Did Speculation Fuel Oil Price Swings?
01-12-2009, 08:51 PM
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Did Speculation Fuel Oil Price Swings?
Here is a CBS story that is a really good read. Kind of long but VERY informative. Somebody finally let out some of the real reasons for the oil prices to skyrocket.
Link to story
Link to story
01-12-2009, 09:32 PM
#2
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'bout time an article came out ... I just didn't know who to yell at before (which investor group per say) but now I know ... and oh that's right now did we bail out without question ... the banks that drive the oil market into the ground!
01-14-2009, 12:38 AM
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Wait until we get the new Carbon Tax the new administration is pushing. Increase of $1.00 a gallon on fuel and $70.00 on your monthy home energy bill. Sweet move in a recession.
01-14-2009, 02:17 PM
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Yup. I can see it now 
On a different note. With oil prices staying low and still dropping slightly AND oil inventories still climbing with demand falling off so bad, why the are the prices creeping back up??? It is not going up crazy but it is still going up.
On a different note. With oil prices staying low and still dropping slightly AND oil inventories still climbing with demand falling off so bad, why the
are the prices creeping back up??? It is not going up crazy but it is still going up.
01-14-2009, 02:21 PM
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Yeah, how bout that? When oil was around 35-37/bbl a couple weeks ago gas was in the 1.20-.30/gal range. I went to work this morning and one of the cheapest stations in my area was sitting at 1.65!!!
01-14-2009, 05:59 PM
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01-15-2009, 04:52 PM
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I read last month that a refinery or two would be closing on the east coast due to the low price of gas (didn't want to wear out high priced equipment) so this may of helped the price to go up some.
01-16-2009, 10:59 AM
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Administrator ........ DTR's puttin fires out and workin on big trucks admin
01-16-2009, 01:24 PM
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01-25-2009, 09:43 PM
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Off CNN's website. I think I actually saw a debate on this, but plenty of information on this Carbon Tax exist out there. The new President is a proponent of this to force the US to seek alternative energy.
A gas tax, minus the gas
Should the U.S. enact a fuel tax to limit global warming and boost development of alternative energy?
NEW YORK (CNNMoney.com) -- To save the planet and move away from imported fuel, some say a big energy tax is the best way to go.
If the nation is going to develop fuel alternatives that will clean the air, limit global warming and make it energy independent, making fossil fuels more expensive is essential, supporters say.
Otherwise, fossil fuels are just too cheap to let alternatives emerge on a big scale.
And many say that with gas and oil prices currently so low, it's the ideal time to push through a hefty tax. Besides, they say eventually we're going to be paying more for our energy, so it is important to stimulate the development of alternatives now before an energy crisis strikes.
Clean energy: The next really, really big thing
"What's at stake is whether or not America is going to be the winner in the next, great global industry," John Doerr, a venture capitalist at Kleiner Perkins, told Congress Wednesday that higher fossil fuel prices are, among other things, essential if the U.S. is going to develop renewable industries.
The prospect of making fossil fuels more expensive is nearly a foregone conclusion. Even when gas prices were over $4 a gallon this summer, both Democrat and Republican presidential candidates were pushing for regulations on greenhouse gasses.
Even Exxon Mobil (XOM, Fortune 500), long accused of funding global-warming naysayers, seems to accept that some type of regulation is forthcoming and necessary.
What's at issue now is how it should be done.
Talkback: Does the nation need a larger gas tax?
Congress will almost certainly debate a law capping greenhouse gas emissions in the coming year - a kind of tax wrapped in the guise of the free market.
There's a decent chance the proposal will pass, ushering in higher prices for everything from electricity to manufactured goods, as companies are forced to either clean up their emissions or buy permits to pollute.
Proponents of this plan - known as cap-and-trade - say it's needed because it uses market forces to bring about guaranteed reductions in greenhouse gasses. It's also modeled on a tried and successful plan to reduce acid rain, and is similar to the global plan already under way to limit greenhouse gasses - the Kyoto Treaty.
