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Oil Prices Skyrocket, Taking Biggest Jump Ever
gnomexxx
Member Posts: 2,920
A few people are getting rich off of this. A whole lot more aren't.
When are we going to free up our own reserves?
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Oil Prices Skyrocket, Taking Biggest Jump Ever
The rise in oil prices turned into a stampede on Friday with futures jumping a staggering $11 a barrel to set a record above $138 a barrel. The unprecedented surge came as the dollar fell sharply against the euro and a senior Israeli politician once again raised the specter of an attack against Iran.
Friday’s jump capped a second day of very strong gains on energy markets, and fueled suspicions that commodities might be caught in an investment bubble.
Oil prices have doubled in the last 12 months, and are up 42 percent since the beginning of the year. Oil futures surged $10.75, or 8 percent, to $138.54 a barrel on the New York Mercantile Exchange, their biggest jump since contracts began trading in 1983. The record rise brought a two-day jump of over $16 a barrel, after Thursday 5.5 percent gain.
“This market is going to shoot itself in the foot,” said Adam Robinson, an energy analyst at Lehman Brothers. “It is searching for a price that will build a safety cushion in the system — either as inventories or as spare capacity. This takes time. But the market has gotten extremely impatient and is not willing to wait.”
The latest jump came as the dollar lost more than 1 percent against the euro amid bleak economic news that fanned recession fears. The unemployment rate surged to 5.5 percent in May, the government said, the biggest increase in more than two decades.
Friday’s negative news pricked a budding sentiment in Wall Street that the financial system was on the mend and stocks fell sharply. The Dow Jones industrials lost 394.64 points, or 3 percent, to 12,209 points, with financial stocks showing the biggest drops. The broader Standard and Poor’s 500-stock index fell 3 percent, its biggest drop since February.
The strong volatility in energy markets in recent weeks continues to puzzle traders. Prices keep rising despite a lack of shortages in the market, and strong evidence of lower consumption in industrialized countries. But investors are caught in a bullish mood, focusing on the perceived risks to future oil supplies and the growth in oil demand from emerging economies, where fuel prices are subsidized.
Even as uncertainties abound about the fundamentals of the energy market, geopolitical tensions in the Middle East regained center stage after Israel’s transportation minister and a deputy prime minister, Shaul Mofaz, said Friday that an attack on Iran’s nuclear sites looked “unavoidable” if Iran didn’t abandon its nuclear program.
Iran is the second-largest oil producer within the OPEC cartel and exports close to 2 million barrels a day. Because the world has few supplies to spare, any interruptions in Iran’s exports could push prices to higher levels. The world currently has about 3 million barrels a day of spare capacity, and consumes 86 million barrels a day of oil.
“The return of the Iranian risk premium calls for a careful assessment of the potential oil supply impact of military strikes on Iran,” said Antoine Halff, an analyst at Newedge, an energy broker. The “comments bring home the point that the dispute over Iran’s nuclear program remains unresolved and that the risks of military confrontation are indeed increasing.”
Investors also reacted to the latest forecast by a large Wall Street bank that oil prices would keep rising. Morgan Stanley predicted that prices would spike to $150 a barrel in the next month because of strong demand from Asian economies.
The threat of a strike by Chevron’s workers in Nigeria also fueled concerns that some production could be shut down. A similar strike by Exxon Mobil workers last April, which lasted a week, reduced Nigerian output by 800,000 barrels a day, or nearly a third of the country’s daily exports.
A strike might delay the start of Chevron’s 250,000 barrels-a-day Agbami project, the country’s largest offshore venture, which is slated for June 15.
One view that has been gaining ground is that the commodity market is caught in a speculative bubble akin to the housing or technology bubble of the late 1990s. That theory was raised by politicians in Washington and a slew of OPEC producers, who blame speculators for the staggering oil rally. Speaking before Congress recently, George Soros, a prominent hedge fund investor, said the current oil markets presented some characteristics of a bubble.
“I find commodity index buying eerily reminiscent of a similar craze for portfolio insurance, which led to the stock market crash of 1987,” Mr. Soros said earlier this week. But he cautioned that an oil market crash was not imminent. “The danger currently comes from the other direction. The rise in oil prices aggravates the prospects for a recession.”
But many analysts say that fundamentals, not speculation, are driving prices.
“I don’t know how else to say it, this is not a bubble,” Jan Stuart, global oil economist at UBS, said. “I think this is real. There is a whole bunch of commercial buyers out there who are spooked and are buying. You are an airline, right now, you’re scared. I don’t see who would buy at these prices unless they need to.”
