Gas Price Thread

Off Topic
81

[quote]MaximusB wrote:
The gas bubble with break eventually, the same way the real estate market did. It doesnt matter if you get a dollar more per hour at your job, if the cost of living goes up 30-40% per year consistently. Did these people actually think it wouldn’t stop?[/quote]

Thats not really true, because oil supplies are constantly getting lower and lower and its getting more expensive to find/drill new holes.

House prices along with food prices etc are effected my supply and demand but you can build more houses and grow more crops. But with oil demand just rises and rises and supply just shrinks and shrinks.

Allthough now petrol/gas may be over priced it will continue to rise in the long term. Sorry for the essay but my job is research into stuff like this.

Anyway its freaking £1.19 ($2.39) for 1 litre over here!

82

Unfortunately it’s not just a “bubble caused by speculators,” as OPEC and some people would have you think. The difference between, say, the tech stock bubble (or the housing bubble) and the current situation with high oil prices is this:

Unlike tech stocks, which were just intangible things that were being bid up on paper (pure speculation), PHYSICAL OIL is being bought and paid for, and delivered, EVERY SINGLE DAY at these prices (which are currently what – $130 a barrel or so?). NOT based on paper speculation as to what someone hopes it will be worth in a year, or 5 years, etc. These oil contracts are very short-term contracts (often just days or weeks), and when those contracts expire (or beforehand), that’s when physical delivery takes place. So every single day there are people/companies/countries taking delivery of ships full of barrels of oil, and paying that price ($120-130 a barrel) for it.

It’s real, it’s physical, and that’s what the market is ACTUALLY paying for the product. On a daily basis.

The tech stock thing was pure, on-paper speculation. The housing market bubble was allowed to happen because housing “contracts” (i.e. mortgages) aren’t something that expire in mere days or weeks like oil contracts do, when physical sale takes place – you don’t buy a house and then sell it again 10 days later – you usually have 15, 30 (maybe just 5 – whatever) YEARS to sit in it and HOPE (i.e. speculate) that its value will go up in the meantime.

[quote]MaximusB wrote:
The gas bubble with break eventually, the same way the real estate market did. It doesnt matter if you get a dollar more per hour at your job, if the cost of living goes up 30-40% per year consistently. Did these people actually think it wouldn’t stop?[/quote]

83

hey guys… dont no if anyone has pointed this out yet. but i think the brits are suffering alot worse… i is about £1.45 her for a litre of diesel. thats about $3 a litre. which using my poor maths skills is roughly $13 a gallon.

basically stop whining! :stuck_out_tongue:

84

[quote]TKOWKD1 wrote:
If you’re driving one of these be glad you’ve got comfy seats.

Gas Guzzler Graveyard

http://money.cnn.com/galleries/2008/autos/0805/gallery.truck_based_suvs/index.html

Your ass will need it after the raping at the gas pumps.[/quote]

It seems the brand will be discontinued. GM is closing four SUV and truck plants.

http://www.bloomberg.com/apps/news?pid=20601082&sid=a3Ghxldwh0Bo&refer=canada

85

[quote]Possumwee wrote:
MaximusB wrote:
The gas bubble with break eventually, the same way the real estate market did. It doesnt matter if you get a dollar more per hour at your job, if the cost of living goes up 30-40% per year consistently. Did these people actually think it wouldn’t stop?

Thats not really true, because oil supplies are constantly getting lower and lower and its getting more expensive to find/drill new holes.

House prices along with food prices etc are effected my supply and demand but you can build more houses and grow more crops. But with oil demand just rises and rises and supply just shrinks and shrinks.

Allthough now petrol/gas may be over priced it will continue to rise in the long term. Sorry for the essay but my job is research into stuff like this.

Anyway its freaking £1.19 ($2.39) for 1 litre over here![/quote]

Real estate and growing food are also finite things.

86

These oil prices are what keep my city/province afloat. Where else can a 3rd year university student make 24$/hr to sit in an office all day and make visio diagrams. Although when not sitting around I do get to see the actual costs associated with finding and drilling for oil, as well as refining it. Basically it ain’t cheap. Plus for our oilsands (200 years worth of oil reserves) to profit, oil needs to be at a minimum of 70$/barrel. Now at the price it is, the energy industry here is ready for HUGE profits. (huge enough that a certain company doesn’t mind building 20 billion dollar upgraders in northern alberta)

After reading this thread I went for lunch and looked around downtown here, realizing how entrenched my province is in the energy industry.

In the area of about 6 city blocks: huskey oil, talisman energy, chevron, alliance, encana, Esso, numerous drilling trusts, and an uncountable number of exploration and consulting firms.

But yeah, I’m trading in my ranger for a honda civic next year. :stuck_out_tongue:

87

Wouldn’t it be great if somehow somebody magically made fuel prices cheaper I don’t think it’s likely to happen. It isn’t practical, realistic or appropriate to expect governments to do this either. Since oil is a global commodity what exactly should the government be doing to protect us poor citizens from high fuel prices? Maybe they could eliminate the gas tax altogether? Sounds like a great idea but then where are they going to make up that revenue? Maybe spend less on hospitals, schools etc? Or perhaps they could initiate a communist style business policy and claim the private owned oil companies as government property? This obviously isn’t a reasonable option either.

