Does anyone know of a definitive explanation of rising oil prices?

[Kablooie]

Everywhere you hear that prices are going up and what the ramifications are but there is very little in the way of explaining WHY they are going up?

"The biggest factor in the skyrocketing price of gasoline is the historic ascent of crude oil, which has surged from $45 per barrel in 2004 to more than $135 this past week."
--Umm, yeah. But why is crude oil on it's historic ascent. -- No explanation.

"Since 2005, global oil production has remained stagnant, while at the same time global demand has increased at an exponential rate. It is reasonable to expect that this trend will only continue as developing nations clamor for oil. "
--OK, WHY is it stagnant? Is it because it's impossible to pump more or was it a business decision? -- No explanation.

"Unfortunately, the oil market (remember where much of it comes from) is not a free market. It is a controlled market, much of it controlled by people who are not friendly to us."
--Well, that sounds like a political problem. WHY aren't they friendly to us?

"We do know that refineries in the U.S. again cut back their utilization to 85%. That's down from 89% a year ago, in a season when production is normally 95%, only because they're trying to draw down gasoline inventories to bid gasoline prices up."
--OK, if this is the case, why isn't the fed doing anything to prevent a national disaster? ( I know, Bush, but there has to be more to it than that.)

"Our currencies have been increasing in quantity which causes them to lose value. If there are more dollars, each individual dollar will become less valuable. As a result the price of “things” that currencies purchase, such as oil and gasoline, will go up."
--Understandable but why is oil skyrocketing faster than anything else?

I can find NO comprehensive answer anywhere. It's as if everyone just assumes it's a force of nature and humans have no more control over it than they do a tornado.
What's going on here? Why aren't there at least some ATTEMPTS to find reasons.
Something really smells fishy here.

[Night_Nurse]

1. Follow the money. n/t

[nadinbrzezinski]

2. Peak Oil

and anybody who has been following this understands that indeed this is peak oil


http://www.theoildrum.com/

http://www.energybulletin.net/primer.php

http://www.peakoil.net/

http://en.wikipedia.org/wiki/Hubbert_peak_theory

http://www.hubbertpeak.com/

http://future.iftf.org/2005/04/another_global_.html

I think this is a good intro to what the press has not really covered... seems sciency things are kind of... off limits

[Subdivisions]

8. I've been following it. At least 6 hours EVERY DAY for

going on three years.

Everything I read before the peak that the peak itself would cause is happening right now.

Oh..it's peak oil alright and people better start taking it seriously because it will not be pretty.

[nadinbrzezinski]

10. I know... all this (and global warming) are coming home to roost

and people will wake up to this reality in about a year best case, or five years worst case

[sendero]

22. I agree...

.... it is peak oil in the sense that the people who have the oil realize just how valuable their dwindling resource is, and they are not going to sell what they've got left cheap.

[ileus]

21. peak oil of current production maybe, global peak oil no

[sendero]

23. Peak...

.. of the oil that will be cheap and easy to get.

There's all kind of oil out that that can be extracted for $50+ a barrel, but that is not comparable to the oil we're extracting now.

[chill_wind]

3. Agree always with "Follow the money". Interesting article on speculation

and BushInc policies written by an "ex-peak-oiler".

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=115x150575

[Cleita]

4. Inflation deliberately set in motion from those who will benefit the most. n/t

[Lorien]

5. Dupe. n/t

[lurky]

6. Crashing dollar.

Gas prices haven't gone up that much in Euros, for example. Consumer goods here haven't really gone up, because China's currency is still largely tied to the dollar and pretty much everything we buy is made in China. Most of the major German and Japanese cars we buy in this country are actually made in the US. Oil is one of the major things we need that is traded in the international market.

I'm sure there is more to it, but this is the big story that nobody wants to talk about. You will never hear the TV news talk about it, it's always rising demand in India or something... Another reason our current recession hasn't spread overseas either. If you listen to BBC they talk about the "American economic slowdown", and that is just what it is.

[TalkingDog]

18. Agreed. Food and etc. are also going up dramatically

But there are ways to disguise added prices to food. You put less product in the same sized bag. You give the consumer 1 oz less and charge the same price. You leave a little more moisture in the dried fruit or other items that sell by weight.

