of predictions and trends

[Tunnelcat]

dissent, I'd believe all that if it weren't for the regularness of it all. It's too well timed to hit right before summer, year after year after year, like a broken record. Also, prices always vary widely state to state. If the market were a "true market", we'd see prices similar all over the country without a state by state bias. I still blame speculators in the commodity markets for this regular yearly screw job.

[dissent]

dissent, I'd believe all that if it weren't for the regularness of it all. It's too well timed to hit right before summer, year after year after year, like a broken record. Also, prices always vary widely state to state. If the market were a "true market", we'd see prices similar all over the country without a state by state bias. I still blame speculators in the commodity markets for this regular yearly screw job.

Yes, it's true. Spring happens every year, and just before summer too.

And so do the same seasonal factors.

Yes, and prices vary widely by state, in part due to gasoline taxes, that also vary from state to state, among any number of factors (fuel transportation costs, pipeline issues, different state environmental regulations, etc.) that also vary regionally, and with time.

Sure speculators have an influence on the market, but, as Robert pointed out in one of the links, speculation can work to either increase or decrease prices. The major issue is that the current balance of supply and demand is so narrow that just about any factor or set of factors can have an outsized influence on the market, compared to where we were before the developing markets (primarily Asia) began to soak up the available capacity. So, go ahead - continue to believe that a complex, multivariate problem is in fact due to a single variable.

Just don't be surprised that the solutions you develop don't solve the actual problem.

[Zuruck]

Speculation does not cause the price to go down. If a company gets hit with a bad price lock-in, they simply raise the price at the pump to offset what they would have lost. the oil companies never take a hit, they never do. when was the last time they didn't turn a massive profit in a quarter?

[dissent]

You talk about “profits” like they’re a bad thing …
http://stevemaley.com/2011/05/18/oil-co ... e-problem/
(Hint: for any business, “profit” is a really good idea)

More at R-Squared –
http://www.consumerenergyreport.com/201 ... formation/
http://www.consumerenergyreport.com/201 ... -goldberg/



Of course you can place bets that the price of a commodity will go down –
Futures trading works both ways.
More at wikipedia.



I doubt that a company can arbitrarily raise the price to any level they want to (in a competitive marketplace). They can try, but it’s just a massive exercise in giving the competition their market share.



You can use this tool over at YCharts to view profit margin data –
http://ycharts.com/companies/XOM/histor ... fit_margin

(Yes, I know that “profit margin” is not the same as “profit”, but it is a good measure for comparison. See here.)

I’ve put in the symbol for Exxon (XOM). Try putting in “BP”, or some other oil company (RDSA, CVX, etc.) in the “Get Historical Data” box in the upper (edit) right corner (/edit) of the page. Looks like most of the familiar majors are getting mostly in the 7 to 10 % range (varies some a bit above and below that on a quarterly basis.

Now have a look at the same data for Apple (AAPL) and Microsoft (MSFT). Hey look at that – we’re pretty steady in the 20-30 % range consistently on a quarterly basis.

So where is the outcry over the profits seen by that industry. You're really being ripped off by them. I think you should stop using computers in protest.

[woodchip]

Speculation does not cause the price to go down. If a company gets hit with a bad price lock-in, they simply raise the price at the pump to offset what they would have lost. the oil companies never take a hit, they never do. when was the last time they didn't turn a massive profit in a quarter?

Aww Zuruck, I know you're smarter than that. Speculators can drive prices up and drive prices down (hint, read about "shorting"). Gasoline is a item that is controlled somewhat by competition. If oil comes down to 30.00 a barrel then you can bet your bippy that pump prices will come down also.
Secondarily have you looked at how much state and federal taxes are placed on that gallon of gas.

[Spidey]

Percentage and total amount seem to play the role of fairness and equality, as you get to choose the one that makes your case.

This is a case where percentage is the main issue, not total amount, but of course with taxes, people point to the percentage…

It’s all spin!!!!

