Article: 60% of oil price is speculation

Discuss life, the universe, and everything with other members of this site. Get to know your fellow polywell enthusiasts.

Moderators: tonybarry, MSimon

jmc
Posts: 427
Joined: Fri Aug 31, 2007 9:16 am
Location: Ireland

Post by jmc »

When this thread was first posted oil was $120/bbl now oil is $102/bbl. Discount the subsequent bubble up to $145 102/120=85%, so at present if the decrease was entirely down to the bubble bursting, 15% of the price of oil would be down to speculation.

In addition this post began in May, when €1 was worth $1.55, the euro is now worth $1.40 this indicates that the dollar has appreciated by 10%

http://finance.yahoo.com/currency/conve ... amt=1&t=3m

Which would cover most of the 15% reduction in the price of oil since the start of this thread in anycase.

MSimon
Posts: 14331
Joined: Mon Jul 16, 2007 7:37 pm
Location: Rockford, Illinois
Contact:

Post by MSimon »

The Saudis just reduced oil output to maintain price.
Engineering is the art of making what you want from what you can get at a profit.

OneWayTraffic
Posts: 54
Joined: Sat Sep 29, 2007 3:35 pm

Post by OneWayTraffic »

We could well see another spike next year and then another and so on...

As of right now we simply don't have the margin between supply and demand that we've had in the 80s and 90s. That dictates historically high though volatile prices untill either demand goes down or supply up.

I can't see supply going up so much. We'll be lucky if new finds merely replace old declining fields.

The real wild card as MSimon pointed out a few posts ago is technology. Plugin hybrids, algae biofuel, new battery technology, fusion and others all have the ability to change the whole paradigm.

MSimon
Posts: 14331
Joined: Mon Jul 16, 2007 7:37 pm
Location: Rockford, Illinois
Contact:

Post by MSimon »

The main thing holding back supply is a certain political party in the US Congress and also controlling some oil mining states.

This same party is also holding back the building of new refineries.

There is some evidence (meager) that said party is in cahoots with the Saudis.

http://powerandcontrol.blogspot.com/200 ... yroll.html
Engineering is the art of making what you want from what you can get at a profit.

DKelley
Posts: 10
Joined: Fri Jul 25, 2008 6:38 pm
Location: Denver, CO

Post by DKelley »

MSimon wrote:The Saudis just reduced oil output to maintain price.
And your point is...? Let's see, we TALK about increasing our domestic production in the U.S. and the Saudis simply reduce output to maintain price. So what is going to happen when we actually DO increase domestic oil production by a very small percentage? What ... you think the Saudis and OPEC will simply roll over and say, "You win," and they'll never do anything to prop up prices again to offset our measly increase in domestic production?
MSimon wrote:The main thing holding back supply is a certain political party in the US Congress and also controlling some oil mining states.

This same party is also holding back the building of new refineries.

There is some evidence (meager) that said party is in cahoots with the Saudis.

http://powerandcontrol.blogspot.com/200 ... yroll.html
Seriously? You are going to try to make the argument that only the Democrats are responsible for high energy costs?

With this last quote it sounds like you are trying to blame the Democrats for high prices and you even seem to be alluding to collusion between them and the Saudis as well. You seriously want to make the argument that ONLY members of the Democratic party are capable of manipulating foreign affairs for personal gain? There are plenty of selfish scum-bags on both sides of the aisle. In fact, the Republicans are known for some serious gaffes in foreign affairs as well.

But in the first quote above you make it sound like all the Saudis have to do is decrease production to prop up the price of oil. So which is it, Democrats colluding with the Saudis and OPEC causing a massive run-up in oil prices or is it the Saudis and OPEC just changing their output to offset the mere mention of us increasing our output for their own self-interests without any need for collusion with Democrats? Pick one and stick with it. Right or wrong it makes for a better sounding argument at least.

Regardless of which argument you choose I want you to show me the math that explains how drilling off-shore AND in ANWR is going to have a meaningful impact to supply that OPEC won't simply wipe out by dropping their production a little to keep prices high (remember at the height of the '70s oil crises oil was in the mid-$90s after adjusting for inflation and that was when they PURPOSEFULLY cut off our supply). Now, people seem "happy" that the price may stabilize below $100.... Really? We should be screaming for renewables as loud now as when prices were at $150.

