what is behind rising oil prices?
Discussion
we've seen this before
http://www.onlineopinion.com.au/view.asp?article=7...
and dinner jacket agrees that there is adequate stock, hints at political interferance (but he would, wouldn't he)
http://afp.google.com/article/ALeqM5hRuRke2mUOTRwl...
although western demand is dropping
http://www.oilvoice.com/n/Oil_Hits_124_Dollars_Per...
as will Asian demand apparently
http://calculatedrisk.blogspot.com/2008/06/asian-c...
bottlenecks at refineries?
http://www.radioaustralia.net.au/programguide/stor...
http://www.onlineopinion.com.au/view.asp?article=7...
and dinner jacket agrees that there is adequate stock, hints at political interferance (but he would, wouldn't he)
http://afp.google.com/article/ALeqM5hRuRke2mUOTRwl...
although western demand is dropping
http://www.oilvoice.com/n/Oil_Hits_124_Dollars_Per...
as will Asian demand apparently
http://calculatedrisk.blogspot.com/2008/06/asian-c...
bottlenecks at refineries?
http://www.radioaustralia.net.au/programguide/stor...
mondeoman said:
I understood it was "city" betting? that was driving it up. They can't make money out of housing anymore, so the next best futures market is energy ......
That's basically it.Hopefully they'll reach a point where they just can't sell it effectively and the prices will come down again.
mondeoman said:
I understood it was "city" betting? that was driving it up. They can't make money out of housing anymore, so the next best futures market is energy ......
Fundamentally, there is more than enough oil and we have not reached 'Peak Oil' yet.So, in essence it is definately speculation that has driven prices up. Oil companies, Governments, investors and speculators are to blame for this.
The media will lay the blame on the financial centres but you have a US government who are all heavily invested in a high oil price, as is our own and those of the oil producing countries like Russia and Saudi, not forgetting the oil companies.
Plotloss said:
Speculation and price fixing.
Crucially not supply/demand.
I admit that I'm a ignoramous when it comes to economic matters but is that for real? These people are such Crucially not supply/demand.
s (excuse my French). I'm all for business/making a fair buck but these people shouldn't be allowed to be in charge of such an important resource which affects so many peoples lives so profoundly.[prepares to get a flaming from all the nasty capitalists]
My tuppence.
Oil at $12 stupidly cheap ( 1998 )
Oil at $60 about right ( 2005 )
Oil at $120 stupidly expensive.
But rather like house prices since when did markets not over or under shoot.
UK house ave £70k too cheap (1996)
UK house ave £120k about right ( 2002 )
UK house ave £190k stupidly high ( 2007 )
The same is true for everything from the £/$ rate to the Nikkei.
It's just the market being a market.
Oil at $12 stupidly cheap ( 1998 )
Oil at $60 about right ( 2005 )
Oil at $120 stupidly expensive.
But rather like house prices since when did markets not over or under shoot.
UK house ave £70k too cheap (1996)
UK house ave £120k about right ( 2002 )
UK house ave £190k stupidly high ( 2007 )
The same is true for everything from the £/$ rate to the Nikkei.
It's just the market being a market.
brisel said:
Doesn't the weak dollar have something to do with it too?
Yeah, no matter how you look at it, the steady drop of the value of the dollar vs other currencies means that its overall value is dropping. All oil trading occurs in dollars and hence there would be an increase accordingly. Add in a little extra to cover any fluctuations and you have a steady increase....From what I can see on Forex websites that have some form of historical data, it looks like the dollar has lost about 5%-8% of its value against the Euro and Yen since the start of the year. That is quite a lot in general, but this is enough to force up the price of oil a touch as dealers, traders and companies try to off-set any losses because of this....
So that's between 10% and 15% of the increase of the price of oil dealt with, so where is the rest of the other 30% increase come from? Demand is static in general so its coming from somewhere. Couldn't be speculators who are ramping the market, could it?
Basically it works like this-
To buy a billion barrels of oil at $100 per barrel you only need to actually pay for 25% of it.(some loophole that was explained in the FT a few weeks back))
You then sit on it a refuse to sell it, when it gets to $130 a barrel you sell it, paying your full $100 but getting $130 and making $30 on each barrel.
Thats the simple idea, if you have a spare £25B its easy money.
To buy a billion barrels of oil at $100 per barrel you only need to actually pay for 25% of it.(some loophole that was explained in the FT a few weeks back))
You then sit on it a refuse to sell it, when it gets to $130 a barrel you sell it, paying your full $100 but getting $130 and making $30 on each barrel.
Thats the simple idea, if you have a spare £25B its easy money.
Dave_ST220 said:
I thought China was to blame, i mean they have been blamed for the rising raw metal costs which is affecting everything(copper has gone through the roof).
Their increase in demand over the last few years has gone from 6% of global production to just 9% (rough numbers from memory). Not enough to justify the rise above $100.mickken said:
The government is not too worried as it is the perfect stealth tax. ...They make 70%+ tax from every gallon sold. They are quite happy.
But fuel duty isn't based on cost, so they're only getting the extra VAT. In other words, they aren't gaining any more from oil prices going up than they would from anything else going up.Gassing Station | The Pie & Piston Archive | Top of Page | What's New | My Stuff