Factors That Pushed Oil Price Up Are Now Pushing It Down

[Robbien]

No matter what theory oil analysts used to explain the spike in petroleum prices over the summer, this week those analysts were saying that those factors -- geopolitics, supplies of refined products and hedge fund speculation -- are working in reverse to drive prices down.

"The whole perception has shifted," said Peter Fusaro, co-founder of the Energy Hedge Fund Center LLC, which tracks 520 energy hedge funds. Put the factors together, said oil consultant Philip K. Verleger Jr., and "you have a setup for one heck of a price washout."

. . .

Finally, the wave of pension fund and other money flowing into commodity index and hedge funds may be ending or changing directions. Verleger said that for years, financial advisers have been telling pension fund managers and other investors that commodities were investments as reliable as stocks and bonds. As a result, he said, more than $100 billion has poured into oil and gas commodity holdings, buttressing prices on spot and futures markets.

Now, Verleger said, those funds could accelerate the drop in oil markets. Asked how low prices could go, Verleger said, "This is a commodity market. There's no floor."

Fusaro said he expects pension funds to continue to boost investments in commodity and energy hedge funds, bolstering commodity prices. But, he said, prices could still drop in the short run. And if they did, he added, hedge funds would "probably exacerbate any price decline by running to the exits."

http://www.washingtonpost.com/wp-dyn/content/article/2006/09/15/AR2006091501121.html

[Lindacooks]

1. If the price of gasoline is tied to the price of a barrel of oil, as

we've been told over and over again, how can the price of gasoline be down 30% and more when the price of a barrel is only down about 10%?

I think that those disgusting oil companies hiked the prices when they could, and now they're bringing it back down because of the midterm elections. That's really the best explanation. And yes, I know about futures and how the 'perceived risk' is supposedly down, but the numbers still don't add up.

[Robbien]

4. Because the speculators in the hedge funds are soaking up

the difference.

Yes politics are a part of the reason the pump price is going down, but the wall street speculators are playing a huge role in the oil stock market game.

[AngryAmish]

24. That makes no sense at all.

[AngryAmish]

23. Because the demand curve for gas is flat.

[amandabeech]

30. The price of gasoline is tied both to the amount of gasoline that

refineries can produce and the price of raw petroleum.

U.S. and world demand for gasoline has risen over the years, but the maximum amount of gasoline that those refineries can produce has not quite kept up with demand, particularly here in the U.S.

That means that the price of gasoline gets bid up here when there's heavy gasoline demand, like in the summer months.

Gasoline usage declines after the Labor Day holiday (known as summer's last hurrah), so that the demand and supply are more in line with one another and prices fall.

Of course, in the oil business, greed is good. I don't discount that.

[ClassWarrior]

2. Skip the "geo" part - those factors are POLITICS, plain and Rape-publican.

NGU.

[Dem2theMax]

3. "This is a commodity market. There's no floor."

Oh yes there is. The floor is election day, November, 2006.

[0rganism]

6. By Christmas, we'll be back to $2.50/gallon, no matter who wins

The blatant manipulation is kind of interesting, insofar as they don't even try to hide it anymore.

[ClintonTyree]

8. BACK to $2.50 a gallon?

I don't know where you live but I want to move there. We're still paying $2.88 here in lovely upstate New York. :wtf:

[UpInArms]

13. mostly the price is down below $2.50 in the midwestern states

imho - the powers that be are attempting to shift middle amurica back to the right - if you look at the coasts and the north and south - the price has not fallen so dramatically -

I had a CBS link the other day - I will try to find it again.

[UpInArms]

14. here's the gas price map for the states

http://www.cbsnews.com/elements/2004/04/12/in_depth_us/map611378.shtml

check out TX @ $2.472
or Montana @ $2.906
then there's Missouri @ $2.316

New York, you say? Why that's $2.882

:hi:

(edit for punctuation)

[bleedinglib]

37. Gas Prices in Missouri !!

In our little town close to Branson, gas was $2.14 today? It has fallen 80 cents in five weeks??
What happened to the B.P. pipeline in ALASKA THAT WAS SHUT DOWN FOR REPAIRS FOR TWO MONTHS. That would have been good for 20 or 30 cents a gallon?? Anyway, why is B.P. pumping oil out of our ground??? and where was that oil being sent too?? I can tell you? the open Market!!
Does anyone remember the repugs name that said back in June that gas would be below $2.00 by election day??
Ever since this administration took over we have been pumping oil out of a hole in Texas and pouring it down a hole in Louisiana, at a cost to taxpayers of $100.00 per barrell. They call it the national reserve. I guess the holes in Louisiana are safer than in Texas. Someone should check and see who the stockholders are in the company that has that contract?
Well, I should be grateful that gas is so cheap now ??
bleedlib

[greccogirl]

26. Almost the entire country with the exception

of some states are close to $2.00 a gallon now.

[driver8]

29. I dream of $2.50 a gallon...

Here in Southern California, I cannot remember the last time I saw gas under $2.75. We are paying $2.93 right now and we are happy about that.

[0rganism]

32. from $1.99 or less by 1st week of November (nat'l average)

shameless manipulation of a cash-starved electorate

[muesa]

5. Mild disagreement

I would give a lot of credit to the alternative, renewable, and clean energy technologies moving out of university labs, "start ups", and (even) government labs, and the "organization" of the synthetic fuels, bio-fuels, and ethanol industries, plus the support for -- enough support that "Big Oil" is spending $30 Million to defeat it.

I would also give some credit to the near death experience of Ford Motor Company.

[aquart]

7. Anyone think he's just making stuff up?

Why would heavy demand for fuel commodities drive the price down? Oh, it wouldn't.