Oh and don't try to tell me about the estimated 800 billion barrels available in oil shale here in the West because I really don't plan on going without water just to supply that oil to you when renewables are a viable option that no one has been able to successfully discount. If you can make a real argument that we should forgo developing renewable energy in favor of strip-mining the West or draining all our ground water here to get at that shale oil then I might listen.
"Just because you can," doesn't mean "you should."

DKelley
Posts: 10
Joined: Fri Jul 25, 2008 6:38 pm
Location: Denver, CO

Post by DKelley »

To take a quote from commenter "ron nord" to the link MSimon posted:
There seems to be a concerted plan or scheme to ruin the United States by the Democrats and it has been going on for a long time now.
Right, I think we would have noticed if 40% of the U.S. had conspired to "ruin" the U.S.

Rather than spewing nonsense and irrational fear might it be more useful to ask a more sensible question such as why do Democrats seem to block efforts to allow drilling everywhere the oil companies want to drill?

As a moderate conservative I'd surmise that "Demon-crats" and "those nasty greenies" are really more concerned about finding and encouraging alternative ways to produce electricity - and have been since the '70s. Hmm, let's think about this, burning fossil fuels burns up a resource whereas solar, wind, hydro, geothermal, et al, are all sources of energy that seem to provide energy without directly destroying a resource.

And yes, even the most conservative estimates are that affordable oil will peak within the next 40 years. How does making a concerted effort to develop alternative and renewable energy sources while discouraging the wasteful burning of fossil fuels during the next 40 years hurt us? Let us not forget the other many uses of oil besides burning it.

So are "Demon-crats" trying to ruin the U.S? I'd argue no, they simply want to encourage other sources of energy.

(Full disclosure: yes, I consider myself conservative. Generally, I believe everyone should be allowed to own a gun and I don't think it is right to have to register that gun [but I'd make exceptions for criminals]. I believe in not spending more than one's income. I believe in saving [aka, Social Security, Medicare, Medicaid, "Personal Savings Accounts", whatever]. I don't believe abortion is "the answer," but as a realist (moderate) I realize that women get pregnant and men are in part responsible and sometimes people have to make tough decisions that some of us don't like. I believe govt. should be as small as possible but as a realist (moderate) I realize that some govt. is necessary. I believe a strong military is important but as a realist I don't think we should be the "neighborhood bully." I think less tax is better but as a realist I believe we have to seriously consider the consequences of running up our national debt while lowering taxes too much. I won't say I believe encouraging business growth is good because that is not a subjective argument, the fact is growing business is good, what is important is to not let businesses run rough-shod over our health and well-being, so as a realist I see the need, unfortunately, for regulation of business.

So keep those things in mind before you attempt to dismiss me as some whack-o, greenie, enviro, Demon-crat.)
"Just because you can," doesn't mean "you should."

Helius
Posts: 465
Joined: Sun Oct 21, 2007 9:48 pm
Location: Syracuse, New York

Comprehensive solutions.

Post by Helius »

I get a kick out of the perspective that oil drilling is somehow not disjoint with wind and solar. How again does Oil company drilling in Anwar and offshore impede solar and wind development? You ahem... "conservatives" would have a lot more credibility if you'd allow the leases for drilling, tar sands development and oil shale development as part of the solution. If you favor renewables, then go for it. Just let the oil companies supply energy too.

MSimon
Posts: 14331
Joined: Mon Jul 16, 2007 7:37 pm
Location: Rockford, Illinois
Contact:

Post by MSimon »

And your point is...? Let's see, we TALK about increasing our domestic production in the U.S. and the Saudis simply reduce output to maintain price. So what is going to happen when we actually DO increase domestic oil production by a very small percentage? What ... you think the Saudis and OPEC will simply roll over and say, "You win," and they'll never do anything to prop up prices again to offset our measly increase in domestic production?


The money stays home is #1. If domestic production keeps increasing eventually the Saudis go broke.

