.22. (http://biznes.onet.pl/5,1700199,wiadomosci.html)

US recession fears raise oil prices (http://ukpress.google.com/article/ALeqM5gWjgHelwM4Bt2_6NUw90g5x-s0Mw)

Ronald Brak
2008-Feb-28, 05:07 AM
Yep. We touched $100 today. It doesn't help to say that it will probably fall back because the economy is nearing recession. Out of the frying pan and into the fire.

Excellent news. The fact that people are bidding up oil prices means that they don't think the U.S. is heading for a severe recession. Of course they could be wrong, but it is a good sign.

Launch window
2008-Feb-29, 04:21 AM
Dollar falls to new low on Bernanke statement (http://money.cnn.com/2008/02/27/markets/bc.apfn.dollar.ap/)

peteshimmon
2008-Feb-29, 07:14 PM
And the burning question is will millions of
feet stroke those pedals a little more gently?