[Tunnelcat]

dissent, since you're the oil man here, do you think that opening the Keystone XL pipeline would lower or raise gas prices at the pump in the U.S.? Since we are part of a global economy now, won't all the extra oil from Canada just fill the need of other nations, particularly China and ultimately raise prices?

When gas prices soared under Bush, no Republican said a peep. Now that they're rising under Obama, you can't shut them up. It's all about politics. The media is not without fault here either. The media is whining about prices now, but back then, it was maybe a good thing as a way to stimulate alternative fuel research and cut our dependence on foreign oil, which, by the way, is what Obama is encouraging NOW by not allowing the Keystone pipeline to be built.

http://newsbusters.org/blogs/kyle-drenn ... -crush-eco

To polish a turd, maybe we should be looking at rising prices as a good portend. It means the economy is picking up, here and globally. You'll notice how rising oil prices and the rising stock market track together.

http://www.cbsnews.com/8301-505123_162- ... good-news/

[dissent]

dissent, since you're the oil man here, do you think that opening the Keystone XL pipeline would lower or raise gas prices at the pump in the U.S.? Since we are part of a global economy now, won't all the extra oil from Canada just fill the need of other nations, particularly China and ultimately raise prices?

Have a look at the following two articles by Rapier (surprise!) -
(and do take the time to read them through with the links; it will be well worth your time)

How I would decide Keystone

http://www.consumerenergyreport.com/201 ... ob-losses/

Robert makes a number of interesting points, especially in the first article. One of the main ones is that the Canadian oil sands will be developed, whether we want to make it easy (via the Keystone pipeline) to send that oil the American refineries for processing or not. So it isn't really a question of increasing supply with or without the pipeline. It's more a matter of who will have access to the economic development that comes with access to that oil. I think we should keep it in the US (I think Robert does too).

When gas prices soared under Bush, no Republican said a peep.

That's not the way I remember it.

Now that they're rising under Obama, you can't shut them up. It's all about politics.

Yeah, I really can't disagree with that. The D's feasted on it when the R's were in office. They can't complain about it now that the roles are reversed.

The media is not without fault here either.

Don't get me started. As Robert points out in numerous places in the articles I linked, the one thing our media is really good at is getting it wrong. The public is very poorly served by most of the windbag media. If it weren't for a handful of competent writers and bloggers, a lot of good information on energy topics would be hard to find otherwise.

[CUDA]

He's exactly right in principle though, if not in delivery.

Agreed 100% but that delivery in THIS economy could and most likely will spell his demise.

and on a side note not directed at you TG,
while gas prices are directly affected by speculators. they are also affected by Government policy. there are some here that have been posting, that would want you to believe that the ONLY thing that affect petroleum cost are the speculators. either they are completely uniformed or they are intentionally trying to mislead the conversation. Government polices and even stupid comments by those in the government will cause those speculators to panic directly affecting those pump prices.

[Krom]

Trying to lower gas prices is ultimately futile, it is a limited resource where the longer we keep using it the less of it there is to go around. The price will rise regardless of what the government or the speculators do. Perhaps the delivery would have been better if they had said "determined it is economically infeasible to lower fuel prices" rather than saying "the administration is not interested in lowering fuel prices". Especially since saying it is impossible to lower the price by any meaningful amount probably isn't very far from the truth, demand is increasing but ultimately supply is going to decline. The only way to get significantly lower prices at the pump would be to subsidize it, but that would just be moving the price around to somewhere less visible and not actually lowering it.

[Sergeant Thorne]

Krom I'm no expert on the subject, but I believe you've got a false premise there. I don't believe that gas prices being above $1/gal really has to have anything to do with a decreasing in supply. First of all I do not believe there is a decrease in supply based on availability. I believe there is plenty of crude/oil/gas. If you believe that the last 15 years of gas price increases have correlated in any way with basic supply and demand then you're putting a lot of faith in people who don't deserve it, in my opinion. I think a better argument could be made for inflation, which must play a part, but fails to explain the 20% jump I watched in the last 2-3 weeks.