Jeffrey Harris, the chief economist at the Commodity Futures Trading Commission, who was speaking before another Senate committee last month, said he saw no evidence of a speculative bubble in commodities. Instead, Mr. Harris pointed out to a confluence of trends that have contributed to the oil price rally, including a weak dollar, strong energy demand from emerging-market economies, and political tensions in oil-producing countries.
“Simply put, the economic data shows that overall commodity price levels, including agricultural commodity and energy futures prices, are being driven by powerful fundamental economic forces and the laws of supply and demand,” Mr. Harris said. “Together these fundamental economic factors have formed a ‘perfect storm’ that is causing significant upward pressures on futures prices across the board.”
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Comments
reserves wont do. we need to drill in our backyard.
-I will subtlety invade your psyche-
I already started, but all I am churning up is sand and sewage.
Oil prices has a direct impact on our economy, nearly every US job is dependant on something that uses oil, or gets a service done by something that uses oil. I agree we should be digging here.
That's what I was talking about.
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Chances of this becoming a thread about economics: 67%
Chances of this becoming a thread about politics/presidents: 30%
Chances of me actually reading people complaing about economics/politics/presidential election: 3%
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In memory of Laura "Taera" Genender. Passed away on Aug/13/08 - Rest In Peace; you will not be forgotten
I think we have to stay the course with the Bush energy plan. Can anyone tell me exactly what that is, though?
Also, in order to stabilize our economy it is important that we print more money and give it away in Iraq. After all, Iraqi welfare and a nanny state is what democracy is all about. It will be okay, don't worry, our money is backed by the full faith and credit of the Central Asian Banks. We can always borrow more if printing more causes the value of the dollar to drop in exchange for foreign currencies.
Yes, the country is in the very best of hands.
So pay no attention to that man behind the curtain, the Great and Powerful Bush has spoken.
Free up our own reserves? You mean drill in federally protected wildlife areas with endangered species?
What we need to do is invest in alternative energy! Like algae! or solar power!
Why drill when your making billions off what you already have?
"Government exists to protect us from each other. Where government has gone beyond its limits is in deciding to protect us from ourselves." ~ Ronald Reagan
Building more refineries and digging in our backyard.
Some guy who literally build an oil well in his backyard.
And for the anti-Bush people:
http://www.whitehouse.gov/infocus/energy/
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I have a scary feeling that is where our tax "refund" is being financed from. I don't know where else they could have pulled that money out of there asses. I thought we were running on a deficit.
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Why do you think our dollar is worth crap? They've printed too much money and manipulated the market via governement mandates and projects. The rest of the world knows tht our money isn't worth the paper it's printed on. It's time for a revolution, if the people do not revolt we'll have a dictator by 2050 if not earlier.
"Government exists to protect us from each other. Where government has gone beyond its limits is in deciding to protect us from ourselves." ~ Ronald Reagan
Oil prices rising are based on a few things.
OPEC trades Oil using only the USDollar, as the value of the dollar declines it take more to buy the barrels. Which cascades the costs down hill to the consumer. The more the dollar falls the more we will all pay at the pump. Strangely enough, recently the dollar has actually gained a small bit of ground on the Euro and the Yin, but the price of oil continues to rise.
The demand for oil from China and India is skyrocketing thus causing more and more to be shipped to those countries. Yet prices in China have held firm at roughly $2.48 a gallon. How can that be if they are using more shouldn't they be paying more? The government in China subsidizes the price of oil for its citizens to encourage growth within their country. Why doesn't our government do this for us? It is estimated that we as Americans spend about 1bil a day on gas and various oil byproducts. And in an era where we are borrowing an estimated 10bil a month from Asian banks, that is just not possible for us at this time.
We hit peak oil years ago. Peak oil is the theory that there is only so much oil you can draw out of the ground before you tap all the easily accessible oil and finding and drilling for new sources of oil gets harder and more costly, thus driving the price up. Oil is a finite resource. Just look at Dubai, their oil runs out in a matter of years, but at least their government is intelligent enough to be investing in what will hopefully be a huge tourism market. And I can't blame OPEC for not wanting to increase production, because once the oil is gone, its gone for good.
Oil prices are ultimately set by our own refineries as their cost for barrels of crude goes up, our cost for refined oil also goes up. There is a belief that if we build more refineries then we will offset the supply and demand and prices will come down. US refineries have been operating at 80% capacity for years. Even if we build new refineries where are we going to get more crude oil from? South Dakota just announced they are building the first new refinery in the US in over 30 years. A refinery that will produce mostly jet fuel and diesel. What American Airlines lobbyist got that passed?