Carbon tax
But critics say this cap-and-trade is little more than a cop-out - an easy way for politicians to duck an unpopular tax. The most efficient way to cut greenhouse gasses, many economists say, is a simple tax on carbon dioxide.
This isn't the small 10 cent-a-gallon increase proposed recently to pay for more road work. This would be a hefty tax designed to cut fossil-fuel use.
A carbon tax, as explained by Dan Rosenblum of the Carbon Tax Center, would be a tax on oil, natural gas or coal levied at either the refinery, well head or mine mouth.
Naturally, energy companies would pas this tax on to consumers, who could expect to see a $1-a-gallon increase in the price of gasoline and a $70 increase in the average monthly household electric bill once the taxes were fully phased in over 10 years, according to numbers from the Carbon Tax Center.
The carbon tax is five times more efficient than a cap-and-trade scheme, said Rosenblum, because it cuts out the need to administer the program - which would need a permitting agency, inspectors to monitor emissions, a carbon exchange futures market and Wall Street banks that would likely run it.
Exxon: An unlikely proponent
Even Exxon, the world's largest publicly traded oil company, favors a carbon tax over a cap-and-trade system.
"A carbon tax strikes us as a more direct, transparent and effective approach," Rex Tillerson, Exxon's chief executive, said at a speech in Washington Thursday. "It is the most efficient means of reflecting the cost of carbon in all economic decisions - from investments made by companies, to fuel and product choices made by consumers."
Supporters of cap-and-trade doubt a carbon tax would be more efficient, and say the flexibility offered by cap-and-trade make it a better solution.
"We have a system that is preferable to most of the people involved - companies, regulators and the international community," said Eben Burnham-Snyder, a spokesman for Rep. Ed Markey (D-Mass.) of the House Select Committee on Energy Independence and Global Warming.
There are, of course, opponents of making fossil fuels more expensive at all, and they generally fall into two camps.
Some, like Sen. James Inhofe (R-Okla.) who once famously called global warming the "greatest hoax ever perpetrated on the American people," simply don't think it's a big deal.
Others say it may be a big deal and we should do something about it, but not now - not when the country is in the midst of the worst recession in decades.
To this last point, Rosenblum and other supporters say the carbon tax can be offset with tax breaks, like a reduction in the payroll tax.
That way, they say, the government could discourage something it doesn't want - pollution - and encourage something it does - employment - through the tax code.
Still, a carbon tax has attracted scant supporters in Congress.
When Rep. Peter Stark (D-Calif.) proposed one last year, it attracted a total of three co-sponsors among the 435 House members.
"I know it's widely popular and makes a lot of sense to economists and academics," said one Democrat Senate staffer. "But unless a member of Congress was considering early retirement, it's not an approach they would consider on the Hill. It's political suicide."
A gas tax, minus the gas
Should the U.S. enact a fuel tax to limit global warming and boost development of alternative energy?
NEW YORK (CNNMoney.com) -- To save the planet and move away from imported fuel, some say a big energy tax is the best way to go.
If the nation is going to develop fuel alternatives that will clean the air, limit global warming and make it energy independent, making fossil fuels more expensive is essential, supporters say.
Otherwise, fossil fuels are just too cheap to let alternatives emerge on a big scale.
And many say that with gas and oil prices currently so low, it's the ideal time to push through a hefty tax. Besides, they say eventually we're going to be paying more for our energy, so it is important to stimulate the development of alternatives now before an energy crisis strikes.
Clean energy: The next really, really big thing
"What's at stake is whether or not America is going to be the winner in the next, great global industry," John Doerr, a venture capitalist at Kleiner Perkins, told Congress Wednesday that higher fossil fuel prices are, among other things, essential if the U.S. is going to develop renewable industries.
The prospect of making fossil fuels more expensive is nearly a foregone conclusion. Even when gas prices were over $4 a gallon this summer, both Democrat and Republican presidential candidates were pushing for regulations on greenhouse gasses.
Even Exxon Mobil (XOM, Fortune 500), long accused of funding global-warming naysayers, seems to accept that some type of regulation is forthcoming and necessary.