So realistically if you want to remain living in a democratic, civilized, industrial nation there are only two options available if you really want to fight the high cost of fuel:

Option #1: Use less of it. (ie- drive, boat and heat less).
Option #2: Protect yourself from high fuel prices by buying part of the oil companies. When you buy shares of a publicly traded company you’re buying a small percentage of the company. As a part owner you’ll benefit (in the form of capital appreciation or dividends) each time the pump prices go up. Hey if can’t beat them join them.

If interested in Option #2 here are a few companies that you might want to start your search with PCA, HSE, SU, COS.UN, TLM.

Disclaimer: This is free advice for discussion purpose only. Don’t thank me for your success and don’t blame me for your failure. You are big boys and girls so conduct your own research and due dilligence.

88

$4.33 for 87…

89

[quote]Zap Branigan wrote:
Real estate and growing food are also finite things.
[/quote]
Space is infinite. So why isn’t real estate also considered infinite?

It is not a matter that resources are infinite or not. It matters that they are scarce – they require one’s labor to produce. Even if petrol were an infinite supply it would still be scarce and therefore we would still be paying for it.

Technically speaking oxygen and water are also finite resources (limited) but only one is considered a scarce good in everyday practical matters.

Oxygen only becomes scarce when it is not freely available; for example, when under water or in space.

90

[quote]LIFTICVSMAXIMVS wrote:
Space is infinite. So why isn’t real estate also considered infinite?
[/quote]

you mean on planet Earth?

91

[quote]TKOWKD1 wrote:
Option #2: Protect yourself from high fuel prices by buying part of the oil companies. When you buy shares of a publicly traded company you’re buying a small percentage of the company. As a part owner you’ll benefit (in the form of capital appreciation or dividends) each time the pump prices go up. Hey if can’t beat them join them.
[/quote]

Let prices get higher and that will incentivize further production. Incidentally, I believe this is a bubble because the price went up too fast. This has the mark of speculators rushing in with cheap credit. Hopefully, it won’t be misdirected and we actually see some lower prices. Either way prices will come down as long as government doesn’t try to help.

92

[quote]robo1 wrote:
LIFTICVSMAXIMVS wrote:
Space is infinite. So why isn’t real estate also considered infinite?

you mean on planet Earth?[/quote]

Planet earth yes. In general, no. What would we call developed, productive space if not real estate?

93

It is a bubble. No ifs, ands, or butts. It will burst.

When the Real-Estate bubble burst, Real-Estate was still up something like 60 % this decade.

This is not some fantasy because oil is real and everything else isn’t. This has happened before, and in fact resulted in years of reduced demand, even after the price dropped.

I know people want to blame Bush. (Come on he is an oil man, whatever the fuck that means.) An he actually wanted to open up Alaska for drilling, which obviously would have resulted in higher prices. (Wait, that doesn’t make sense.)

Then there are cars that are not being designed to get better gas mileage. Obviously a conspiracy. Other then the fact that in the 90’s, oil was so cheap nobody cared about fuel efficiency, and while the car industry was in fact working on squeezing out more energy from a gallon of gas, all that technology went into power. (Paraphrasing a science magazine I read in the 90’s.) Why? Because that was what everyone wanted.

This year more money has been poured into energy commodities then all of last year. According to a recent article this is the sign of the end of a bubble.

I have an idea, lets blame the people who are actually responsible for much of the energy run up. The people who sand in the way of drilling for more oil, the people who deny the building of refineries. the people who stopped all the nuke power plants from being built.

I get tired of people causing problems and then blaming others for it.

Figure out what is actually going on, then form an opinion. Don’t get your opinions from propaganda. This is called thinking.

94

[quote]LIFTICVSMAXIMVS wrote:
robo1 wrote:
LIFTICVSMAXIMVS wrote:
Space is infinite. So why isn’t real estate also considered infinite?

you mean on planet Earth?

Planet earth yes. In general, no. What would we call developed, productive space if not real estate?[/quote]

Lifty I’ve got this great beachfront property on Mars that I think you might be interested in. However I need a fast decision because I’ve got offers from two other prospects.

95

As I explained earlier, this is not a “bubble.” People are BUYING and taking PHYSICAL DELIVERY of the stuff at THESE PRICES EVERY DAY. Entire cargo ships worth of the stuff. There ARE BUYERS at THESE PRICES. And the number of buyers, and the amount they’re buying, is NOT going to decrease anytime soon. Why? China and India are only beginning to scratch the surface of becoming fully industrialized and modernized. We ain’t seen nothin’ yet. COMBINED with the fact that no major, massive increases in oil are expected to be found and exploited in the short-to-medium term.