What can we do to help? In my own opinion:
Cheers! Good to be back on the forums!
Get your stock brokers to buy into legitimate companies making electric cars, doing research (focused plasma based) into fusion, and other such deals. Because it's inevitable that oil's dominance in fuel sources is about to end. It's time to make a buck on that fact right now, and fund the development too.
-- Brede
tbh sooner or later we will need a renuable energy source, i would really perfer it to be sooner.
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Freeing up reserves won't do anything at this point. It's to late for that. The beast is to far out of control. We are so thirsty that we would guzzle up the reserves as soon as they were introduced. Oil companies are making enough money in profits, that a single company could dam near balance America's economy. Not to mention The US is still giving these guy's money to boot!
Oil is going to be in the 200's before the years up. These company's literally have us by the balls. They control our agriculture, work force , and military. All Indirectly. Nothing functions in our society at a sustainable level without the Oil. Until we fix that were going to keep being exploited and the price will continue to rise.
The time of the internal combustion engine is coming to an end.
ah yes, the Bush energy plan:
New CAFE standards, which are absolutely irrelevant because the market will determine vehicle MPG. Even without these standards as law, auto companies were being driven (excuse the pun) toward more fuel efficient vehicles. GM/Ford no longer make mini-vans, are closing truck and SUV plants, and fuel inefficeient vehicles are sitting on dealership lots. Those auto manufacturers that were asleep at the switch are offering to lock gas in at $3 a gallon.....
Mandating biofuel production, which has no major impact on our energy uses; utilizes only a portion of the plant to produce fuel; utilizes almost as much energy to plant, harverst, and ship to market as it creates; increases food prices; and creates food crisis in the third world; sweet plan, if you're Con-Agra.
Switching to electric light bulbs that contain mercury, don't drop and break one in your house.....
All this is really sweet for current manufacturers, where is the government incentive for new research and developement grants? This legislation costs the government nothing, and is feel good stuff. If Bush was really serious there would have been increased research money made available as grants into specific alternative energy projects desired. I always thought this country would stay competitive based on our R&D, not based on government mandates. Silly me, government mandates are the answer, not R&D. Maybe the government is so deeply in debt it's better to not finance R&D and just stay the course in Iraq.
Yes, it's working well......
A weaker dollar has driven up our energy costs, which in turn has driven up our food costs, which in turn has made Americans nervous about spending, which in turn has cut consumption, which in turn has led to layoffs and plant closures......yup, good strategy, we are solidifying our economy, stay the course.
So how does our government address that? They borrow more money off the Central Asian Banks, pass it out to Americans, and tell them to go ahead and blow it and have a good time. Live for today, tomorrow never comes! Then the Republicans accuse the Democrats of abusing entitlements, and the ditto heads get their tax rebate and agree.
Yup, good strategy.....
ah yes, the Bush energy plan:
New CAFE standards, which are absolutely irrelevant because the market will determine vehicle MPG. Even without these standards as law, auto companies were being driven (excuse the pun) toward more fuel efficient vehicles. GM/Ford no longer make mini-vans, are closing truck and SUV plants, and fuel inefficeient vehicles are sitting on dealership lots. Those auto manufacturers that were asleep at the switch are offering to lock gas in at $3 a gallon.....
Mandating biofuel production, which has no major impact on our energy uses; utilizes only a portion of the plant to produce fuel; utilizes almost as much energy to plant, harverst, and ship to market as it creates; increases food prices; and creates food crisis in the third world; sweet plan, if you're Con-Agra.
Switching to electric light bulbs that contain mercury, don't drop and break one in your house.....
All this is really sweet for current manufacturers, where is the government incentive for new research and developement grants? This legislation costs the government nothing, and is feel good stuff. If Bush was really serious there would have been increased research money made available as grants into specific alternative energy projects desired. Maybe the government is so deeply in debt it's better to not finance R&D and just stay the course in Iraq.
I agree with you on the fact that bio-diesel is not a solution. But in fact a worse alternative. Were near maximum food production as it is.
Electric seems to be a sure thing if people want to maintain the daily commutes they currently have.
Hydrogen doesn't sound to bad either. Honda ( I think it was) has made a proto-type car and refueling system that works from your own home. I am not to familiar with what the side effects of hydrogen are. But it defiantly sounds like a better deal than we currently have.
