Re: I do not understand---

Posted by AG in IN on February 26, 2012 at 16:28:59 from (67.236.103.47):

In Reply to: I do not understand--- posted by MTC on February 26, 2012 at 13:25:56:

The current situation has nothing to do with how much oil is produced, where it's produced, or where it's being used. Although world demand is up, there's plenty of fuel and oil to go around, and no shortages anywhere. Head Iranian clown is shaking his fists just like he always does every so often, and has cut off Iranian oil to some countries (a drop of rain in a 5-gallon bucket, and they're only hurting themselves). Current pricing is being driven by speculators playing with paper who's sole purpose is to make themselves and those they trade for money and they've found another Middle-Eastern big oil area excuse to drive prices up. More speculators are also playing around with commodities after the stock market took a crap. Our dollar being next to worthless also does have some effect on prices.

Contrary to a current presidential candidate's theories, drilling in everyone's backyard here won't lead to $2.50 gas, and trying to keep oil drilled in the USA in the USA isn't going to happen. Doubling production and refining capacity in the USA wouldn't necessairly drop prices at all, and there's no incentive for that to happen. Oil companies are loving this like farmers were loving the idea of $8 corn. It wasn't long ago we had the potential of $8 corn futures and the threat of $4 corn futures in the same week. All it took was a big guy or two to get out of the market and grab their winnings while the going was good. The guys playing with paper who are smart and not crazy greedy at what they do know when enough is enough and it's time to get out.

There will always be things like 9-11, Iranian clowns shaking their fists (and their nuclear capabilities) that could be taken care of in hours if some of our leaders had some backbone, and other world events that allow speculators room for rapid upward pricing of oil and fuels in a "world market".

There will be a point at a certain dollar figure (I'm guessing $5.25/gal gas) where consumption will drop drastically in the US (I'll guess 10%) and prices will come down some because of a true lack of demand and a true glut of supply. Speculators simply won't be able to drive the prices higher.

AG

This post was edited by AG in IN at 20:09:02 02/26/12 3 times.

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