[Sergeant Thorne]

I don't know, I guess what I'm saying is that just because the supply/demand thing makes sense from a casual point-of-view (just about every American), that doesn't mean it's true. I mean who says their supplies are actually in danger? Maybe they just decided they were going to milk it more over time, or maybe they've decided to wring the markets for as much as possible while they can, with new technologies on the horizon to compete with or potentially replace crude as a primary fuel source.

If you ask me the best way to keep the cost of fuel at a reasonable level would be to pull it from the stock market.

[Ferno]

I believe in a fat guy in a suit that gives me gifts at the end of the year as a bribe for behaving in a certain way.... but we both know that's not true.

[Sergeant Thorne]

A poor analogy. How can children know it's not true? We both know that's a lie that parents tell their children to encourage them to behave when Mom and Dad aren't looking. But how can we know we're not being sold a line by the big oil companies?

[Spidey]

Well, I’m no expert, but I do know for a fact that most of the easy oil is just about gone.

It is a “limited” resource, ya know.

[dissent]

Thorne, I've posted a number of links in this thread that would be of benefit to you. Robert Rapier's R-Squared site would be worth your spending some time there. This issue with the current narrower gap between supply and demand has more to do with a significant increase in demand (primarily Asia) that with a significant decrease in world supply. The casual American, thanks to our pathetic major media, in fact doesn't understand this supply and demand dynamic, hence the yearning for simplified scapegoats - that our political classes yearn to supply for their own purposes. Supply and demand is the gravity of economics - it's just there; you have to deal with it.

[Sergeant Thorne]

A conspiracy is "simplified"?

[dissent]

A conspiracy is "simplified"?

Occam's Razor applies.

[Tunnelcat]

Krom I'm no expert on the subject, but I believe you've got a false premise there. I don't believe that gas prices being above $1/gal really has to have anything to do with a decreasing in supply. First of all I do not believe there is a decrease in supply based on availability. I believe there is plenty of crude/oil/gas. If you believe that the last 15 years of gas price increases have correlated in any way with basic supply and demand then you're putting a lot of faith in people who don't deserve it, in my opinion. I think a better argument could be made for inflation, which must play a part, but fails to explain the 20% jump I watched in the last 2-3 weeks.

Uh huh. The magic oil fairy must be down underground making oodles more oil for us to find if we just look hard enough for it.

But I do question the 20% jump in the last 2-3 weeks. We haven't had that much inflation to account for it. Soooooooo, that means speculation in the markets are at work when no other reasonable explanations can be found. Kind of what happened under Bushie when gas prices tripled during his watch. Yes, back then it was the Dems who were throwing the fit and falling in it. And yes dissent, I don't remember very many Republicans making hay over it, despite your recollections, because they were all too happy that Bush was deregulating energy. Have you forgotten about the aftermath of that deregulation and Enron?

Even a staid conservative like George Will even thinks the Republicans are barking up the wrong tree by going after Obama on gas prices.

http://www.mediaite.com/tv/george-will- ... ign-issue/

[CUDA]

But I do question the 20% jump in the last 2-3 weeks

at the beginning of the year it was $3.08 here in PDX, it's now $3.90+ that's just in the last 2 months

Kind of what happened under Bushie when gas prices tripled during his watch

gas prices tripled only in the last 1/12 years of his administration, and who controlled the congress at that time??? could it be the same people that control it now??

it's all politics aint it

[Sergeant Thorne]

Uh huh. The magic oil fairy must be down underground making oodles more oil for us to find if we just look hard enough for it.

Not to dismiss what's been said since my original reply, but that is exactly what I'm talking about. When was the last time you were down there, TC? Welcome to your argument, framed by somebody else for reasons you don't care to question. One of the best lessons one can learn in life is that you don't know unless you do.