I like his adorable belief that the market would drop if the hedge funds ran away. WHY would they run? They know it's a diminishing resource with no successful substitute yet.

Economists never make any sense. Silly, silly people.

[killbotfactory]

9. It goes up a dollar in a year

then down ten cents.

Whoopdefuckingdoo.

[RUMMYisFROSTED]

16. .

:woohoo: defuckindoo

[bklyncowgirl]

10. This may be cynical but It will go up again shortly after the election.

I think that this is all just smokescreen.

A Democratic win would not be good for the oil companies.

There's always the chance that at least some Democrats actually believe what they say about things like alternative fuels, higher mileage standards and other issues that are anathema to the oil companies. At the very least, they'd have to start bribing a whole new group of politicians.

[Gman]

11. Another factor: Previously it wasn't Labor Day before an election

Now it is. Therefore, prices go down. On November 8, prices start going back up, way up.

[Dogmudgeon]

12. Or maybe this variation on the theme:

Gasoline prices increase a little.

Natural Gas prices skyrocket.

It all depends on the severity of the winter. With a mild El Niño coming in, it's probably going to be cold and snowy in Washington, DC -- and all throughout the East coast.

--p!

[0007]

15. We've become an oil addict..

What a guy!

[fshrink]

17. Your engine doesn't run because the sub-phase inductor

has split the double-headed converter, which made the belt, here, activate the security chip. We will have to take the cylinder head off and perhaps change it. Good news is we have the parts in stock.

[bemildred]

18. Time to spook the herd. nt

[Wise Doubter]

19. Here is a big factor for gas prices dropping before the mid-terms.

Especially in Ohio and Misery

If you look at every state`s gas prices (available here) You will notice that the lowest gas prices in the Nation are in Ohio and Missouri.


Ohio is a crucial battleground state, divided bitterly between left and right. It has cast its votes for the loser only twice in 20th century, a record beaten only by Missouri (which has voted for the loser once).


Psychological warfare - Vote republican, we`ll bring gas prices down.(after we hike them up)

I live in So. Cal and I just paid 2.79 for reg unleaded, yesterday. It dropped 4cents from 2.83 in about 3 hrs.

[leftofthedial]

20. yeah.

US election cycles.

[lonestarnot]

21. bushitlers and cronyism are the two factors.

And if they could do it now they could have done it then. How does it feel to be ripped off by corporate greed America?

[Triana]

22. Factors = The bu$h Administration

...whose many members are from the oil and gas industry. Factors ALSO = upcoming mid-term elections in November.

Coinky-dink?

I DON'T THINK SO!

I hope no one on DU is buying this bu$hit.

[IDemo]

25. "The whole perception has shifted"? Not entirely

[stepnw1f]

27. Bullshitttt

These analysts can all go to hell.

[sofa king]

28. Bullshit.

It's the oil companies commisserating to temporarily reduce their profit margin in order to swing the November elections for the Republican Party.

If they succeed, or especially if they don't, oil will be back through the roof by Christmas.

[VegasWolf]

31. Oil is a nonrenewable resource. One thing is certain,the price will go up

again at some point. So don't go buying SUVs!

[mrminnman]

38. who knows?

If you saw the movie "what ever happened to the electric car," that movie claimed that oil prices dropped a few years back because the mideast was afraid of the electric car and whtat that would mean to the mideast.

And that threat is still on the table!

And today, Honda annouched it's cellulose ethanol technology was moving on to the next stage of research.

If we stay disciplined and keep seeking alternative energy, the prices might stay lower than we'd think?

But who knows...

[DiverDave]

33. Oh, BULLSHIT!!

The reason gas prices are coming down is because the god damned fucking republicans are running scared!
And, to our utter shame, it WORKS with the brain dead, stupid, "fuck all ya'll, I got mine" crowd.

Diesel prices have moved not a bit.
WHY??, cause the great unwashed don't BUY DIESEL!
But everything you buy costs more because the oil barons have figured out that you don't care about the price of diesel.

They are gonna win, they play dirty, and we don't. period.

[Cha]

34. ELECTION in

NOVEMBER.

[CGrantt57]

35. In a nutshell..

I don't care if they give gasoline away for free and throw in a blowjob...I am still NOT VOTING FOR ANY FUCKING REPUBLICANS!!!

Just so you know...

[VirginiaDem]

36. Hey conspiracy theorists -- any proof that

the drop in prices is fixed, rather than a function of the combination of (temporarily) increased supply and market reaction?

[ForFuxakes]

39. You Bet...

If supplies are REALLY tight...how come I can buy as much as I want when i want, wherever I want?:eyes:

[Divine Discontent]

42. LOLOLOL!

exactly... that reminds me of the guys who say things are RARE on eBay when there are millions of whatever it is, made!

buy all the gas you want at nearly $3 a gallon, it ain't going away right now... in fact, does the gov't keep on them to keep production lines open even when driving season slows down so they can't gouge us on a necessary commodity for most people?


www.cafepress.com/warisprofitable <<-- antibush prodem stickers/shirts

[samsingh]

40. it's all a game

[junior college]

41. I don't know me nothin' about much

but one thing I do know is that Diebold is gonna hump us in the butt come November regardless of the price of gas.

[Divine Discontent]

43. that's not the kind of hump I'm looking for...

so, I will certainly pull a Mexico leftist party move and go to the capitol with my brothers & sisters and hand vote the Democrats as the leaders of America, there are hardly any large amounts of people supporting the republican candidates anywhere. There the fringe group now. They are less than 40% of America now according to the newest research (and I love that most of the country considers themselves Christian and yet only 40% of the country is repub??? sounds like someone likes to think they're the "Christian" value party!)


www.cafepress.com/warisprofitable <<-- antibush prodem stickers/shirts