What's at issue now is how it should be done.
Talkback: Does the nation need a larger gas tax?
Congress will almost certainly debate a law capping greenhouse gas emissions in the coming year - a kind of tax wrapped in the guise of the free market.
There's a decent chance the proposal will pass, ushering in higher prices for everything from electricity to manufactured goods, as companies are forced to either clean up their emissions or buy permits to pollute.
Proponents of this plan - known as cap-and-trade - say it's needed because it uses market forces to bring about guaranteed reductions in greenhouse gasses. It's also modeled on a tried and successful plan to reduce acid rain, and is similar to the global plan already under way to limit greenhouse gasses - the Kyoto Treaty.
Carbon tax
But critics say this cap-and-trade is little more than a cop-out - an easy way for politicians to duck an unpopular tax. The most efficient way to cut greenhouse gasses, many economists say, is a simple tax on carbon dioxide.
This isn't the small 10 cent-a-gallon increase proposed recently to pay for more road work. This would be a hefty tax designed to cut fossil-fuel use.
A carbon tax, as explained by Dan Rosenblum of the Carbon Tax Center, would be a tax on oil, natural gas or coal levied at either the refinery, well head or mine mouth.
Naturally, energy companies would pas this tax on to consumers, who could expect to see a $1-a-gallon increase in the price of gasoline and a $70 increase in the average monthly household electric bill once the taxes were fully phased in over 10 years, according to numbers from the Carbon Tax Center.
The carbon tax is five times more efficient than a cap-and-trade scheme, said Rosenblum, because it cuts out the need to administer the program - which would need a permitting agency, inspectors to monitor emissions, a carbon exchange futures market and Wall Street banks that would likely run it.
Exxon: An unlikely proponent
Even Exxon, the world's largest publicly traded oil company, favors a carbon tax over a cap-and-trade system.
"A carbon tax strikes us as a more direct, transparent and effective approach," Rex Tillerson, Exxon's chief executive, said at a speech in Washington Thursday. "It is the most efficient means of reflecting the cost of carbon in all economic decisions - from investments made by companies, to fuel and product choices made by consumers."
Supporters of cap-and-trade doubt a carbon tax would be more efficient, and say the flexibility offered by cap-and-trade make it a better solution.
"We have a system that is preferable to most of the people involved - companies, regulators and the international community," said Eben Burnham-Snyder, a spokesman for Rep. Ed Markey (D-Mass.) of the House Select Committee on Energy Independence and Global Warming.
There are, of course, opponents of making fossil fuels more expensive at all, and they generally fall into two camps.
Some, like Sen. James Inhofe (R-Okla.) who once famously called global warming the "greatest hoax ever perpetrated on the American people," simply don't think it's a big deal.
Others say it may be a big deal and we should do something about it, but not now - not when the country is in the midst of the worst recession in decades.
To this last point, Rosenblum and other supporters say the carbon tax can be offset with tax breaks, like a reduction in the payroll tax.
That way, they say, the government could discourage something it doesn't want - pollution - and encourage something it does - employment - through the tax code.
Still, a carbon tax has attracted scant supporters in Congress.
When Rep. Peter Stark (D-Calif.) proposed one last year, it attracted a total of three co-sponsors among the 435 House members.
"I know it's widely popular and makes a lot of sense to economists and academics," said one Democrat Senate staffer. "But unless a member of Congress was considering early retirement, it's not an approach they would consider on the Hill. It's political suicide."
01-25-2009, 11:05 PM
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That is really a double edge sword. If the taxes are increased to make the people resort to alternative fuels they need to first have the alternatives figured out and well into production. But as long as prices are low they will not get into full production.
01-26-2009, 02:27 AM
#14
I wish I was as fine, as those who work the pipeline!
As far as your original question, yes. Speculation did most definitely drive up oil prices.
There were allot of other factors that aided it, but without rampant, unregulated speculation by option traders and investment bankers the huge increases and decreases would not have been possible. This is also the reason the cost of a barrel of oil crashed so hard. Everything worked out just fine until we stopped buying fuel because it was to expensive and our false housing market finally crashed.