That said, I'm done with the matter until I've had a look at dissent's reference.

[Ferno]

A poor analogy. How can children know it's not true? We both know that's a lie that parents tell their children to encourage them to behave when Mom and Dad aren't looking. But how can we know we're not being sold a line by the big oil companies?

simple. you just have to see if something makes any logical sense. and if the story doesn't add up, then it starts to fall apart, like the santa construct.

[dissent]

But I do question the 20% jump in the last 2-3 weeks. We haven't had that much inflation to account for it. Soooooooo, that means speculation in the markets are at work when no other reasonable explanations can be found.

Let's assume, for the sake of argument, that speculation is the major component leading to the recent price rise. The reason that speculators can do this is because of the narrow difference between supply and demand. Speculators can't operate in a financial vacuum.

I'd go back to the links I've previously posted to see if there might be other potential factors involves, before I'd confidently state that "no other reasonable explanations can be found".

, because they were all too happy that Bush was deregulating energy. Have you forgotten about the aftermath of that deregulation and Enron?

Enron is a red herring for the current discussion (gas[oline] prices). Enron was into electricity and natural gas, not oil and gasoline. Let's keep our outrageous outrages properly categorized, shall we.

[flip]

I think what TC is talking about is the manipulation of people's perception. Supply and Demand is not so big a factor as what the masses will allow. If all you have to do is make others think there is a shortage, then do you? The fact still remains that whether there is a factual shortage or not, it's the consumer's perception that matters most.

[Sergeant Thorne]

A poor analogy. How can children know it's not true? We both know that's a lie that parents tell their children to encourage them to behave when Mom and Dad aren't looking. But how can we know we're not being sold a line by the big oil companies?

simple. you just have to see if something makes any logical sense. and if the story doesn't add up, then it starts to fall apart, like the santa construct.

Fail. First off a child's logic "circuits"--let's call them--aren't necessarily developed to the point where this can be done. The parents' active tainting of their perspective of reality certainly isn't helping. Secondly your "logic" fall-back leaves you open to clever deception--it says that something must simply be believable to be true. All good lies are believable. I say something must be proven to be true.

It makes "logical sense" that there is a limit to how much crude there is under the earth, but for logic to serve us in this case it must be aided by accurate information. If we accept that there is a "limited supply" of crude, but the supply is actually 10-times what we've been told, then we've been sold a lie, and you believe it because it appears to be logical.

[Spidey]

Then you are stuck with the job of fleshing out the idea that all of that oil can be hidden from the general public.

It’s not 20 years ago, we now have the technology to know where the oil is.

Explain how the conspiracy would work, and gain more credibility, until then…it’s mostly worthless.

And while you are at it, you also need to explain why we are now drilling the not so easy oil, if there is still plenty of light sweet crude.

Also your number of 10x…is it 10x the original volume…which would be a tremendous amount, or 10x the current volume…which wouldn’t be all that much.

[Ferno]

ah, you underestimate a child's ability to think too much thorne.

[flip]

Na, I can't think of any child I know I couldn't utterly take advantage of. Mentally. I think your over-estimating their ability.

[Sergeant Thorne]

ah, you underestimate a child's ability to think too much thorne.

I do not. I have found that a child is basically an impressionable logic engine that builds upon what it is given through perception of experience. Furthermore, what it builds, and the validity of that construct, is largely dependent on what it is given. Until that child gets up in the middle of the night to find his parents wrapping the presents, he would have no other reason to question his parents' story. It would be reality as far as he is concerned, and he will have judged/constructed other things accordingly.

Had I known you would take it so personally...

[Krom]

Back on the subject of oil supplies. Sure we have a larger supply of it now than we have had in the past, but that speaks nothing about how difficult it is to obtain that supply. There is a huge difference between getting oil by slopping it up from some spot on dry land where it will just flow out on its own with near zero effort versus drilling a 6 mile deep hole starting out already 2 miles deep under in an ocean in order to squeeze some oil out of a rock by pumping water in to displace it...

