Forbidden Donut

you've got most of it...maybe there was more to what al-Badri was saying (china ftw). There are a shitload of factors that affect prices: consumer supply and demand, crude oil supply, refinery disruptions, pipeline issues, etc. He's right in that there is no oil shortage; the common misconception is caused because most people don't know or don't acknowledge the difference between proven and unproven oil reserves.

In the industry we use "P90" to describe "proven reserves", i.e. "we have 90% confidence that we can produce xxx barrels according to our research, modeling, etc". P50 cases are classified as "probable reserves", and P10 cases are "possible". The proven reserves is already a large number, and it doesn't even include anything less than P50 cases. So as current technologies like SAGD, VAPEX, CSS, etc. improve, the reserves estimate will rise and cut production costs, lessening the strain on the market. (assuming the govt doesn't fuck us with carbon emissions bullshit and royalties)

but don't crude oil supply, refinery disruptions, pipeline issues, and other production distractions contribute to the supply and demand that there seems to not corrolate with prices at all?

All the things i listed are independent of supply and demand. Rather they, along with supply and demand, contribute to market prices

Let's see if I can throw some fuel on the fire (pun... slightly intended).

http://www.sfgate.com/cgi-bin/article.cgi?...2/BU6AUQMT9.DTL



I'd like to restate: "No American business has ever scored a higher profit".

I'll admit. They are good business men in the oil industry, but gasoline is a necessity in America, today. They could double the price and people would still buy gasoline, because they have to.

edit: for clarity...

No kidding, I went in to put 20 in the tank and i saw a guy wanted to put in $4.53 to get to work for his paycheck.

Edit* was all change from the car cupholder.

i think you're confusing oil and gasoline. oil is the same thing as gasoline, gas = natural gas (like methane)

The confusion isn't on his end. His language was just inaccurate. My basic problem with the oil industry is that the amount of rampant speculation involved in setting the price of something that should really be considered a commodity is out of control. They are no longer required to give real reasons because of all the ammunition they have accumulated over the years.

1) Instability in oil producing regions
2) Instability in transportation of oil
3) Disruptions in refineries
4) Disruptions in tankers
All contribute to the supply of oil. Directly. Having a busted pipeline doesn't inherently make oil cost more. It makes oil harder to come by for a bit and people charge more for it as a result. The market always has and always will boil down to those 2 factors exclusively. Supply. And Demand. except oil

BREAKING NEWS LOL
Oil +1
$118
Nigeria is experiencing "unrest".
They produce 2.5 million barrels per day and export 2.15 of them vs the US producing 8.37 million bpd and exporting barely any.
see here

i think for one of the world's biggest businesses, something that happens today, shouldn't have any affect today...i feel like this is backlash from months ago.

who knows.


ALSO: i think once george bush is out of office, the gas situation will get under control. if he cuts budget for fuel, it's coming out of his pocket.

i think there are many things people can do to remove the stress of the rising gas prices:


1. make sure your car is maintained: (tire pressure, oil changes on time are both crucial to getting the most from your cars fuel) people with older cars, make sure they've had a tuneup within the last 20-30 thousand miles. a tune up can run you 100 bucks at a garage but can save you a lot more if your car is running efficient.

2. if you know someone that drives a gmc yukon denali, punch them square in the junk until they realize they're useless and you no longer value them as a friend.

3. don't feed into these useless chain emails/facebook groups. picking and choosing which gas company you buy from isn't going to do shit. not buying gas on a certain day isn't going to do shit.

The attacks on one of Nigeria's pipelines temporarily slowed the transport of 169k barrels per day in the country occurred this weekend. So not quite today, but not weeks old either.

And the point isn't that we are a gas hungry nation. Though that's true and there are a lot of things including those that we can do to help change that, there is no evidence that if we were to decrease our dependence on oil that prices would go down. On the contrary, smaller demand is the reason that oil jumped above 115 a couple days ago. Smaller demand = smaller profits = higher prices = same price at the pump overall...

My problem with all of this is that we're being toyed with by an industry and I frankly think they are raising prices because we can't stop them and all they have to do is watch current events and emphasize the ones that have effects on their business.