We notice gas because we don't buy 50 items at one time. We buy gas. It can't (or shouldn't) be tampered with in terms of volume, so you see the direct increase with no shenanigans.

And as long as they keep printing more money and inflating the dollar "prices" will continue to rise.

Dollar inflation helps this Administration. You want to pay off your debts with inflated dollars. Imagine: You owe 100 dollars. When a dollar is worth a dollar you are paying full price. The dollar is now worth about 71 cents. If you pay off your debts with the inflated dollar, you are actually paying less.

The trick is to then bring the dollar back to a stable point.

And this is where they will fail. They will run it up to the sky, let us scream and squirm while they make out like the thieves and bandits they are, then it will crash. By that time they will have gotten their nut and to hell with the little guy.

[Hannah Bell]

19. oil [rices up 600% since 2002. i don't think the dollar fell 600%.

[Lorien]

7. It's a perfect storm. There is no single answer, but a variety of factors at

work here. Petro dollars: http://www.youtube.com/watch?v=cF3wZL4BZvY&feature=related , BushCo's disastrous dollar policy: http://www.informationclearinghouse.info/article15440.htm , Peak oil, Wall street speculators, oil profiteers like Exxon-Mobil, increased demand world wide, more than a decade of the SUV fad, etc.

[Big Blue Marble]

9. The reasons for rising oil prices are multiple and complex.

First consider the impact of instability in the Middle East, namely the Iraq War and
the threat of war in Iran. Factor in the increasing global demand which exceeds the
supply, speculators leveraging their investments and oil companies maximizing their
profits in this uncertain international environment.

Beyond these pressures is the serious impact of the value of the dollar as an international
currency. The currency used in the oil markets. As our dollar loses value, oil producers
must demand more dollars to equal the value of their product. As we ship more dollars overseas
the value of the dollar falls. The dollar is in a downward spiral while the value of oil
keeps rising.

With these conditions we can only expect the price of gas to keep rising for the
foreseeable future

[bananas]

11. Greg Palast's explanation

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=103x361402

<snip>

Indeed, the recent engorgement in oil prices and profits goes right back to Bush-McCain “surge.” The Iraq government attack on a Basra militia was really nothing more than Baghdad’s leaping into a gang war over control of Iraq’s Southern oil fields and oil-loading docks. Moqtada al-Sadr’s gangsters and the government-sponsored greedsters of SCIRI (the Supreme Council For Islamic Revolution In Iraq) are battling over an estimated $5 billion a year in oil shipment kickbacks, theft and protection fees.

The Wall Street Journal reported that the surge-backed civil warring has cut Iraq’s exports by up to a million barrels a day. And that translates to slashing OPEC excess crude capacity by nearly half.

Result: ka-BOOM in oil prices and ka-ZOOM in oil profits. For 2007, Exxon recorded the highest annual profit, $40.6 billion, of any enterprise since the building of the pyramids. And that was BEFORE the war surge and price surge to over $100 a barrel.

It’s been a good war for Exxon and friends. Since George Bush began to beat the war-drum for an invasion of Iraq, the value of Exxon’s reserves has risen – are you ready for this? – by $2 trillion.

<snip>

http://www.ourfuture.org/blog-entry/obamas-secret-war-profiteering-tax

[Junkdrawer]

25. Greg is the closest to the truth...n/t

[1]

12. occam's razor would suggest...

because they can.

that's pretty comprehensive...

[old mark]

13. MSN carried a short article stating that "$4 gas is a bargain..."

and saying that if you applied "2008 dollars" to the price of gas in the 1930's, it would have been over $3 a gallon back then so the price today is only a few cents more than back in the 1930's.
True, if you had the buying power of 1930's dollars while keeping the vastly inflated numbers of "2008 dollars."
(I'm pretty sure I said what I meant to say but I'm not quite sure what I actually mean.)

mark

[parasim]

14. Greed. nt

[Breeze54]

15. GREED

.... the selfish desire for or pursuit of money, wealth, power, food, or
other possessions, especially when this denies the same goods to others. ...

Absolute, unadulterated, GREED! :grr: :evilfrown:

[fasttense]

16. Well Ravi Batra makes a good case for an oil bubble and supply manipulation.

In his book "The New Golden Age" Ravi Batra, a Professor of Economics at Southern Methodist University, makes a good argument that we are experiencing a bubble in oil much like we experienced in housing and in the dotcoms.

