Why is oil $52 bucks a barrel?

[Bigmack]

WTF?

Is the ME getting more stable?

Also, I know some clever oil industry analyst could explain it away, but how come gas prices lag so far going down, but quickly reflect upward spurts in oil price?

[maxsolomon]

1. why is gas $2.86 for regular unleaded in Seattle?

it went UP immediately following the election, and its been climbing steadily despite oil's drop to $52.

i believe the word is COLLUSION. there is nothing to stop it, either. just antitrust laws 'n' stuff.

[global1]

11. Because You Are Paying That Price.......

I'm not saying this to be a smart aleck - but - as long as we are willing to pay what they are asking and keep buying it - it will stay at these inflated prices. Don't ever expect to see $1.75/gallon again. This happens on a regular basis. When gas was $1.25 they raised it to $1.75 and then lowered it to $1.50. When we were paying $1.50 they raised it to $2.00 and then lowered it to $1.75 and we feel good about that. When gas was $1.75 they raised it to $2.25 then lowered it to $2.00 and we felt good about that. When gas was $2.00 they raised it to $2.50 and then lowered it to $2.25 and we're happy with that. It just goes on and on. They keep pushing the envelop to a point where we cry 'hurt'. They lower the price to something above what it was but lower than the high and we feel that we've won.

[maxsolomon]

21. so liberal cities pay more because the hinterlands are on strike?

or are you indicting the entire driving populace of murka?

[Roland99]

23. Holy crap! It *is* that high out there! Damn!!

http://www.seattlegasprices.com/

We're about to dip under $2/gal here: http://www.louisvillegasprices.com/

Wow...you guys are getting RAPED!

[maxsolomon]

30. on top of the prices

we have 2 refineries within 90 miles of downtown.

[Earth_First]

2. (report thread to state department)

...We have an independant thought alarm triggered in sector 7-G

[Warpy]

3. OPEC has opened the spigot wide

because they've been reading about all the new non petroleum technologies that are starting to mature.

Nothing will keep the suckers hooked on smack and away from methadone like lowering the price of smack for a while.

[Earth_First]

6. Could it also be in anticipation of something happening in the Straight of Hormuz?

It's widely documented that the Iranian government will do whatever it takes to shut down the Straight of Hormuz should combat operations be escalated and enter Iran.

40% of the world's OPEC petroleum travel through the Straight of Hormuz. Could it be an attempt to get out as much as possible as cheaply as possible before 40% of the world's petroleum is cut off?

[Warpy]

9. No, the prices would be sky high, then

like they were eight months ago when Stupid started waving his dick at Tehran.

[twilight_sailing]

19. Warpy, you rock!

[DinahMoeHum]

4. The market is not a rational animal.. That price of $52 doe NOT mean cheap

it means VOLATILE.

And it could easily skyrocket to $100-$200 a barrel if things explode in the ME.

Best to keep your seatbelt fastened - it could well be a very nasty ride soon.

:evilfrown:

[lectrobyte]

5. Warm weather is helping to reduce demand.

[BushOut06]

7. Bigger question - why is gas still over two bucks a gallon?

I made the observation a few days ago that oil could drop to $1 per barrel, and oil companies would still charge what they're charging now.

American's have gotten used to paying this much for gas. That's basically it. Now, even though oil is cheaper and inventories are at record highs, the oil companies see no need to reduce prices. This way, they can keep making record profits, and then oil does get more expensive later on, they can "justify" raising prices a couple bucks.

[tyedyeto]

27. Here in AZ, the price per barrel keeps dropping but the price at the pump

goes up and up and up.

I agree with you but for those who try to rationalize the increased prices...... tell me again that the oil companies aren't price fixing. :shrug:

[hlthe2b]

8. Warm winter means decreased heating fuel demand...

There is a surplus--driving down demand...