[Ferno]

ah, you underestimate a child's ability to think too much thorne.

I do not. I have found that a child is basically an impressionable logic engine that builds upon what it is given through perception of experience. Furthermore, what it builds, and the validity of that construct, is largely dependent on what it is given. Until that child gets up in the middle of the night to find his parents wrapping the presents, he would have no other reason to question his parents' story. It would be reality as far as he is concerned, and he will have judged/constructed other things accordingly.

Had I known you would take it so personally...

you must know some pretty dumb kids then.

[callmeslick]

I think what TC is talking about is the manipulation of people's perception. Supply and Demand is not so big a factor as what the masses will allow. If all you have to do is make others think there is a shortage, then do you? The fact still remains that whether there is a factual shortage or not, it's the consumer's perception that matters most.

you have yourself at least a grain of truth there, flip. However, turn it around and tell me how ignoring a flagrant reality, such as a finite amount of oil with two nations(India and China again) with a total population that dwarfs ours rapidly expanding oil usage serves us..
If we, in the US, keep wishing to put our heads in the sand, keep buying those big old trucks and SUV's just to run to the grocery store(not talking about you construction guys), keep poo-poohing electric vehicles and alternative power R and D, we are in far deeper economic straits down the road than most folks can conceive of. It isn't simply a matter of environmentalism anymore, it's facing a world and a nation in which we are frozen in time. And that, flip, gets the US looking a lot like, say, Afghanistan or the Congo quicker than one might suppose.......

[Sergeant Thorne]

you must know some pretty dumb kids then.

I was having a futile argument with one not long ago.

[callmeslick]

you must know some pretty dumb kids then.

I was having a futile argument with one not long ago.

who won?

[Sergeant Thorne]

Nobody won, and the DBB lost.

[Tunnelcat]

Enron is a red herring for the current discussion (gas[oline] prices). Enron was into electricity and natural gas, not oil and gasoline. Let's keep our outrageous outrages properly categorized, shall we.

Energy is energy. We burn oil and natural gas to make electricity. It's all interconnected. Any company supplying any type of energy can manipulate the markets if the temptation is there to make more profit, especially in an inelastic market and regulations are few or absent.

Not to dismiss what's been said since my original reply, but that is exactly what I'm talking about. When was the last time you were down there, TC? Welcome to your argument, framed by somebody else for reasons you don't care to question. One of the best lessons one can learn in life is that you don't know unless you do.

Since oil and gas came from the decomposition of huge tracts of dead plant life eons ago, and since the planet's covering of present plant life nowhere comes close to that coverage in the past, I can assume that new oil is not being made in any significant quantities to make up for what we're using up now. I guess if you count the methane made in landfills as a renewable resource.........

[dissent]

Enron is a red herring for the current discussion (gas[oline] prices). Enron was into electricity and natural gas, not oil and gasoline. Let's keep our outrageous outrages properly categorized, shall we.

Energy is energy. We burn oil and natural gas to make electricity. It's all interconnected. Any company supplying any type of energy can manipulate the markets if the temptation is there to make more profit, especially in an inelastic market and regulations are few or absent.

Only in the sense that they can all be measured in joules. Natural gas and gasoline have many distinctions between them regarding production, storage, transportation and distribution, and the corresponding regulatory structures are just as distinctive. Sorry, but you can't link them together with the pejorative "Enron". Not to mention that Enron was much more an issue of corporate officers trying to game the system illegally than it was with the status of the natural gas regulatory system.

[Tunnelcat]

And you don't think corporate officers in oil and natural gas companies aren't trying to game the system as well? Come on. Money begets greed and there's a lot of money in a commodity that people essentially need to live. If there was the temptation to "game the system" in Enron, you can bet that any other energy company can also fall to that temptation.