Also this is a problem. Oil refineries aren't making enough money apparently and so they need to slow production to lower their overhead. This will also drive up prices because supply will drop, increasing the profitability of the refineries, allowing them to increase production again.... I guess.

edit 2:
I also think it's fishy that oil companies like Exxon are posting record profits, but gas refineries are posting losses.

the hardline is the two-headed dildo of the weakening dollar and crude oil prices man. A near infinite supply of anything isn't gonna matter much if your currency's worth dick all, ask any german. It is also significantly more technically difficult and time consuming to extract oil from reservoirs, as well as processing, compared to a few decades ago. Political instability, facilities disruptions, consumer demand, and all that other shit contribute to minor or short term fluctuations. I don't think speculation has much, if anything, to do with it. There is no 9/11 conspiracy. And i'm not just saying that because i work in the industry. /smile.gif" style="vertical-align:middle" emoid=":)" border="0" alt="smile.gif" /> And even if you, the consumer, makes a conscious effort to "decrease your dependence on oil", how much do you really think you could cut? Enough to offset worldwide demand (esp. China)?

I'm not proposing any sort of conspiracy. At least not in a real capacity. But to say that speculation has nothing to do with it seems a bit nitpicky. All those factors are all speculations by nature. Oh, this country we get oil from happens to have trouble brewing. We speculate this will make oil harder to get. And should therefore be more expensive, not for us to buy, but for us to sell. Every distributor of oil has a stockpile of their own, and they price that stockpile based on what could be going on in the world around them in the near future.

Plus our dollar isn't really worth dick all yet. And oil prices are rising around the world, not just here. I didn't mean to sound as crank-pot-y as I did, but if anyone here doesn't think that the goal of oil companies isn't to increase profits then they don't understand how corporations work. And they've found a really easy way to increase profits that almost no other industry can leverage. They simply raise the price. If this were ANYTHING but oil we'd be crying foul.

Whether they have good reasons or not, I think it's important that we not stop questioning their validity.

I agree that the main problem is the weakening dollar.

I just can't understand why the consumers feel it, but the oil companies are making record profits. If the oil was getting more expensive, and the oil companies just passed the increase to the consumer, the oil companies shouldn't be making record profits. It doesn't make sense, unless they are raising the price up beyond the increase of the oil.

Now, I may just not understand the complexities of the oil/gasoline business, but the way I understand business, if the costs of producing your product goes up, you aren't expecting to post record profits.

i like the idea of nationalizing blends of gasoline. instead of refineries having to make 50+ diff types of blends for different states, they should just make 3. im probably naive because more than 3 are needed, but it still sounds good.

That would definitely reduce the overhead for the refineries which would eliminate one of the troubles. And yeah, if I can drive my PA car to Arizona and get gas there and have it still work, but the refinery had to make it special... I can probably live with the same gas they use there in my home state.

$119.37 on "news" that the dollar is weak and there are supply concerns. Really? I hadn't heard. A shame we didn't know this yesterday or we could have raised the price then instead.

qft, they latch onto any reason to raise the price by a dollar a friggen day

Okay I did some poking around and saw a couple things. I compared Oil prices with the strength of the dollar and the daily production of oil in 2000 and 2008. I saw this:

2000 - 1 Euro = 1 Dollar source
2008 - 1 Euro = .66 Dollars source
Ergo the dollar experienced a 33% loss

2000 - Opec Production = 25k barrels per day source
2008 - Opec Production = 26k barrels per day source

2000 - $40.00/barrel source
2008 - $120.00/barrel source
That's a 300% increase

I fail to see the correlation.

Using a currency that can change over time (inflation/deflation) as a method to rate the change in another currency isn't the best argument.

What I'd like to see, and will most likely research later the change in the dollar as rated by common goods, such as bread, milk, house.

I refrained from that comparison because it's apples and oranges. We know our money is worth less when it is worth less compared to other money. You're adding another variable. The prices of those goods and/or services fluctuates not only based on the free market but ALSO based on the value of money. You can't possibly get an accurate idea of how much the dollar is worth that way.

Oh, and this means gas prices should go down right? Bad news for oil production means it gets more expensive... so good news should mean the opposite... right?

