[Eug]

Gold under $800 today, and oil very close to $100.

Well, not quite a burst bubble, but a significant deflation to the crazy prices just months ago.

Sustainable, at least for the near and mid-term? Perhaps. I wouldn't expect to see $600 gold or $70 oil any time soon though. Conversely, I don't expect to see $1100 gold or $150 oil soon either.

[Mastrap]

I think there's enough people out there who will keep holding on to a golden nest egg that prices won't get much lower much faster. Oil prices I suspect will keep on rising over the next decades.

[Doofy]

Just a correction brought about by a rally on the dollar. It'll be up on the up again soon.

[Eriamjh]

Funny how gas isn't the same price with oil at $100 coming down as it was when it was going up.

I thought gas was $3 when oil was $100. It's still $3.60 here.

[Wiskedjak]

Originally Posted by Eriamjh 

Funny how gas isn't the same price with oil at $100 coming down as it was when it was going up.

I thought gas was $3 when oil was $100. It's still $3.60 here.

If the price of oil goes up 10%, the price of gas will go up 15%. If the price of oil goes down 10%, the price of gas will go down 5%; the goal being to constantly inch up the price of gas, regardless of it's cost.

[xi_hyperon]

The oil companies, if I recall from my studies (years ago, so I may be talking out of my arse here), like to use the accounting practice called NIFO, which is next-in, first-out. This allows them to charge more in order to stay ahead of expected price rises. Although my assumption is that is why gas is so fast to go up, it may also explain why it is slow to go back down when oil goes down. Prices are still expected to rise over the long term. Or at least it would be their justification, if they were to be hauled in front of Congress to explain it.

[wallinbl]

Gas is seasonal and is generally lower after Labor Day than it was during the summer. I wouldn't read much into the current price other than that. I won a bet with a coworker that I made two months ago regarding the price of gas come Labor Day. I bet we'd get to the $3.50 range, and lo and behold it was $3.53 here this weekend.

[Wiskedjak]

Originally Posted by xi_hyperon 

Prices are still expected to rise over the long term. Or at least it would be their justification, if they were to be hauled in front of Congress to explain it.

The funny thing about that, since oil is a commodity item, is prices will rise simply as a result of oil companies *saying* prices are expected to rise. IMO, the way they can so easily manipulate the will of the buyers and sellers of the stock market is worse than any measly profits (by comparison) that could be garnered through insider trading.

[Wiskedjak]

Originally Posted by wallinbl 

Gas is seasonal and is generally lower after Labor Day than it was during the summer. I wouldn't read much into the current price other than that. I won a bet with a coworker that I made two months ago regarding the price of gas come Labor Day. I bet we'd get to the $3.50 range, and lo and behold it was $3.53 here this weekend.

They tell us that they need to increase the price of gas in the winter season because our engines run longer.
They tell us that they need to increase the price of gas in the summer season because we drive more.
Soon, they'll tell us that they need to increase the price of gas in the hurricane season because of potential damage to rigs in the Gulf.

[wallinbl]

Originally Posted by Eriamjh 

Funny how gas isn't the same price with oil at $100 coming down as it was when it was going up.

I thought gas was $3 when oil was $100. It's still $3.60 here.

Oil was last $100 in March, when gas was $3.40.

[wallinbl]

Originally Posted by Wiskedjak 

Soon, they'll tell us that they need to increase the price of gas in the hurricane season because of potential damage to rigs in the Gulf.

Oil futures were up on Friday because of Gustav. They recovered.

[Doofy]

Originally Posted by Wiskedjak 

They tell us that they need to increase the price of gas in the winter season because our engines run longer.
They tell us that they need to increase the price of gas in the summer season because we drive more.
Soon, they'll tell us that they need to increase the price of gas in the hurricane season because of potential damage to rigs in the Gulf.

When in fact the real reason is because you're using less of the stuff and they still have overheads to cover.