The better question is why the hell gasoline prices haven't come down proportionately at the pump...:mad:

[teryang]

10. Saudi Arabia broke OPEC ranks to support anti Iran campaign

...by Bush family. The Saudi's are discounting oil prices to the US markets. This is a temporary support measure for the dollar which looked like it was going to nose dive. The financial embargo and the US led international boycot of Iranian oil projects accompanyied by troop increases in Iraq (desired by Saudi Arabia) and increased instability there are all meant to strengthen petrodollars and bush's hand at home while weakening Iran.

Can the US really "persuade" China and Russia to give up on their huge natural resource projects in Iran?

Will decreasing banking resources and oil revenues cause greater instability in Iran that knows the coercion is coming from the US?

Can economic warfare avoid or substitute for the widely advertised attack on Iran?

the price of gold has stiffened because insiders know that the dollar was imperiled before Saudi Arabia threw out the oil price discount liferaft to the bush financial circles. How long will the Suadi's sell oil at give away prices? A major provocation was the Iranian oil bourse plan, which was another direct attack on the petrodollar monopoly.

The Saudi's have bought a pig in the poke because this policy is going to cost them in the long run. The social instability weakness of SA is equal to or greater than Iran. Which will crack first? SA, Iran or the petrodollar? The American financial elites are here to say, we've always won in the past. They may win this round, yet again. The persian gulf sheikdoms are going to pay the price by losing their independent ability to set prices as they or the market see fit. They'll be taking orders from Goldman Sachs as Iraq deteriorates further and further and the US political will to fight the war eviscerates.

I feel the Saudi position of just openly supporting Sunni insurgents after a total US withdrawal is actually a good plan. However, this plan would not result in favorable anglo-US oil contracts based in petrodollars, so it is stiffly resisted at all costs by the bushista banking clique.

It's all about the almighty petrodollar. This is a war to maintain fiat dollar domination of international trade in energy.

[A Simple Game]

15. "How long will the Suadi's sell oil at give away prices?"

The Saudi's may be selling oil below what the market is willing to pay, but don't think for a minute that they are losing money on their oil.

The cost of pumping oil in Saudi Arabia has had no significant increase since they were selling oil for less than $20 a barrel. At $52 a barrel, the Saudis are still making a lot of money!

[teryang]

26. the cost lies in the depletion and opportunity cost

utlimately, saudi arabia may in the short term derive increased income from the strategy. It's obvious that they believe that they get additional US troops between them and Iran, and that it's its worth it to them to try to topple Iran's regime and its plan to topple petrodollar dominance.

Everyone on tv says no one supports the "surge." This is incorrect, the Fed, American bankers, and Saudi Arabia support the surge. The bushites military energy banking complex has found the means to intimidate the arab OPEC members on the gulf. They are now being coerced to set a price.

[A Simple Game]

28. Sounds reasonable to me. This may be the real reason that

Cheney was summonsed to Saudi Arabia a while ago. Could the Saudis order more American troops to the region? I for one wouldn't be surprised if they could.

[AngryAmish]

12. "cause oil supplies are almost at capacity

There is more oil available to refine than is being used right now. Warm winter is partly to blame. So when a commodity supply increases...wait for it...the price goes down.

[rustydad]

13. Complex reasons

But top of the list, the Saudi's are pumping wide open in hope of driving down the price and hurting Iran's economy which relys on oild exports for most of it's income. The there is the unusually warm winter around the globe. Then there is the demand destruction in the poorer parts of the world caused by the price run up in the last few years. Make no mistake though, the world is on the razor edge between supply just meeting demand and supply falling short of demand....permanently. Bob

[pampango]

14. All the factors already mentioned here... warm weather, increased production

in Saudi Arabia, no supply disruptions currently or anticipated. You can be sure that if the big oil traders thought Bush was about to attack Iran or Iran was about to close the Strait, the price of a barrel of oil would be sky high just on the anticipation.

Our gas prices in southwest Ohio have come down from over $3 when oil was at $70 a barrel in the fall of 2005 to $1.96 today with oil at $52 a barrel. Gas prices around here don't follow oil prices day by day, or week by week, but they do seem to track them in the long run.