It may take a while. It is not impossible.
Engineering is the art of making what you want from what you can get at a profit.

jmc
Posts: 427
Joined: Fri Aug 31, 2007 9:16 am
Location: Ireland

Post by jmc »

Oil drilling is polluting, mining non-conventional tar sands is very polluting.

http://www.interboreal.org/globalwarmin ... rsands.pdf

MSimon
Posts: 14331
Joined: Mon Jul 16, 2007 7:37 pm
Location: Rockford, Illinois
Contact:

Post by MSimon »

jmc wrote:Oil drilling is polluting, mining non-conventional tar sands is very polluting.

http://www.interboreal.org/globalwarmin ... rsands.pdf
Yeah and letting the Saudis do it is non-polluting and they are a positive force on the international scene.

Of course if we can raise oil prices high enough fast enough we can kill off a lot of marginal people. Lots of possible advantages there. Consider it a humanitarian undertaking. Heh.

"Peak Oil" seems to have a way of bringing out the humanitarian contingent. Who knew?
Engineering is the art of making what you want from what you can get at a profit.

jmc
Posts: 427
Joined: Fri Aug 31, 2007 9:16 am
Location: Ireland

Post by jmc »

Regardless of whether the Saudi's are nice or not, that doesn't change the fact that a couple of oil wells in the middle of the desert is nothing compared to devastating 55,000 square miles of Canadian forest, not to mention reducing lakes and rivers of clean fresh water to polluted sludge.

I don't see the point in making short term "humanitarian" argument for tearing up the planet. Nature has a place aswell. And the long term result of these short term meassures will be to make the planet less viable for humanity. Your don't eliminate human suffering that way, you just defer it for a few more decades, and when it comes its even worse.

The money spend on tar sand extraction would be better spend developing EVs.

MSimon
Posts: 14331
Joined: Mon Jul 16, 2007 7:37 pm
Location: Rockford, Illinois
Contact:

Post by MSimon »

jmc wrote:Regardless of whether the Saudi's are nice or not, that doesn't change the fact that a couple of oil wells in the middle of the desert is nothing compared to devastating 55,000 square miles of Canadian forest, not to mention reducing lakes and rivers of clean fresh water to polluted sludge.

I don't see the point in making short term "humanitarian" argument for tearing up the planet. Nature has a place aswell. And the long term result of these short term meassures will be to make the planet less viable for humanity. Your don't eliminate human suffering that way, you just defer it for a few more decades, and when it comes its even worse.

The money spend on tar sand extraction would be better spend developing EVs.
Nature can be restored. In fact oil is food for organisms that will support a food chain.

You have to not only look at costs of a plan. What are the costs of the alternative plan? i.e. feeding the Saudis/Iranians with excess $$$. Is 55,000 sq miles of destruction worth it to avoid (or at least reduce the risk of) an atomic war?

It is a judgment call.

Suppose using that tar sands would have avoided the dust up in Iraq. Worth it?

Suppose we can use those tar sands to bring the government of Iran down without a fight. Worth it?

In my engineering judgment - yes. YMMV
Engineering is the art of making what you want from what you can get at a profit.

ravingdave
Posts: 650
Joined: Wed Jun 27, 2007 2:41 am

Post by ravingdave »

DKelley wrote:To take a quote from commenter "ron nord" to the link MSimon posted:
There seems to be a concerted plan or scheme to ruin the United States by the Democrats and it has been going on for a long time now.
Right, I think we would have noticed if 40% of the U.S. had conspired to "ruin" the U.S.
Boiling frog syndrome ?

Apart from that, I think "Conspired" is the wrong word. It implies that there is some overall intelligence at work. :) What actually occurs is the pursuit of people's own perceived self interest without thought to the long term consequences.

Rather than spewing nonsense and irrational fear might it be more useful to ask a more sensible question such as why do Democrats seem to block efforts to allow drilling everywhere the oil companies want to drill?


I have always thought their reasons were as follows.
1. They don't want to look at ugly oil rigs spoiling their view.
2. One of their major constituency groups is vehemently opposed to it.(for environmental reasons due to past oil spill disasters.)
3. Other of their constituency groups HATE corporations and big oil.
4. Another of their constituency groups believe in the "Gaia" theory of earth.
5. Keeping the cost high increases Governmental revenues, thanks to the gas tax.
6. And so on.
As a moderate conservative I'd surmise that "Demon-crats" and "those nasty greenies" are really more concerned about finding and encouraging alternative ways to produce electricity - and have been since the '70s. Hmm, let's think about this, burning fossil fuels burns up a resource whereas solar, wind, hydro, geothermal, et al, are all sources of energy that seem to provide energy without directly destroying a resource.
Using the power of Government to force market changes they favor and stifle those which they oppose.
And yes, even the most conservative estimates are that affordable oil will peak within the next 40 years. How does making a concerted effort to develop alternative and renewable energy sources while discouraging the wasteful burning of fossil fuels during the next 40 years hurt us? Let us not forget the other many uses of oil besides burning it.