Everyone drives around in 50 mpg vehicles instead of 25 mpg ones, they're selling half the product. But their infrastructure and staff still costs the same. So the price must double.

[wallinbl]

Originally Posted by Doofy 

When in fact the real reason is because you're using less of the stuff and they still have overheads to cover.

Everyone drives around in 50 mpg vehicles instead of 25 mpg ones, they're selling half the product. But their infrastructure and staff still costs the same. So the price must double.

Exxon is in no place to complain that their costs are too high. They are repeatedly one-upping their own records in terms of quarterly profits (profit, not revenue). No one has ever made as much money as they have been.

[Doofy]

Originally Posted by wallinbl 

Exxon is in no place to complain that their costs are too high. They are repeatedly one-upping their own records in terms of quarterly profits (profit, not revenue). No one has ever made as much money as they have been.

Shareholders are overheads.

[xi_hyperon]

Originally Posted by Doofy 

When in fact the real reason is because you're using less of the stuff and they still have overheads to cover.

Everyone drives around in 50 mpg vehicles instead of 25 mpg ones, they're selling half the product. But their infrastructure and staff still costs the same. So the price must double.

If that were to happen (everyone using much less) the oil companies wouldn't hesitate to downsize, even before shareholders demand it.

[Eriamjh]

Originally Posted by wallinbl 

Oil was last $100 in March, when gas was $3.40.

Got a link?

[Wiskedjak]

Originally Posted by Doofy 

When in fact the real reason is because you're using less of the stuff and they still have overheads to cover.

Everyone drives around in 50 mpg vehicles instead of 25 mpg ones, they're selling half the product. But their infrastructure and staff still costs the same. So the price must double.

Exactly. I remember hearing, a few years ago, that one of the states, Connecticut, I think, was requesting to be able to increase their rates because too many of their customers were consuming less.

They want to increase prices when demand exceed supply, and they want to increase prices when demand is *less* than supply.

[wallinbl]

Originally Posted by Eriamjh 

Got a link?

http://www.eia.doe.gov/emeu/international/prices.html

There are Excel files available next to each graph with the daily or weekly prices.

[wallinbl]

Originally Posted by Wiskedjak 

They want to increase prices when demand exceed supply, and they want to increase prices when demand is *less* than supply.

Doesn't everyone?

[zombie punk]

Sure - as people move to a post carbon economy, legacy fuels like oil will become a niche, expensive product.

[Eug]

I don't want to politicize this too much, but I just want to point out that the proletariat in North America isn't too keen on a "post-carbon economy" happening any time soon.

Right now Canada has a minority government. The Conservatives are in power, with the Liberals being the official opposition.

There is a looming election and the Liberals are pushing a green platform, with a series of federal carbon taxes offset by tax rebates esp. for lower income groups. It ain't goin' over too well. Before the campaign push, the Liberals and Conservatives were neck-and-neck in the polls. Now, the Conservatives are firmly ahead, and are within spitting distance of a majority government.

[zombie punk]

Originally Posted by Eug 

The post carbon economy is not coming any time soon in North America.

That's pretty similar to what the whale oil salesmen said. You can choose - you either lead, or follow - but the countries that lead will have clear patent and tech advantages in the next few decades.

[moonmonkey]

I think gold will recover, in my opinion now is a good time to buy in.

[Eug]

Originally Posted by zombie punk 

That's pretty similar to what the whale oil salesmen said. You can choose - you either lead, or follow - but the countries that lead will have clear patent and tech advantages in the next few decades.

May be true. However, that won't change the reality that is North America's path.

[Eug]

Oil below $105

Gold now at $780

[zombie punk]

Originally Posted by Eug 

May be true. However, that won't change the reality that is North America's path.

You mean to continue burning whale oil in its lamps? I guess not.

[ort888]

They have to get gas prices low before the election.

[Big Mac]

Who is "they"? Do you mean the Saudis, who are trying to defend $100 oil? Futures traders who have made a fortune on high prices?