[robertpaulsen]

16. Here is an interesting analysis to your question.

In addition to global warming giving the world a hot winter, driving down the demand & price for heating oil, this is also an attempt by the neo-cons to squeeze Iran's economy as they plummet past Peak Oil:


Iran oil industry founders, report says

By BARRY SCHWEID

The Associated Press

WASHINGTON — Iran is suffering a staggering decline in revenue from its oil exports, and income could virtually disappear by 2015 if the trend continues, according to an analysis published Monday in a journal of the National Academy of Sciences.

Iran's economic problems could make the country unstable, with its oil industry crippled, Roger Stern, an economic geographer at Johns Hopkins University, said in the report and in an interview.

Iran earns about $50 billion a year in oil exports. The decline is estimated at 10 to 12 percent annually. In less than five years exports could be halved and then disappear by 2015, Stern said.

more...

http://seattletimes.nwsource.com/html/nationworld/2003494872_iranoil26.html


What's Behind The Crash In Crude Oil?

By Gary Dorsch

January 10, 2007

snip

Yet given a difficult investment environment and concerns over its nuclear program, Iran has been unable to upgrade its oil facilities, nor increase production capacity for the past few years. Oil production was stagnant last year, which resulted in the oil sector expanding by just 0.6% in real terms. Instead, Iran’s economy is being driven by higher government spending, which grew by 5.4% in real terms in 2006, the highest rate of growth in five years.

snip

The latest plunge in crude oil, perhaps inspired by Saudi Arabia, is likely to put a squeeze on Iran’s budget surplus, which could turn into a deficit if oil prices fall towards $45 per barrel. To finance the government’s subsidies, Iran’s central bank increased the broad money supply by 36% in 2006, sending inflation soaring to 14.6% in September. Tehran cannot afford to cutback on oil production and reduce its oil income, without cutting back on subsidies and risk riots in the streets.

snip

While apparently ruling out the military option for 2007, the Europeans and the US are quietly engaging in economic warfare with Iran, by demanding that international banks and oil companies to pull out of dozens of Iranian projects, including development of Iran’s two massive new oil fields Azadegan and Yardavan that could expand Iran’s output by 800,000 bpd over the next four years.

http://www.kitco.com/ind/Dorsch/jan102007.html

The only part of this article I don't agree with is military action being ruled out. "All options are on the table" means if we goad Iran into attacking us in the wake of this economic stranglehold, we've got just cause to respond. This is almost the same way our military involvement in World War II began. Very scary food for thought.

[Bigmack]

20. I know one way for Iran to get out....

of this pinch.

Just a short way west of them is a disorganized semi-country with a shitload of oil. The majority of the people in that semi-country are of the same religious cult.

The US gets pushed out of Iraq, and "voyla", Iran is solvent again.

Damn... I wish somebody in the US government had thought of this a few years ago!

[sandnsea]

17. Threat of oil taxes and investigations n/t

[twilight_sailing]

18. Why is natural gas under $6 (the last time I looked)?

[RB TexLa]

22. I for one wish it would recapture some of it's gains

[Roland99]

24. The Middle East is less stable than a year or so ago yet oil is way cheaper

Makes no sense.

None.

[ecstatic]

25. Thanks for this post

I would have never known, since prices at gas stations have not dropped.

However, I just looked and natural gas prices have quietly dropped to around .97/therm (for fixed contracts in GA) so now I have to decide whether to lock in or not.

[sendero]

29. I'm not sold...

.. on the idea that one country can suddenly increase output to the extent prices are affected in a big way.

It think it is much simpler - speculation coupled with the usual, supply and demand.

Speculators drove the prices up in anticipation of more instability, more uncertainty but especially more usage. The warm winter in the US has caused oil usage to be only 67% of projections. That's a lot of oil, and now there is a (very temporary, but real) surplus.

Nothing falls faster than prices run up by speculators in the face of falling demand. Look no further than the overheated housing markets in Las Vegas, Boston and other areas for a prime example.