The Koch Brothers come to mind.

http://thinkprogress.org/economy/2011/0 ... ?mobile=nc

Of course, that's a left wing perspective, so conservatives will dismiss or tear apart the findings.

But why are the big banks so interested in commodity trading, especially NOW, in oil? There's no question that the banks ARE trading in commodities at the moment. You can find all sorts of references to it on the net. Since Dodd Frank put the screws to ripping off the customer directly through onus fees, they're getting desperate to make lots of money off of us in any way possible, and by other more nefarious methods. So when will this house of cards fall and tank the economy yet again?

http://online.wsj.com/article/SB1000142 ... 43190.html

And here's where the Feds might be involved. They're enabling all this investment by giving the banks the money to do it.

http://blogs.dailymail.com/capitolnoteb ... as-prices/

Speculation is driving the recent price rise, nothing else, no matter how much lipstick you put on this pig.

[dissent]

And you don't think corporate officers in oil and natural gas companies aren't trying to game the system as well? Come on. Money begets greed and there's a lot of money in a commodity that people essentially need to live. If there was the temptation to "game the system" in Enron, you can bet that any other energy company can also fall to that temptation.

The Koch Brothers come to mind.

It seems the Koch brothers often come to your mind. I won't say "obsession" but it certainly is frequent ...........

http://thinkprogress.org/economy/2011/0 ... ?mobile=nc

Of course, that's a left wing perspective, so conservatives will dismiss or tear apart the findings.

I won't dismiss it because it's a left wing perspective. I will dismiss it when I find that it is riddled with errors. The TP author writes -

(a) that the Koch's "control the market". This is ridiculous on it's face. If anyone (the Koch's, Exxon, BP, pick your liberal boogey-man du jour) could control the market, then why would prices ever go down? Why aren't they even higher? After the last big run-up in oil prices to, what was it, $145-$150 per barrel, they subsequently plunged to around $30 per barrel.

I find it hard to believe that you spent any time reading the stuff I linked from Rapier's blog, and can still post a link to a blog article that is as poorly constructed as this one.

(b) then he writes - "In 2008, Koch called attention to itself for “contango” oil market manipulation. A commodity market is said to be in contango when future prices are expected to rise, that is, when demand is expected to outstrip supply." Yet he can't even get the definition of contango right. Contango "is the market condition wherein the price of a forward or futures contract is trading above the expected spot price at contract maturity. It's not just about the price rising. See here, here, or here. Among dozens of others. You mean the authors couldn't manage to find a good definition of "contango"? Do writers for TP really need Wikipedia lessons?

When you start out with BS in your assumptions, and you get doo-doo in your conclusions, why are you surprised?

http://blogs.dailymail.com/capitolnoteb ... as-prices/

Speculation is driving the recent price rise, nothing else, no matter how much lipstick you put on this pig.

Certainly speculation is involved. As I've been saying, ad nauseum, a number of factors are involved. But, your hunt for a boogey-man notwithstanding, supply and demand fundamentals are still the foundation for why speculation, and other factors, are able to have an outsized effect.

Hey, we could always go back to price controls. Remember how well those worked out?

[Tunnelcat]

You know, with that much net wealth, power and the right wing views they espouse, the Koch Brothers are a influential powerful force in the upcoming 2012 election, and not a good force either. They're just part of the Plutocracy trying to fully take over our country to use for their own enrichment. Evil is evil. If you think they're just wealthy little angels out for the good of this country, go right ahead and believe your delusion.

http://www.guardian.co.uk/world/2011/no ... 2-election

As for oil speculation, I still think the big banks need to quit playing with our money and stay out of a commodity that is so important for the functioning of our economy. They crashed it once in 2007 and now they're screwing around with commodities to just make a buck, with no other purpose by the way, and it's going to tank things all over again.

All the whining by the present crop of Republican Presidential candidates is empty, hollow rhetoric, like they could do any better if elected pres. Just watch Fox News in 2008 when Bush was President and gas prices spiked on his watch.