[ort888]

The Illuminati.

[Big Mac]

Oh!

[Eug]

And again, the #1 supplier of oil to the US is Canada. Even though the two countries are friends, you can be damn well sure that Canada is going to charge as much as it possibly can for every drop of oil.

It's a balance of supply, demand, and speculation by commodities brokers.

In any case... The news reports oil today hit a 5 month low, at $103.84.

Actually, these are the numbers from Bloomberg:

Nymex Crude Future 103.95 -2.39 -2.25 12:24
Dated Brent Spot 99.73 -1.73 -1.70 12:53
WTI Cushing Spot 103.83 -2.51 -2.36 12:05

[Shaddim]

Originally Posted by ort888 

The Illuminati.

and you guys have the nerve to chide people for believing in God?


Gas hit $3.50 /ga again, from 3.43. Though, I suppose it's foolish to think that dropping oil prices will = lower petrol costs. Oh well, I suppose the hurricanes are more to blame for the recent spike.

[Eug]

Originally Posted by Eug 

Oil below $105

Gold now at $780

Oil now at $103, and as you can see from the graph, gold is at $759.

---

Speculators behind oil moves, study finds

An independent U.S. study of oil markets concludes that speculation by large investors is the primary reason for the massive rise and fall in oil prices this year.

The study says investors poured $60 billion into oil futures markets in the first six months of the year as oil prices soared from $95 to $145 a barrel,

They have since withdrawn $39 billion from those same markets as prices have retreated.

---

OPEC cuts 'huge oversupply' of oil

OPEC Secretary-General Abdalla El- Badri said the group's decision to adhere to production quotas means it is cutting output by about 500,000 barrels a day.

OPEC members are reducing a "huge oversupply" of oil on the market, El-Badri said today during a press briefing at OPEC headquarters in Vienna. Before the cut, the group was producing 900,000 barrels a day above its quota, he said.

---

The commodities bubble has burst

Across the commodities spectrum, the descent has been swift and deep: oil is 30% off its summer high; natural gas has plunged 45%; aluminum is off 20%; copper is down 25%; and wheat has cratered 20%.

The CRB index, a compendium of commodities futures, has dropped 23.5% in 10 weeks, the steepest fall in such a short period in nearly 40 years of records, according to BMO Capital Markets.

[Eug]

Oil now down below $95 US. Yet, gas prices are at record levels. WTF?

Wholesale gasoline prices hit well over US$5 per gallon last week. They're at about $1.38 in Toronto, and were up to $1.50 in Montreal.

Yeah, Ike and all that, but as usual, the companies seem to have overcompensated.

[Dakar V]

Originally Posted by Eug 

Oil now down below $95 US. Yet, gas prices are at record levels. WTF?

I guess it wasn't speculation feeding gas prices.

[Doofy]

Originally Posted by Eug 

Oil now down below $95 US. Yet, gas prices are at record levels. WTF?

You're using less of it (save the planet, etc., etc..) but the supply chain still has those same overheads, regardless of how much you use. Use half the amount, it's going to double in price.

[Eug]

Originally Posted by Doofy 

You're using less of it (save the planet, etc., etc..) but the supply chain still has those same overheads, regardless of how much you use. Use half the amount, it's going to double in price.

That, of course, makes no sense whatsoever.

[Doofy]

Originally Posted by Eug 

That, of course, makes no sense whatsoever.

Well carry on saying "WTF?" then if you don't want to understand what's actually happening.

[Wiskedjak]

Originally Posted by Eug 

That, of course, makes no sense whatsoever.

It's simple. The gasoline suppliers have developed a set of fictional scenarios to constantly increase the price of gas.