Brazil's discoveries of what may be two of the world's three biggest oil finds in the past 30 years could help end the Western Hemisphere's reliance on Middle East crude, Strategic Forecasting Inc. said.

I thought about putting this in the things we're proud of thread. Because seriously, it's about time those analog gas pumps met their match, and I'm proud it happened while I was alive.

lol jk

Apparently, when you pump gas at a constant rate, and the price increases, the rate at which the cost rises also increases. I'll be damned. So these analog pumps have finally reached the limit at which they can record the cost. Suckers.

I suggested to use the comparison that I did, because that was what I was taught in economics class. And it isn't a perfect measurement, but it tends to demonstrate the value of the dollar. If $3 could feed a family fifty years ago, but it takes $20 today. We can effectively see the amount the dollar has fallen.

I agree that the British Pound and the Euro are decent markers, because of how stable they have been. But the truth is that all currency is measured by what it can buy you.

^ he's right...that's why we used to be on the gold standard...1 dollar used to be worth 1 oz of gold on the world market.

That doesn't work anymore. It worked great with gold when gold WAS the standard. But there seriously isn't a standard today. The value of gold is variable on too many levels. The STRENGTH of a currency, IMO is best represented as it's strength relative to the rest of the world. Here's a hypothetical example:

2000: Item X costs $1/each and 1 Euro/each
2010: Item X costs $2/each and 3 Euro/each
The dollar is stronger even though it buys less of the item, because the value of the item has also increased as dictated by the world market.

2000: Item X costs $1/each and 1 Euro/each
2010: Item X costs $2/each and 1 Euro/each
The dollar is weaker because the item isn't worth more anywhere but here, indicating that the increased cost is a direct result in the value of our money, rather than simple market fluctuations.

It'd be really nice if things were as simple as they were in the 1800's when our money cost less to produce than it was worth, and it was a symbol of something real, and was only traded internally in the country.

Ron Paul. http://www.youtube.com/watch?v=AMe_7-hmHHY

Actual Post:
The problem that you have pointed out is one that the equation that I was taught in economics has tried to accommodate. It doesn't take in any single item as its standard. You can use one item, but that won't calculate the inflation properly. You have to use a variety of items.

And the problem you state for using commodities as a measurement may also apply to use of currency.

2000: Item X costs $1/each and 1 Euro/each
2010: Item X costs $2/each and 3 Euro/each

In 2000, the currency could be considered about equal. In 2010, maybe item X has changed, but the currencies may have changed as well. Maybe the dollar fell, but the Euro fell further. Maybe the item's value increased, the dollar increased and the Euro stayed the same. Maybe the Euro fell slightly, and the dollar didn't change one bit, but item X's cost increased.

The only way I know to measure currency is by what it buys.

idk. I said nicer but I meant easier. I don't know enough to say that I think these kinds of changes would actually help at all. But they would certainly make it more accessible for the average joe to understand and therefore provide oversight into our government planning.

Also this is a really great visual representation of our income distribution. Ima turn this into an Obamania thread and say that if you look at that there is no way you can say that we don't need to start taxing people for exercising their capital advantages.

CNBC doesn't seem to think that goods are the way to measure the value of currency.

That point aside, the dollar is up! Or at least less down. And OPEC seems to think that increased oil prices are a result of the weakening dollar, saying that if the dollar's value were to fall 1%, then the cost of oil would rise $4/barrel. Conversely if the value of the dollar were to rise that 10% then the cost would drop by 40%

40% of $120 is $48...
1% fall... $4 increase.
10% rise...$48 decrease. I'm glad that the people who are supposed to be johnny on the spot with the economic situation surrounding their good/service are so very good at numbers.
article2

and I don't care how weak our dollar is. This is stupid.

Get it spell checker....

What you're failing to take into account is China and India -- the two most heavily populated nations on the planet, entering more fully into the latter part of the 20th century on average(with many people in their countries entering the 21st with the rest of us).

So no small amount of the price increase you're seeing is the result of "middle-class" people in China and India upgrading from their bicycles to cars just like the Americans use...