Edit, Ok guess a few companies have made a home refueling system. The one I happened to see was Honda's.
I agree with you on the fact that bio-diesel is not a solution. But in fact a worse alternative. Were near maximum food production as it is.
Electric seems to be a sure thing if people want to maintain the daily commutes they currently have.
Hydrogen doesn't sound to bad either. Honda ( I think it was) has made a proto-type car and refueling system that works from your own home. I am not to familiar with what the side effects of hydrogen are. But it defiantly sounds like a better deal than we currently have.
Edit, Ok guess a few companies have made a home refueling system. The one I happened to see was Honda's.
I belive the main wast product from this particular process is Dihydrogen monoxide.
Another great example of Moore's Law. Give people access to that much space (developers and users alike) and they'll find uses for it that you can never imagine. "640K ought to be enough for anybody" - Bill Gates 1981
I'm a little bit jaded on this topic. Our US auto manufacturers are struggling with maintaining market share, and losses, they could use actual research grant money from the US government to stay competitive in the quest for alternative energy source technology. Kind of like the subsidies that the oil companies, and the agricultural companies get. The Europeans subsidize Airbus, and their industries to remain competitive, why not us too?
In exchange we get a competitive heavy manufacturing industry, jobs, and stabilize our economy, rather than fall behind to Toyota's war chest, and watch our heavy manufacturing go belly up because we lost the technology race.
Supposedly America will remain competitive in the future based on our technology edge, which we need R&D to maintain. But exactly how has the Bush administration encourage R&D? They use the stick (government mandates) without the carrot (R&D grants). Do you really think that foreign governments are not subsidizing their national company's R&D efforts into alternative energy sources?
Perhaps Bush/Cheney really don't want successful R&D into alternative energy sources, it's so much easier to flop out mandates and feel good legislation while we remain dependant on oil.
Follow the money.....
NOT DIHYDROGEN MONOXIDE!!!
Remember, America has had its greatest accomplishments when it was in its worst of times. We had a technology boom after World War II. We created manufacturing technology and techniques during the early 20th century because we were to Europe then as we are to China now. We created space technology because of a need for ICBMs to taunt the Russians with. We created un-imaginable weapons because of our Civil War. I think the Bush Plan is to practically kill America so it can spring back. You gotta admit, if we are a 2nd world nation our jobs won't go over seas and we won't have an immigration issue.
Still I would like to avoid that contingency.
I belive the main wast product from this particular process is Dihydrogen monoxide.
Also known as hydroxic acid
What's everyone going to do with all the automobiles that they invested their money in to if they start trying to push an alternative fuel source on us? There is going to be some major pushing back by some mighty angry people. Especially when they're still making payments on those cars. And a lot of people drive their cars for 10 years or more.
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The same kind of thing happened in the 70's- gas prices sky rocketed and the truckers went on strike and jammed up Washington. And imagine...Bush wasn't president then!
But, the same situation that caused the 70's crisis caused this one...too many Americans driving huge, heavy gas- hog vehicles. They started making smaller and lighter weight cars in 1979 and that caused the gas prices to go down. Chevettes, VW Rabbits, hatchbacks ,etc became popular then.
Then in the 90's- under the Clinton presidency and not Bush- SUV's, 8 person family vans and huge 10 mpg Trucks became popular. Just like in the 70's- except back then it was pick-ups and station wagons and huge ass family sedans.
We caused the oil prices to go up- not the politicians. Look around you at the stop lights and see what percentage of us are driving SUV's, vans and trucks that get 10-16 mpg and you'll see how this crisis happened.
I was talking to my good friend Rex Tillman the other day and he was telling me how expensive it's getting to buy ads to downplay the $40 billion annual profits he's been making recently. The public just seems to hate his company (ExxonMobil) even though they put a whopping .04% of their profits into alternative energy sources research. He then proceeds to go into great detail about the millions he's spent combatting the persistent global warming rhetoric. I told him not to worry about any of that. George and I are going to see to it that John McCain get elected so he can pass along that $1.2 billion tax cut that ExxonMobil so deserves. If the public is going to back oil companies into a corner and force them to spend their hard earned profits to spread propoganda and pretend to search for renewable resources, we will have to help them any way we can. We look out for our own!
Vote McCain, the oil companies need your help
TORT REFORM: I am in favor of "settlement panels". Easy for the judge to look at a "best practice" settlement per offense. Who needs litigation when we can save time and money by cutting out the middle man through "comparative effectiveness"?