But he goes further and explains how this bubble has grown. It starts with capital from other popping bubbles looking for a place to land and ends with five regional oil monopolies that provide 60% of the US oil playing with the supply in ENRON fashion with oil speculators in the stock market jumping on the band wagon. A good read if you are interested in economics.

Ravi Batra is one of the anti-Greenspan and anti-free trade economists that were shut up and drowned out by Milton Friedman.

[Hannah Bell]

17. i dont know, but it seems to happen at regular intervals...

http://pqasb.pqarchiver.com/csmonitor_historic/access/297876252.html?dids=297876252:297876252&FMT=ABS&FMTS=ABS:AI&date=Mar+15%2C+1918&author=Special+to+The+Christian+Science+Monitor+from+its+Washington+Bureau&pub=Christian+Science+Monitor&desc=OIL+SHORTAGE+SEEN+FOR+UNITED+STATES&pqatl=google

"The Teapot Dome Scandal was symptomatic of a much greater corruption in Harding's oily administration. There was a false oil-shortage scare after WWI which peaked (oddly) during Harding's presidency, when a number of major oil companies had landed plum positions in the gov't.--By the mid-1920s this had passed, and by the time of the East Texas discoveries, we were again very much on the "plus" side of the scale with regards to oil production."

http://209.85.173.104/search?q=cache:g8Ow-vyWg8oJ:forum.axishistory.com/viewtopic.php%3Ff%3D65%26t%3D87104%26start%3D0+%22oil+shortage+scare%22+1919&hl=en&ct=clnk&cd=5&gl=us

[TalkingDog]

20. Oil eggs milk

Oil is not skyrocketing faster than anything else.

Eggs are up about 30 to 50%

Milk is up also about 30%

These two items, like oil, can't be repackaged to hide price increases.

Increases in the costs of other food items have been disguised by clever packaging or less product in the same package.

Yesterday I bought bags of lime for my garden, in 11 pound bags. 11 POUNDS. Nobody puts 11 pounds in anything. It's either 10 or 12. Well, it used to be 10 or 12. Now it's 11.

Eggs and Milk use grain for production and gas for transportation and that could account for the increase, but I live in a county that produces eggs, milk and grain as it's major exports and guess what, they are still up about 30%. If those things are a factor, our costs here should be substantially lower.

Oil is partly up due to speculation, but mostly due to an inflated dollar as someone suggested upthread.

[Why Syzygy]

24. Do you really want to know?

http://youtube.com/watch?v=UNzcJImX4Ew

[Kip Humphrey]

26. Here's a breakdown for you...

Disclaimer: my numbers are informed estimations but demonstrate the point provided you don't get hung up quibbling over the pennies!

Basis: Oil = $135 per barrel
Price of oil when Bush took office: $27.69
(http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3321615&mesg_id=3321615)
Price differential: $107.31

Commodity Speculation (SOLUTION: INCREASE MARGIN REQUIREMENTS FOR OIL!): $30
Current price without commodity speculation: $105

Venezuelan Nationalization of their oil industry (mostly impacts US, some global impact): $4
Current price without Venezuelan nationalization, commodity speculation: $101

Mexican Decline in Supply (US specific, little global impact): $1.50
Current price without Mexican decline in supply, Venezuelan nationalization, commodity speculation: $99.50

Increase in Demand (China + India so far - expect impact to increase 1-1.5% per year)): $8
Current price without increase in demand, Mexican decline in supply, Venezuelan nationalization, commodity speculation: $91.50

Petro-Dollar Devaluation (SOLUTION: STOP PRINTING EXCESS DOLLARS!): $30
Current price without devaluation, increase in demand, Mexican decline in supply, Venezuelan nationalization, commodity speculation: $61.50

Natural Inflation (globally, basis gold normalized for dollar devaluation): $33
Current price without natural inflation, devaluation, increase in demand, Mexican decline in supply, Venezuelan nationalization, commodity speculation: $28.50

Peak Oil (mostly factored into Mexico and natural inflation - expect to dominate in future - price impact likely to be 3-4%/annum in 5 years rising to 8-12%+/annum in 10 years): $.81

Current price of oil without peak oil, natural inflation, devaluation, increase in demand, Mexican decline in supply, Venezuelan nationalization, commodity speculation: $27.69!