This is NOT speculation. This is NOT just on paper. This is NOT people just buying and holding, as you would do with a stock, hoping it’s worth more months or years from now. This is people buying and TAKING DELIVERY of PHYSICAL OIL at $120-130 a barrel EVERY DAY. People do not have long-term contracts of oil which have maturities ranging in the years – they expire in days, or sometimes weeks, and at that point PHYSICAL DELIVERY takes place.

This is not a bubble. It’s a real market price. It’s what the market IS actually, really, truly willing to pay for it. And they are.

[quote]The Mage wrote:
It is a bubble. No ifs, ands, or butts. It will burst.
[/quote]

96

[quote]Damici wrote:
As I explained earlier, this is not a “bubble.” People are BUYING and taking PHYSICAL DELIVERY of the stuff at THESE PRICES EVERY DAY. Entire cargo ships worth of the stuff. There ARE BUYERS at THESE PRICES. And the number of buyers, and the amount they’re buying, is NOT going to decrease anytime soon. Why? China and India are only beginning to scratch the surface of becoming fully industrialized and modernized. We ain’t seen nothin’ yet. COMBINED with the fact that no major, massive increases in oil are expected to be found and exploited in the short-to-medium term.[/quote]

And people were buying houses left and right too, at prices way above what they should have. And yes the price is affecting demand. GM just closed 2 plants, and is thinking of dumping the Hummer line. The sales of the large gas guzzlers have plunged. This is affecting demand, just like it did in the past.

There has been an increase in demand over the past decade, absolutely. And there are factors that have reduced the supply. But the supply is enough to cover demand. The bubble is not about this supply and demand, it is about an unjustified price well above what is rational. [quote]

This is NOT speculation. This is NOT just on paper. This is NOT people just buying and holding, as you would do with a stock, hoping it’s worth more months or years from now. This is people buying and TAKING DELIVERY of PHYSICAL OIL at $120-130 a barrel EVERY DAY. People do not have long-term contracts of oil which have maturities ranging in the years – they expire in days, or sometimes weeks, and at that point PHYSICAL DELIVERY takes place.[/quote]

It is a commodity market. It runs something like 6 weeks ahead. Many people do not like the commodity markets because it is such a gamble. This short delivery time is actually part of the problem. The investors are too often more like day traders trying to make their quick buck. [quote]

This is not a bubble. It’s a real market price. It’s what the market IS actually, really, truly willing to pay for it. And they are.[/quote]

Then invest in it and make your millions.

Please look at the history of investing. People keep getting this idea that something is going up, so it must be going up forever. It must be scarce because it is a finite resource. (Sand is a finite resource.)

The price has affected the market. That is how a market works. When the price was low people quit looking for oil. Now that oil has jumped they are suddenly finding it everywhere.

Previously people were not responding to the increase because they could afford it without it affecting their wallets. Now it is different, and people are responding. Companies are responding. Demand has dropped.

Also while people have way too short of memories, they will remember the price of gas for years, and that will influence their purchases for the next 5 years at least.

And as far as supply, going up. I know thats not what you heard. Something about a “PEAK” in oil. There there is none left to find. Yet Brazil suddenly has 33 billion barrels of oil. Oil is just starting to flow out of North Dakota. Saudi Arabia just had 400k of daily production come online, and has another 1.4 million barrels per day coming online next year.

Since we are not taking the oil from south of Florida, China has contracted with Cuba and are going to drill out that oil.

Iraq just hit a high of over 2 million barrels per day.

Production is expected to increase by 1.5 to 2% this year, yet world demand is expected to increase by 1.2%.

Here is a good recent article on the subject:

97

It’s not as simple as this “bubble/no bubble” debate.

There is indeed a built-in speculation cost in oil right now, and sooner or later, it’ll evaporate. But don’t expect that to be more than 10%. So, while technically it is a bubble, in practice , the term is usually reserved for much higher variance from intrinsic values.

98

[quote]lixy wrote:
It’s not as simple as this “bubble/no bubble” debate.

There is indeed a built-in speculation cost in oil right now, and sooner or later, it’ll evaporate. But don’t expect that to be more than 10%. So, while technically it is a bubble, in practice , the term is usually reserved for much higher variance from intrinsic values.[/quote]

And here comes lixy.

As of today, the price has already dropped 10% from its high. (Ok, only 9.4%.)

10% is only $13, and even with this recent drop I wouldn’t even consider this to be anything other then natural market fluctuation. Definitely not a bubble burst. In fact it could drop another $13 and not break its current up trend.

No we are not going to see $10 a barrel oil again, and yes the current supply/demand structure is going to keep prices high, relative to the past.

But everything we are hearing about oil from the media is nothing but the same old hype we hear about everything. They get everything wrong, and the foolish people just fall in line. But what we are seeing is nothing new.

Prices cannot fall any more then the Titanic could sink.

99

Just filled up my tank for $30.20. Price for regular unleaded in my area is $2.02.

I don’t remember the last time I paid this price. The funny thing is that there’s an old gas station that was by my university and it has been closed for a really long time and the signs still reads regular unleaded for $2.10.