bust Posted January 3, 2008 Report Share Posted January 3, 2008 Not sure if this is true but have heard it on a couple of news radio stations here today. Oil has finally reached the US$100 a barrel.....traded overnight. Now here is the interesting part. Some guy bought a 1000 barrels @ $100 even though it was trading at $99.40. He sold them minutes later at $99.40 to make a loss of $600. WHY? So he could tell his grandkids he was the first person in history to pay a $100 a barrel for oil. This has already had an effect on the price of fuel here and I am guessing now it has reached that milestone.....that's where it probably going to remain. What a fucking idiot. Link to comment Share on other sites More sharing options...
Old Hippie Posted January 3, 2008 Report Share Posted January 3, 2008 Doubt it will remain there, will drop a bit, then go up again...all on speculation...which =whims and moods of a few key people... Remember when gas spiked in the USA to well over $3usd a gallon? then it fell, then slowly went up again...once the initial shock was over. There is the old notion of the frog in a pot of boiling water...toss the frog in a pot of boiling water, the frog jumps out. Put the frog in water, slowly turn the heat up, the frog sits there and eventually boils to death...this is what has been happening with the American people, we have been the frog in the pot with the water slowly heating up, to stupid to know or do anything... Link to comment Share on other sites More sharing options...
keekwai Posted January 3, 2008 Report Share Posted January 3, 2008 I've been wondering how much of the price of oil is based on peoples fears and knee jerk reactions to world politics. Incidents like the Bhutto assassination cause an increase in price because among other things Pakistan has nuclear weapons. We all pay extra pennies at the pump and when fears don't become reality the profits remain. Link to comment Share on other sites More sharing options...
shygye Posted January 3, 2008 Report Share Posted January 3, 2008 50% Link to comment Share on other sites More sharing options...
chuckwoww Posted January 3, 2008 Report Share Posted January 3, 2008 50% I'd say more like 75% is driven by world politics. The big scare is Nigeria at the moment. Pakistan is shakey (not that they have oil but they do have a strong effect). Venezuela and Iran are still simmering. Other major factors are Russian supply to Europe and huge Chinese demand. Why did God let the bad guys have so much oil? Link to comment Share on other sites More sharing options...
Steve Posted January 3, 2008 Report Share Posted January 3, 2008 The big lie is that the oil companies have to pass on the new prices to the consumer. ALL large commodity companies are actually commodity trading firms. They buy commodity futures contracts in the markets to guard against price swings. Farmers with any size of crop do the same thing. If you're counting on getting $1 a bushel for your corn and you harvest in the fall, the farmer buys or sells a future commodity contract in corn at a price that locks in his profit if the market goes against him. If it does, he makes money off the contract, if not, he lets it expire harmlessly. Its an insurance policy. They ALL do it. The oil companies have HUGE trading desks and lock in prices against swings against them. Its a wonder the media doesn't report this. Link to comment Share on other sites More sharing options...
chuckwoww Posted January 3, 2008 Report Share Posted January 3, 2008 You're right CS. That's the way it works. But the oil companies are looking at the future. What concerns them most is the supply/demand ratio and geopolitical events. Link to comment Share on other sites More sharing options...
Mekong Posted January 3, 2008 Report Share Posted January 3, 2008 The big lie is that the oil companies have to pass on the new prices to the consumer. ALL large commodity companies are actually commodity trading firms. They buy commodity futures contracts in the markets to guard against price swings. Farmers with any size of crop do the same thing. If you're counting on getting $1 a bushel for your corn and you harvest in the fall, the farmer buys or sells a future commodity contract in corn at a price that locks in his profit if the market goes against him. If it does, he makes money off the contract, if not, he lets it expire harmlessly. Its an insurance policy. They ALL do it. The oil companies have HUGE trading desks and lock in prices against swings against them. Its a wonder the media doesn't report this. Something you failed to observe CS, farmers fields are replenishable whereas oil fields are a one time harvest. In the ME (Saudi, Kuwait, Iraq, Iran, Oman etc) it is still possabale to harvest the abundent crops for minimal expenditure, onshore upstream is dirt cheap, except for the military costs but even so still cheaper. There is still a lot of oil out there but it is further away from the customer than before and costs a lot more to get out of the ground, 20 years ago we classed offshore drilling at 50 meters deep sea, now that benchmark is 500 M. It costs a ;ot more money to engineer and build a production platorm deep offshore (CAPEX Capitial Expenditure) than it does onshore, and in the Middle East TCN's can operate offshore more western personel are required hence effecting the production costs (OPEX Operational Expenditure) Globally we are consuming energy at an expinential rate as more nations are becoming industrialised and we are all fighting over finite rescources that can sustain us for the next few decades. Ecconomics, simple Supply and Demand is what is driving the costs up not the oil companies. Political uncertainties are just a small part on the overall. Link to comment Share on other sites More sharing options...
chuckwoww Posted January 3, 2008 Report Share Posted January 3, 2008 Very good point Mekong. It costs more to find and bring the stuff to market. The Alberta oil sands would be a good example of high production costs. I was probably out with my 75% figure being due to geopolitics. $40-50 per barrel would probably be a reasonable price if you could take out the global uncertainty. Also don't forget global inflation partly caused by massive injections of liquidity by central banks. Link to comment Share on other sites More sharing options...
unit731 Posted January 3, 2008 Report Share Posted January 3, 2008 I have gas! Link to comment Share on other sites More sharing options...
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