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You are here: MacNN Forums > Community > MacNN Lounge > Political/War Lounge > Drill, baby, drill,.........

Drill, baby, drill,......... (Page 2)
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stupendousman
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Nov 14, 2008, 05:30 PM
 
Originally Posted by Dork. View Post
Are we still talking about this?

I see two main reasons why the price of gas has gone down:

- Greatly reduced demand from China. Their consumption went up widely as a result of the Olympics, it was bound to go down afterwards.
I'm pretty sure the worldwide demand difference pre-post Olympics was a drop in the bucket. The Olympics ended in late August. The drop started in July.

It was more than just the mortgage markets that collapsed, it was nearly the entire lending system. This is just a hunch, but the speculation that was present in the crude oil market in the Spring and Summer was probably heavily leveraged. When credit markets froze, these folks couldn't be leveraged to the same extent and had to reduce their exposure to the market.. Without speculators giving support to prices, they fell.
All this happened months after prices started to fall, and kept falling.

Both explanations are more plausible then the notion that we scared people off by threatening to drill. I'm sure the OPEC folks quake in their sandals every time an American says "Drill Baby, Drill".
Neither explanation is plausible given that they both require information that was not in hand in July when prices started their downward cycle. If you don't believe that the OPEC guys quake in their sandals every time something happens that takes even a little bit of leverage away from their cartel, you don't understand the way they operate. They are constantly maneuvering in order to ensure that they have price control, and when they don't they are in a panic. Right now, they are in a panic.
     
hyteckit
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Nov 14, 2008, 06:08 PM
 
Allowing offshore drilling 50 miles from the coastline is the reason from the price drop in oil.

Right.

And electric power cars, ethanol fuel, windmill farms, and alternative fuel investments is the main reason prices of oil drop.

Speculators always look 10 years into the future for short terms gains.

Oh brother.

Investors look for long term gains and speculators look for short term gains. Speculators don't look what will happen in 10 years. They look at what will happen in the next few months or the next year.

If the global economy isn't tanking, the price of oil would continue remaining at its high price, regardless of whether offshore drilling is allowed or not.
Bush Tax Cuts == Job Killer
June 2001: 132,047,000 employed
June 2003: 129,839,000 employed
2.21 million jobs were LOST after 2 years of Bush Tax Cuts.
     
Dork.
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Nov 14, 2008, 06:51 PM
 
Don't kid yourself, Stupendousman. Folks who were paying attention knew about the bit with China and may have started bailing out beforehand. Plus, it's not like credit got frozen everywhere all of a sudden, it took a while to develop and it's feasible that it was starting to freeze up in July. I still say it's more plausible than OPEC getting jittery over our talking about drilling....
     
Shaddim
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Nov 14, 2008, 07:10 PM
 
$1.79 here for regular. Today I noticed that people have dusted off their huge SUVs and were out cruising like it's 1999.
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
- Thomas Paine
     
stupendousman
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Nov 14, 2008, 10:21 PM
 
Originally Posted by hyteckit View Post
Allowing offshore drilling 50 miles from the coastline is the reason from the price drop in oil.

Right.
Again, you fail to see the big picture. Allowing the drilling signaled that the price of gas was sufficiently high enough to exact enough political pressure on the elected representatives of the United States to ACTUALLY ACT in a way that would influence supply and demand. You mention all the other alternatives that WOULD ALSO likely follow if we are going to take the initiative to start drilling in places we hadn't before.

I guarantee you that the people betting on oil prices know that the US left won't allow drilling unless alternatives are also invested in. The "big picture" created by Bush's announcement was just what the markets needed as a signal that the "jig is up" and that the artificially high prices for fuel would not withstand the long haul if the actions discussed where taken.

I'm sorry if you don't understand how markets work, but I assure you that Bush's action was a HUGE reason why the prices started immediately declining right after he did what he did.

Again, while the economy wasn't great at the time the price started dropping precipitously, there were no clear signs that the current credit/mortgage crisis was imminent and even now there's no clear sign that supply/demand will be changed so greatly as to justify a halving of the price of gas in just a couple of months. Your theories just don't make any sense. I on the other hand predicted precisely what would happen 5 months ago.
     
hyteckit
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Nov 14, 2008, 11:26 PM
 
Originally Posted by stupendousman View Post
Again, you fail to see the big picture. Allowing the drilling signaled that the price of gas was sufficiently high enough to exact enough political pressure on the elected representatives of the United States to ACTUALLY ACT in a way that would influence supply and demand. You mention all the other alternatives that WOULD ALSO likely follow if we are going to take the initiative to start drilling in places we hadn't before.

I guarantee you that the people betting on oil prices know that the US left won't allow drilling unless alternatives are also invested in. The "big picture" created by Bush's announcement was just what the markets needed as a signal that the "jig is up" and that the artificially high prices for fuel would not withstand the long haul if the actions discussed where taken.