As for fuel prices, let me give it a go.....
Right now oil reserves are increasing due to decreases in economic activity. This keeps downward pressure on the cost of oil. One would think that eventually, the price of 'fuel' would come down as well. Initially the cost of gasoline did plummet with oil. It finally leveled out and now has upward pressures. The reason that gas prices are going up, when oil prices are very low and somewhat stable is due to increased refining costs, increasing crude inventories, and rapidly diminishing storage capacity. 'Fuel' at anything less than $2.00 per gallon (retail) is not profitable. I have said in other posts that to reach parity in the market, oil should trade at or around $80.00 to $90.00 per barrel and because of recent governmental cost increases in the industry, regular gasoline should be at about $2.50 a gallon. Any less than that and profit margins falter, any higher and we as consumers withdraw from the market.
If the refineries can not make a profit, they will reduce the amount of refined products. In addition, you can’t just extract gasoline and leave the rest of the components in a tank somewhere. Refineries extract a great many things out of oil, all these other items have to be stored and/or sold. Due to economic woes, increasing storage costs, decreasing storage capacity and coupled with decreasing byproduct demand, it is very simple to see why refining costs have increased. This whole scenario puts downward pressure on future inventories, and upward pressure on current and future expenses, resulting in increases to the future cost of gasoline and the price goes up regardless of the basically stable price of oil.
Basically the reason that fuel prices are going up is because the costs incurred in the industry are increasing. As far as lag times for price increases or price reductions at the pump this is pretty simple. These companies are doing everything they can to increase their profit margins, so as to keep stock prices up to keep investors on board. You would do the same thing. You lower your price only when forced by the market so as to increase profits and you increase prices as soon as possible to decrease losses.
This is quite obviously a very over simplified description, but I think you get the point.
There were allot of other factors that aided it, but without rampant, unregulated speculation by option traders and investment bankers the huge increases and decreases would not have been possible. This is also the reason the cost of a barrel of oil crashed so hard. Everything worked out just fine until we stopped buying fuel because it was to expensive and our false housing market finally crashed.
As for fuel prices, let me give it a go.....
Right now oil reserves are increasing due to decreases in economic activity. This keeps downward pressure on the cost of oil. One would think that eventually, the price of 'fuel' would come down as well. Initially the cost of gasoline did plummet with oil. It finally leveled out and now has upward pressures. The reason that gas prices are going up, when oil prices are very low and somewhat stable is due to increased refining costs, increasing crude inventories, and rapidly diminishing storage capacity. 'Fuel' at anything less than $2.00 per gallon (retail) is not profitable. I have said in other posts that to reach parity in the market, oil should trade at or around $80.00 to $90.00 per barrel and because of recent governmental cost increases in the industry, regular gasoline should be at about $2.50 a gallon. Any less than that and profit margins falter, any higher and we as consumers withdraw from the market.
If the refineries can not make a profit, they will reduce the amount of refined products. In addition, you can’t just extract gasoline and leave the rest of the components in a tank somewhere. Refineries extract a great many things out of oil, all these other items have to be stored and/or sold. Due to economic woes, increasing storage costs, decreasing storage capacity and coupled with decreasing byproduct demand, it is very simple to see why refining costs have increased. This whole scenario puts downward pressure on future inventories, and upward pressure on current and future expenses, resulting in increases to the future cost of gasoline and the price goes up regardless of the basically stable price of oil.
Basically the reason that fuel prices are going up is because the costs incurred in the industry are increasing. As far as lag times for price increases or price reductions at the pump this is pretty simple. These companies are doing everything they can to increase their profit margins, so as to keep stock prices up to keep investors on board. You would do the same thing. You lower your price only when forced by the market so as to increase profits and you increase prices as soon as possible to decrease losses.
This is quite obviously a very over simplified description, but I think you get the point.
01-26-2009, 09:39 PM
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THANKS wyododge for another great post. I like to read your take on these things and they really make sense.