The road to hell is paved with good intentions. Market forces are driven by people who freely choose to spend their money as they see fit. Sometimes these people do foolish things in excersizing their freedom to wastefully burn fossil fuels, but the market will punish them eventually and Nature will put things right. Having Liberal "caretakers" forcing others to do as they think best is why the crops always failed in communist Russia.

So are "Demon-crats" trying to ruin the U.S? I'd argue no, they simply want to encourage other sources of energy.

That is a very benign interpretation that may very well have a lot of truth in it. I have no doubt that many of these people believe exactly that. Unfortunatly, good intentions do not justify horrible results.

(Full disclosure: yes, I consider myself conservative. Generally, I believe everyone should be allowed to own a gun and I don't think it is right to have to register that gun [but I'd make exceptions for criminals]. I believe in not spending more than one's income. I believe in saving [aka, Social Security, Medicare, Medicaid, "Personal Savings Accounts", whatever]. I don't believe abortion is "the answer," but as a realist (moderate) I realize that women get pregnant and men are in part responsible and sometimes people have to make tough decisions that some of us don't like. I believe govt. should be as small as possible but as a realist (moderate) I realize that some govt. is necessary. I believe a strong military is important but as a realist I don't think we should be the "neighborhood bully." I think less tax is better but as a realist I believe we have to seriously consider the consequences of running up our national debt while lowering taxes too much. I won't say I believe encouraging business growth is good because that is not a subjective argument, the fact is growing business is good, what is important is to not let businesses run rough-shod over our health and well-being, so as a realist I see the need, unfortunately, for regulation of business.

So keep those things in mind before you attempt to dismiss me as some whack-o, greenie, enviro, Demon-crat.)

It appears that some regulation is absolutely necessary, and that's why i'm a conservative, not a libertarian. The goldilocks amount of government. Not too much, not too little. Right now we have too much.


David

dnavas
Posts: 84
Joined: Sun Nov 11, 2007 3:59 am

Post by dnavas »

>>>
Market forces are driven by people who freely choose to spend their money as they see fit. Sometimes these people do foolish things in excersizing their freedom to wastefully burn fossil fuels, but the market will punish them eventually and Nature will put things right.
<<<

Ah, if only that were accurate. One doesn't have to look far afield to see that this isn't the way these things work.

Have you noticed who will be bailing out those "people" who did "foolish things" in the housing market? It won't be "those people"....

Everyone here has a self-interest in having it done "right", so that we don't have to pay for it later....

As far as self-correcting, the free market fails to address resource-limited allocation whenever short-term self-interest drives hoarding behavior. I'm sure there's a technical term for it, but I don't know what it is. The canonical example I've heard is the cow ranchers and public open fields. It is in each rancher's short term interests to put as many of his cows onto the field as possible, even if there are already too many cows on the fields, because each additional cow is getting food not just from his existing cows, but from all of the other rancher's cows as well. Each rancher's self-interest is identical, and it leads to a sub-optimal overall result.

The same basic problem underlies any resource management problem -- land-use, water-rights, oil, you name it.

I'm a big believer in letting the free market be free, but I'm under no illusions that it delivers from all evil....

-Dave

MSimon
Posts: 14331
Joined: Mon Jul 16, 2007 7:37 pm
Location: Rockford, Illinois
Contact:

Post by MSimon »

And yes, even the most conservative estimates are that affordable oil will peak within the next 40 years. How does making a concerted effort to develop alternative and renewable energy sources while discouraging the wasteful burning of fossil fuels during the next 40 years hurt us?
It won't hurt us.

It will hurt them. i.e. people at the margins. Africa mostly. China. The poor in America.

And don't forget nations attacked by those using oil money for nefarious purposes. I guess that might be us after all.
Engineering is the art of making what you want from what you can get at a profit.

Post Reply