Oil Prices Tumble

[chlamor]

Oil prices tumble

Ashley Seager
Thursday March 24, 2005
The Guardian

Oil rigs light the night sky in the Cromarty Firth, Scotland, as oil prices fell sharply again yesterday on news that oil stocks in the US are at their highest for almost three years.

The dollar meanwhile surged in the wake of hawkish remarks from the US Federal Reserve.

US light crude futures fell $2.50 a barrel to trade at about $53.40. Last week prices hit a record high of $57.60. Crude inventories rose for the sixth week in a row and the US energy information administration said they were 23m barrels higher than a year ago.

By contrast, gasoline stocks fell sharply, showing motorists in the world's largest economy seemingly undeterred, for now, by rising pump prices which are now above $2 a gallon.

http://www.guardian.co.uk/oil/story/0,11319,1444639,00.html

[Tandalayo_Scheisskopf]

1. Pump up that gas price for summer.

n/t

[applegrove]

2. ROTFLMAO. Inflation hurts the rich. We had ONE DAY OF INFLATION

and the OIL PRICES CAME DOWN. ONE ****ing DAY where the rich may have lost something.

One day!

[TheFarseer]

3. Won't mean anything at the pump

Since that refinery exploded in Houston. Texas is a damn good place for expensive gas but it will probably affect the rest of us too.

[AndyTiedye]

20. Every Time Prices Drop A Bit, A Refinery Has an "Accident"

which usually sends prices right back up again. :wtf:

[annabanana]

4. "sigh".....I SO don't understand this stuff..

Oil Prices Tumble, so OF COURSE the price at the pump will surge..

[salin]

5. other odd things...

crude supplies up from a year ago? But gas prices still climbing?

Makes that oil refinery blowup interesting timing. Though I think it was not a conspiracy - it does give cover for keeping the price high.

Are they trying to find, domestically, the edge of the curve... exactly how high we are willing to pay before cutting back on consumption? If so - I bet we find those higher prices and then they stabilize.

[RoyGBiv]

10. It's a combination of factors ...

Note that I am in *no way* saying the current price of gas is not manufactured artificially. Oil companies are still making out like bandits. Nor am I saying this is all of it.

However, some of the reason the gas price is still high is due to the devaluation of the dollar. I've lost the link and don't have time to find it again, but a study of this was done by some economists. European gasoline prices have remained relatively stable over the last year while the price in the US has moved steadily upward.

[whistle]

6. Why, did the U.S. not place a bid today on its build-up of the....

....strategic oil reserve (SOR)? There is now approximately 83% of the 750 million barrel capacity in the reserve They purchase on average 2.0 to 3.0 million barrels a day for the reserve regardless of the price. Doesn't that constitute price manipulation in some way?

[theophilus]

7. Somebody PLEASE cut through the B.S. and tell me what is

going on! It was just last week that prices surged because our stocks had plummeted the week before. Something is rotten. I hold to the Peak Oil scenario but are they just playing around to get ANWR, etc? Help me understand. Gas is more here in Arkansas than it has ever been in my experience and people are grumbling. This article could have come from Fox the way it sounds. What's up with that?

[Viking12]

16. Simple supply-demand ratio is only part of oil pricing

A significant driver is speculation buying and selling of oil futures.

[insane_cratic_gal]

8. Gas prices

Maybe I know next to nothing about stocks and supply and demand work. But what about patterns? Inflation? the Psychology of it.

I suspect when all is said and done, like what happened in the late 90's the gas prices jumped up and stabilized at 1.50 to 1.65 a gallon. People complained and grumped over it yet became adjusted to it the expenditure.

We will never see those prices again. All of this back and forth swinging and rising prices (I do know that world demand has risen) is to prepare people to pay and get use to paying 1.89 a gallon, or 1.98 a gallon on average. Even when prices managed to stabilize a month ago. In PA Western PA (which is not rich by any means) was paying at the lowest 1.85 a gallon. Today the pumps are ringing in at 2.09

So when 1.89 settles in we won't feel so terribly about paying that price. Like severe shock, so when you get a break (that really isn't a break at all) you feel content and less likely to complain.


All that said .. isn't the bastard of a president preaching in 2001 right after 9/11 to decrease our dependency on foreign oil by investing IN OTHER sources of fuel. Hydrogen was one he was spouting quite a bit. WTF happened to that plan? he spent something like 3 million dollars (Not that he was ever serious) and then decided to cut it? Never did he say drill in the Alaska, or CO.

To make matters worse, the state and government are pondering charging people a mileage tax since people are using hybrid cars? If you are decreasing your dependency taking it out of the government hands and spending the extra cash to be sufficient How do they get to decided "Oh well.. we can't have you making less trips to the gas pump because our pockets are suffering."
It's so damn frustrating to watch the world spin out of control, delusional that this is America, this isn't the United States of American, it's the Untied States of Corporation.

Sorry carry on.. just had to get that off my chest.