"It's summer, people drive more in the summer and use more gas, so the price has to go up"
"It's winter, to keep their cars warm people let their engines run more and use more gas, so the price has to go up"
"It's fall/hurricane season, there might be damage to the gasoline infrastructure impacting supply, so the price has to go up"

They don't seem to have one for spring yet, but I'm sure they're working on one. Perhaps "It's spring, people aren't driving enough and aren't buying enough gas, so the price has to go up".

[Doofy]

No, it's even simpler than that.

Your gas station is 24/7 and has three people running it in 8 hour shifts. Let's say they each earn $100 a week. So, $300 per week.

Gas is at $1 per litre so to cover staff wages you'll be needing to sell 300 litres per week (let's keep it simple and ignore all that nasty stuff like actually having to buy the gas off someone in the first place).

Now, all of a sudden, for some reason (Al Gore) all of your customers have gone and ditched their F150s and bought hybrids. Let's say that the new vehicles use exactly half the amount of fuel that the old ones do.

So, your customers are now buying 150 litres per week instead of the 300 they used to buy. So that's $150 a week.

Oh crap. You're $150 short on paying your staff wages. So either you have to go out and find double the customers, half your staff wages or... ...put the gas up to $2 per litre.

This is, of course, massively simplified. But that's what's going on.

[Eug]

Originally Posted by Doofy 

No, it's even simpler than that.

Your gas station is 24/7 and has three people running it in 8 hour shifts. Let's say they each earn $100 a week. So, $300 per week.

Gas is at $1 per litre so to cover staff wages you'll be needing to sell 300 litres per week (let's keep it simple and ignore all that nasty stuff like actually having to buy the gas off someone in the first place).

Now, all of a sudden, for some reason (Al Gore) all of your customers have gone and ditched their F150s and bought hybrids. Let's say that the new vehicles use exactly half the amount of fuel that the old ones do.

So, your customers are now buying 150 litres per week instead of the 300 they used to buy. So that's $150 a week.

Oh crap. You're $150 short on paying your staff wages. So either you have to go out and find double the customers, half your staff wages or... ...put the gas up to $2 per litre.

This is, of course, massively simplified. But that's what's going on.

Massively simplified, and massively wrong too. Stop trying to get this thread locked by throwing in your political mumbo jumbo.

[Doofy]

Originally Posted by Eug 

Massively simplified, and massively wrong too.

Carry on saying "WTF?" then Eug.

[Wiskedjak]

Originally Posted by Doofy 

No, it's even simpler than that.

Your gas station is 24/7 and has three people running it in 8 hour shifts. Let's say they each earn $100 a week. So, $300 per week.

Gas is at $1 per litre so to cover staff wages you'll be needing to sell 300 litres per week (let's keep it simple and ignore all that nasty stuff like actually having to buy the gas off someone in the first place).

Now, all of a sudden, for some reason (Al Gore) all of your customers have gone and ditched their F150s and bought hybrids. Let's say that the new vehicles use exactly half the amount of fuel that the old ones do.

So, your customers are now buying 150 litres per week instead of the 300 they used to buy. So that's $150 a week.

Oh crap. You're $150 short on paying your staff wages. So either you have to go out and find double the customers, half your staff wages or... ...put the gas up to $2 per litre.

Or, you drop your overhead costs (staff). If people are buying less gas, then your store probably doesn't need to be open 24/7. Drop the graveyard shift ... that guy's probably making 50% more than the 9-5er as well.

In typical supply-and-demand economics, prices go *down* as supply exceeds demand. In gasoline distribution, prices go up with demand is high, and they go up when demand is low.

[Doofy]

Originally Posted by Wiskedjak 

Or, you drop your overhead costs (staff).

And if you're already on the buffers?

Originally Posted by Wiskedjak 

If people are buying less gas, then your store probably doesn't need to be open 24/7. Drop the graveyard shift ... that guy's probably making 50% more than the 9-5er as well.

But then, of course, the customers who want to fill up at 4 am before they head out to work will go to the station down the road, because they are open 24/7.

