Weird shit in oil

[ThomWV]

Europeans have switched over the diesel vehicles in the past several years because diesels are much more fuel efficient than gasoline power internal combustion engines. As a consequence the world demand of diesel fuel has increased. Europe, unlike the US is not faced with a lack of refinery capacity but like the US it has limited storage facilities. So the europeans are shipping their excess gasoline to the US to take advantage of our high prices and ease the strain on their overflowing storage capacity. In the meantime back in the US demand has decreased so much that it eclipses the increases in demand from India and China so that overall world wide demand has decreased. While all that was going on investment banks got into the oil business, or the oil finance business, and started buying up all the fuel oil they could get their hands on, further decreasing the world supply of diesel fuel, which is the same thing as fuel oil. More importantly the storage of that speculative diesel fuel further ties up limited storage in this country.

In the meantime the 'peak oil' folks have helped spread the hysteria that has allowed the very same speculators that have driven the price of crude up to more than twice the price it would be were supply and demand to rule the day; it is, after all, simply the fear of scarcity that is driving up prices, there isn't a shortage of oil anywhere in the world. At this very moment world-wide supply has outpaced demand.

Oh, and even if we were at 'peak oil' why would anyone think that if it took us 100 years to use the first half that we will go through the second half between now and the 4th of July?

[truebrit71]

1. To answer your final question as to why it would speed up...

...maybe because there are tens of MILLONS more human beings demanding the product now, than in the first 100 years...I would have thought that was fairly obvious...

And it's the speculators that are driving up the prices, not the suppliers and refiners and producers manipulating the markets to garner the biggest corporate profits in the history of the world?

Really?

:eyes:

[ThomWV]

2. Really

I can think of two investors who together made more money in speculating in oil in the last 90 days than Exxon made in the last quarter.

[truebrit71]

3. ..and they are???

They made more than $10,890,000,000.00 net income in the last 90 days...??

Okay...

[Dhalgren]

5. What two investors made more money on oil

in the last 90 days than Exxon?

[truebrit71]

13. Hmmm strangely silent on this....I wonder why?

:eyes:

[ThomWV]

24. Sorry, went for a motorcycle ride this afternoon. Is that OK with you?

The names were discussed during tuesday's hearing on the current oil bubble. I was about an hour into the hearing as I recall. I believe you can get a transcript from C-Span.

[truebrit71]

25. I'd like to see those numbers...do you have them?

Thanks!

[lectrobyte]

27. And the technology for extracting it has improved. Kind of like

drinking that Big Gulp with a bigger straw halfway through.

[Dhalgren]

4. Well, it is only common sense that we will burn through

the second half of the oil much, much faster than we burned through the first - more people, more homes using oil, more cars, more factories more electric plants, more, more, more. The thing that most people are beginning to realize is that we do not HAVE to use oil as a means of power. We can use other things. It may take some time and effort and money and energy to develop new sources of power and to develop mechanisms for using them, but it should/must/is going forward and oil will (hopefully) soon be much less necessary...

[lapfog_1]

6. exponential rise in consumption.

Not only are there a *lot* more people on the planet today than 100 years ago, a much higher percentage are using oil to power and feed themselves.

4th of July is hyperbole.

And as for astronomical rise in the price of oil, all you need to have happen is to be on the other side of the peak.

T. Boone Pickens correctly points out that the US consumes 87 million barrels per day and only 86 million are available. The pricing (spot market futures) is on that missing 1 million barrels.

And there is a speculative bubble in addition to past peak pricing.

[depakid]

7. Americans in denial are far more to blame than speculators

Wasting cheap petrol and natural gas for years, thinking that the fun would never end. Welp, the party's over and it's come time to pay the piper.

[aint_no_life_nowhere]

8. On CNBC this week, an investment guru was saying "oil is the place to be"

He was encouraging investors to put their money into oil company stock and oil futures. He was saying that investment in financial institutions is not the place to be anymore. I guess all that matters is making a quick buck without working for it, like a parasite. There seems to be no acknowledgement or awareness that this type of profiteering is killing us.

[gullwing300]

9. T. Boone Pickens is switching from oil to water.

Buying up every bit of water resources he can get his grubby mitts on.