[deminks]

9. Are we being gouged?

Last week OPEC said the price was out of their control, they had done all they could do. I remember on 9/11/01 here in Kansas that the price of gas at certain stations went $10.00 per gallon. You can imagine the chaos that created. Some of the other station owners said it was just one owner that did this. The attorney general, now governor, went on TV saying that there was no shortage, and that she would prosecute any of the station owners who did this - and she did later, but they worked out a deal. I have always wondered if someone just jumped the gun that day. I am completely ignorant about these matters, and how gas prices are set, and how the law applies. I have always found it strange that the price keeps going up, and the oil companies year after year set record earnings.
:shrug:

[auburngrad82]

11. Yes, we are being gouged

The gas companies, as you pointed out, keep reporting record earnings.

The oil stocks in the US are at their highest for almost three years.

Who's buying all this oil in the oil commodities? Not anyone I know. The oil companies are buying it and holding onto it. That way they can keep prices artificially inflated and create a "shortage". The shortage also gives them the leverage to get the ANWR drilling approved by Congress.

The citizens of our country lose but the big oil companies win big.

[chlamor]

12. No-Gas prices are quite cheap:Real cost is at least $5/Gallon

Just a reminder that Europe pays twice or three times what we pay.

The Real Price of Gas is at least $5 per gallon - A report by the CTA

This report by the International Center for Technology Assessment (CTA) identifies and quantifies the many external costs of using motor vehicles and the internal combustion engine that are not reflected in the retail price Americans pay for gasoline. These are costs that consumers pay indirectly by way of increased taxes, insurance costs, and retail prices in other sectors.

The report divides the external costs of gasoline usage into five primary areas: (1) Tax Subsidization of the Oil Industry; (2) Government Program Subsidies; (3) Protection Costs Involved in Oil Shipment and Motor Vehicle Services; (4) Environmental, Health, and Social Costs of Gasoline Usage; and (5) Other Important Externalities of Motor Vehicle Use. Together, these external costs total $558.7 billion to $1.69 trillion per year, which, when added to the retail price of gasoline, result in a per gallon price of $5.60 to $15.14.

TAX SUBSIDIES - $9.1 to $17.8 billion.

The federal government provides the oil industry with numerous tax breaks designed to ensure that domestic companies can compete with international producers and that gasoline remains cheap for American consumers. Federal tax breaks that directly benefit oil companies include: the Percentage Depletion Allowance (a subsidy of $784 million to $1 billion per year), the Nonconventional Fuel Production Credit ($769 to $900 million), immediate expensing of exploration and development costs ($200 to $255 million), the Enhanced Oil Recovery Credit ($26.3 to $100 million), foreign tax credits ($1.11 to $3.4 billion), foreign income deferrals ($183 to $318 million), and accelerated depreciation allowances ($1.0 to $4.5 billion).

Tax subsidies do not end at the federal level. The fact that most state income taxes are based on oil firms' deflated federal tax bill results in undertaxation of $125 to $323 million per year. Many states also impose fuel taxes that are lower than regular sales taxes, amounting to a subsidy of $4.8 billion per year to gasoline retailers and users. New rules under the Taxpayer Relief Act of 1997 are likely to provide the petroleum industry with additional tax subsidies of $2.07 billion per year. In total, annual tax breaks that support gasoline production and use amount to $9.1 to $17.8 billion.

http://www.distributiondrive.com/Article4.html

[salin]

13. Better question - is collusion going on

price setting among corporations... monopolistic behavior, etc.

[chlamor]

14. Always-But gas prices in US are kept artificially low

The Oil Cos. feed at the public trough via massive subsidies AND tax breaks. They also make a pretty penny supplying the military which is using 7.5 billion gals of fuel per year for Iraq alone.

[salin]

15. granted - which is why I moved the question from gouging to

collusion which is against anti-trust laws, yet not discussed or probed by any arm of govt.

[chlamor]

17. I saw that

and congratulate you on your wise maneuver. Wrong question-Wrong answer is where most of our discussions go (I use 'our' in a cultural sense). The massive profits the Oil cos. have always made is not so much the point as the larger issues of energy and civilization. We are running low on the cheap energy we used to create this mess and to blame the oil cos. or those "damn Arabs" or etc. etc. distracts us from what we must address post haste.

Your reframing the discussion was excellent.
:toast:

[salin]

18. A number of years ago I wondered allowed

why some of the energy cos didn't start heavily investing in alt. sources - getting ahead of the curb and keeping their massive market share. Of course, there are still massive profits to be made - and there in lies the answer.

Yet earlier this week, didn't we read of someone (was it an energy co or a financial co) making a huge investment in- was it wind power? I think that is a very good sign. Not per market manipulation and all of the other foul games that they play - but in a market that is finally realizing and investing that this is a finite game and their futures are involved in moving to another "plane."

Thanks for the comps. Though - I have to admit that is an arena I have cursory knowledge of... way back when my late economist father cut his dissertation teeth on collusion in a specific (non energy related) industry. Guess a little eye for some anti trust issues is coursing through these viens.

[deminks]

19. Thank you for your responses. nt