Like I said - it's massively simplified. Competitive constraints hold the buffers up to a certain expected standard.

Originally Posted by Wiskedjak 

In typical supply-and-demand economics, prices go *down* as supply exceeds demand. In gasoline distribution, prices go up with demand is high, and they go up when demand is low.

Oil is not a typical supply/demand scenario... ...because Joe Bloggs doesn't make it in his shed/factory and send it via UPS.

[Wiskedjak]

Originally Posted by Doofy 

And if you're already on the buffers?

The you close up shop. Or should we unionize the gasoline distribution industry?

Originally Posted by Doofy 

But then, of course, the customers who want to fill up at 4 am before they head out to work will go to the station down the road, because they are open 24/7.

Market economics. If one shop can't afford to stay open 24/7, then others probably can't as well. If only one can afford to stay open 24/7, then there's only enough room in the market to support one gas station at 4am. As a consumer, I don't feel I should have to subsidize someone's need to get gas at 4am when they could have filled up at 5pm the prior day.

Originally Posted by Doofy 

Oil is not a typical supply/demand scenario... ...because Joe Bloggs doesn't make it in his shed/factory and send it via UPS.

The only reason it isn't supply/demand is because the gasoline distribution industry has carefully crafted it that way, with the help of our governments. Of course, they're *very* quick to reference supply/demand when they claim they're increasing prices due to increased demand.

[Doofy]

Originally Posted by Wiskedjak 

The you close up shop.

Wrong. Since you and the rest of the industry don't want to retrain as graphic designers, you bump up the price... ...and then geeks talk about it on Internet forums.

Originally Posted by Wiskedjak 

Market economics. If one shop can't afford to stay open 24/7, then others probably can't as well. If only one can afford to stay open 24/7, then there's only enough room in the market to support one gas station at 4am. As a consumer, I don't feel I should have to subsidize someone's need to get gas at 4am when they could have filled up at 5pm the prior day.

You're misunderstanding me. My example was of a gas station, but this process works all the way to the top.

You think that tank inspection can be delayed for six months because you've only been pumping half the fuel? You think your trained distribution drivers are going to find part time jobs as cell phone salesmen because you're delivering less product and can't afford to pay them full time? You think you need that private army less because the whatever radical nationalists/terrorists will only try to blow the pipes half as often because you're pumping less product?

Originally Posted by Wiskedjak 

The only reason it isn't supply/demand is because the gasoline distribution industry has carefully crafted it that way, with the help of our governments

It's because it acts more like an on-demand service rather than a product. Even if you only fill up once a year, you expect the service station to be open and fuel available - and you're paying for that expectation of service.

[brassplayersrock²]

With all of the cars coming out with higher and higher MPG,electric cars ect ect I'm sure the fuel companies are getting a little worried, and now are keeping the prices high to compensate, even if the percentage of the higher MPG cars on the road isn't that high at the moment ( I have no sources, I'm assuming) It's simply greed that's keeping the fuel costs high.

[Eug]

Oil price down to $91. Our local gas prices went down about 6.5% today.

Gold is on its way up, but still is below $790.

[Dork.]

The Hurricane thing is a legit excuse. There are pipelines running from the Gulf all over the place. If a particularly big storm hits, at best these pipelines shut down for a few days. At worst, the refineries that feed these pipelines have to shut down for repairs for a while.

(Don't underestimate the effect of the pipelines on prices. Gas prices in Western New York are consistently higher than New York City, even though everything else is more expensive in the city. This is because there's a major pipeline form the Gulf that terminates there (Either Staten Island or Brooklyn, I forget where....)

When the supply goes down, and transportation costs go up (due to having to use tankers instead of the pipeline), prices will go up. After everything gets resolved, it will still take a few days for the price increase to unwind itself. Price increases do seem to happen faster than price declines.

[smacintush]

I just wanna congratulate the government for legislating a situation where all of our offshore rigs and refineries are in hurricane alley.