[truebrit71]

10. Water is the "next" oil without a doubt...

...

[yella_dawg]

15. Pickens was in my home town a few weeks ago.

In person. Buying a right of way to pump water from the West Texas aquifers to DFW. He's combining a water pipeline with a gas pipeline and a private electricity conduit for wind farms. The boy is spending money like water. No excuse for the pun.

[gullwing300]

21. Yup. He's proof that an asshole can be very intelligent.

...

[Terry in Austin]

11. Peak Oil often misinterpreted

It doesn't mean that the oil supply is exhausted. The crucial thing about the peak is that supply no longer increases, even though demand continues to increase. The result is sharply higher prices.

The situation is unprecedented, so we hear a lot of misleading "explanations" for price increases: speculators, weak dollar, etc. The awful truth is that we no longer have quite enough to feed our habit.

The simple explanation is the strongest: supply and demand. EIA stats show that production has been essentially flat since 2004, while demand grows an average of 1.5% a year. So the market's only way to bring demand in line is higher price, i.e., demand destruction.

Then the question is How much? For oil, there's a very low sensitivity to price. People can't do without it, so they'll keep buying it despite sharp increases. Economists quantify this price elasticity, and for oil, it's very inelastic -- about -.07. That means that the price must increase 100% -- double -- to bring demand down by a mere seven percent.

That, in fact, is close to what we've seen -- demand has grown about 7% since 2004, when oil was moving into the $50-$60 range. Double that, and the fundamentals put oil in the $100 - $120 range. There's certainly some bit of a premium on top of that due to speculation/profiteering/weak dollar/whatever, but that's not the major cause. It's plain old supply and demand.

[DCKit]

12. Well, I agree with you.

The one thing you did miss is the devaluation of the dollar over the past seven years. However, that only accounts for a 30% premium, not the 400% we've seen.

The Peak Oil and Supply apologists are going to look pretty naive when the truth is finally on the table.

Kudos on the last paragraph. Pretty succinct, and funny too.

[truebrit71]

14. So wait, you think Peak oil is bullshit and this is all due to speculation....

...That is simply amazing...

[DCKit]

17. No, I've believed in peak oil since before it was called peak oil....

but, as the OP so succinctly pointed out, it's not going to be gone a month from today.

Speculation is driving the prices and the hype - peak oil, shortages, Nigeria, hurricanes, Terra! Terra! Terra!, refinery capacity, China, India, etc... - is the cover for the crime.

Yes, Peak Oil is real, but it's the people making billions of dollars in commodity trades as well as Big Oil itself (remember, we still get 47% of our oil domestically) that are creating the market conditions that allow them to profit at our expense.

Be More Skeptical.

[truebrit71]

18. I am plenty skeptical...but anyone that can't understand why the oil in the last 100 years...

...lasted longer than it will in the future diplays a significant amount of ignorance...

I also do not believe that speculators are the ones primarily responsible for the spike in prices...they may add an additional 5% premium, but the vast majority is down to the greed of the producers/refiners and oil companies...

[DCKit]

22. And I explained my position to you...

yet you, AGAIN, call me ignorant.

Sorry, but, if you're going to be an apologist whomever it is you're working for, best keep a lower profile. Your "justifiable anger" at my ignorance is verging on hysteria and the cracks are showing.

But thanks for playing.

[truebrit71]

23. I'm not calling you ignorant....re-read my posts...you complimented the OP...I said the OP was daft.

.. I said the OP was a clueless...NOT you...

So thanks for the free psych anlaysis and have a nice day...

[yella_dawg]

16. Five bucks says oil hike today is related to Air Force ouster yesterday.

Chaney finally cleared the path for bombing Iran. Close that valve and $150 will seem unthinkably cheap.

[truebrit71]

19. Nope, more likely because Israel threatened Iran...

...keep the $5...it'll buy you half a gallon next week... ;-)

[slutticus]

20. The bubble will pop, leaving speculators all wet. Government will bail them out.

Same shit, different day.

[Liberal Gramma]

26. It must be the same mechanism that allows me to get 300 miles from the first half-tank

and thirty miles from the second.