I'm sorry if you don't understand how markets work, but I assure you that Bush's action was a HUGE reason why the prices started immediately declining right after he did what he did.

Again, while the economy wasn't great at the time the price started dropping precipitously, there were no clear signs that the current credit/mortgage crisis was imminent and even now there's no clear sign that supply/demand will be changed so greatly as to justify a halving of the price of gas in just a couple of months. Your theories just don't make any sense. I on the other hand predicted precisely what would happen 5 months ago.
I'm sorry you don't know how the market works.

I predicted the economy is going to tank and price of oil is going to drop 6 months ago. I predicted the stock market was going below 10k after Sept.

I predicted that a Republican president like Pres. Bush is a disaster to our economy 8 years ago.

Saying just because offshore drilling 50 miles from the coastline is the main reason for the price drop in oil is ridiculous. You make it sound like only OPEC and the US can actually drill for oil.

You really think OPEC is saying: Oh no, US can now drill for oil offshore. We are doom!
Bush Tax Cuts == Job Killer
June 2001: 132,047,000 employed
June 2003: 129,839,000 employed
2.21 million jobs were LOST after 2 years of Bush Tax Cuts.
     
CreepDogg
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Nov 15, 2008, 05:23 PM
 
Originally Posted by stupendousman View Post
Can anyone find for me the true numbers regarding drop in demand for oil over the past couple of months?
Here you go.

EIA - Short-Term Energy Outlook

U.S. Petroleum Supply, Consumption, and Inventories

The first link is a summary. The second is an interactive data interface. Obviously final 2008 numbers are not available yet, but there's a projection in there saying expected 2008 consumption is to drop about 1.1M bbl/day, or 5.4% from 2007. If you look at the data, you can play with it and display monthly numbers, which are actual through October 2008. You'll see a steady drop in consumption through 2008, with the larger drops and low points in July, August, and September. Not surprisingly, consumption has gone up a bit in October, likely due to the realization of lower prices, and probably somewhat from entering heating season which is even less elastic consumption.

The EIA is also projecting US consumption to drop in 2009, albeit less than it did from 2007 to 2008. World consumption is projected to increase very slightly in 2008 and 2009 (less than 0.1%).

But of course, these factors couldn't have (or have had) anything to do with prices.
     
stupendousman
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Nov 16, 2008, 01:02 AM
 
Originally Posted by CreepDogg View Post
But of course, these factors couldn't have (or have had) anything to do with prices.
A 5% change in supply/demand can cause a 50% change in the price of gas.

Logically, a smaller change - say the amount cased by a big increase in output by the United States via increased drilling, should result in at the very least a stabilization of current prices.
     
Wiskedjak
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Nov 16, 2008, 01:08 AM
 
Originally Posted by stupendousman View Post
Logically, a smaller change - say the amount cased by a big increase in output by the United States via increased drilling, should result in at the very least a stabilization of current prices.
Or, more likely, increased profits for oil companies.
     
CreepDogg
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Nov 18, 2008, 11:14 AM
 
Originally Posted by stupendousman View Post
Logically, a smaller change - say the amount cased by a big increase in output by the United States via increased drilling, should result in at the very least a stabilization of current prices.
Or OPEC cutting production by that amount to keep prices up.
     
stupendousman
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Nov 19, 2008, 10:06 AM
 
So how's OPEC control of prices working these days?
     
CreepDogg
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Nov 19, 2008, 12:26 PM
 
Originally Posted by stupendousman View Post
So how's OPEC control of prices working these days?
Are you claiming that the actions of any one supplier (or cartel of suppliers) has little impact on price? Interesting.
     
stupendousman
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Nov 19, 2008, 04:14 PM
 
Originally Posted by CreepDogg View Post
Are you claiming that the actions of any one supplier (or cartel of suppliers) has little impact on price? Interesting.
No, I'm not claiming that. I'm claiming that their power is reduced when the market sees they don't have almost total control of new supply.
     
CreepDogg
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Nov 19, 2008, 04:26 PM
 
Originally Posted by stupendousman View Post
No, I'm not claiming that. I'm claiming that their power is reduced when the market sees they don't have almost total control of new supply.
They never have. Look in the link above. They supply about 32M bbl/day, give or take. That leaves about 48M bbl/day from other suppliers, give or take. So, in the past few years, if those the market 'saw' that OPEC has 'almost total control' of supply, they're not very smart.

They do have more control over marginal supply than another individual supplier who produces less than them, though. Their choices to increase or decrease production impact revenue less (on a percentage basis) than it would a smaller supplier.
     
Wiskedjak
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Nov 19, 2008, 04:28 PM
 
Originally Posted by stupendousman View Post
No, I'm not claiming that. I'm claiming that their power is reduced when the market sees they don't have almost total control of new supply.
Because America's oil supply is a massive threat to OPEC's dominance?
     
 
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