Minimal increase in production + significant increase in demand = lower excess supply of goods = increased perceived scarcity of goods = increased cost of goods.



The other side of the coin is looking at food based commodities can skew the numbers because of another problem: Ethanol production. It's more profitable for most farmers to grow crops for Ethanol production at this point in time than it is for them to actually grow food. Which means we've decreased production of foodstuffs for the purpose of eating it while demand for food is largely unchanged(if not growing)... Which in turn has increased the cost of many types of food. Another one that many people in here may have noticed is that beer is costing more to buy now. Seems a lot of Hops growers have switched to supplying Ethanol producers instead, causing the price of Hops to go up, which is being passed on to the consumer in the form of beer costing more.

http://www.msnbc.msn.com/id/22808209/

It's also going to start hitting other parts of the food industry as well, as chicken feed, feeding cattle, etc is becoming more expensive because its more profitable for Farmers to grow crops in support of Ethanol production than it is for them to grow that stuff.

You saved yourself with that "perceived". There is no real shortage atm. What's annoying about this is that your still right. They can use the perceived supply problems as leverage for price increases. So they do. It's dick. I'd be interested in seeing some data about the increased demand in IndoChina. I bet it's a really small percentage. Both nations were pretty well industrialized and had airports, shipping ports, etc. Cars contribute so little to the overall carbon footprint. Though the sizes of the populations might make the difference. I'm too lazy to look it up atm. Maybe later.

**discussion intermission**
if i may wield the dan-stick for a moment-o





**resume**

His right moves so very little. I find it so compellingly still.

http://sandia.gov/news/resources/releases/.../oilprices.html



http://www.eia.doe.gov/cabs/China/Oil.html

Shows 4.8 Million Barrels per day of oil consumption in China in 2000... Which puts the 2006 numbers (7.356 million barrels per day) at 52% higher than their rate of consumption in 2000.

Add another 3.5% on top of that for 2007(sandia's numbers) and we're up to 7.613 million barrels per day for China, or a 58.6% increase in demand for Oil in China since 2000... And those numbers are continuing to go up for 2008.

And for India:
http://www.eia.doe.gov/cabs/India/Oil.html

Oil consumption in 2000: 2.1 Million Barrels per day
Oil consumption in 2006: 2.65 Million barrels per day

...not nearly as bad as China, but it still is a 26% increase in demand over 6 years.

Oil ocnsumption/production/imports/exports for the US:

http://www.eia.doe.gov/emeu/aer/txt/ptb0501.html
Oil consumption in 2000: 19.7 million barrels per day
Oil consumption in 2006: 20.588 million barrels per day

...for a 4.5% increase in oil consumption in the United States over 6 years.

QQ

http://www.geekculture.com/joyoftech/joyarchives/1101.html

I died a little inside.

Data
2007:
US: 20,730,000 bbl/day
China: 6,534,000 bbl/day
India: 2,450,000 bbl/day

So since 2006, oil consumption has
risen 130,000 bbl/day in the US
fallen 820,000 bbl/day in China
and fallen 200,000 bbl/day in India
for a total drop in consumption of 890,000 bbl/day

Oil Price 2006: $75/barrel
Oil Price 2008: $120/barrel
for a total increase in price of $45/barrel

Clearly demand is the force at work.

scroll down to the bottom of that table you cite:



You're time traveling to get that decrease in consumption.

The CIA World Factbook was likely using the 2006 estimate at that point in time.

And going back to look at your numbers of:
China: 6,534,000 bbl/day

compared to:
https://www.cia.gov/library/publications/th...os/ch.html#Econ
6.93 million bbl/day (2007 est.)
As pulled from there today(5 May, 2008)

And we have a 400,000 bbl/day increase in demand over the course of one year(roughly a 6% increase in demand)... Not a decrease like you tried to claim.

And going back to look at your numbers of:
India: 2,450,000 bbl/day
compared to:
https://www.cia.gov/library/publications/th...os/in.html#Econ
2.438 million bbl/day (2005 est.)
As pulled from there today(5 May, 2008) -- We're probably looking at the same numbers for India that he pulled in June of 2007 and the descrepancy in numbers was probably due to a downward revision in the estimate.

I do find it interesting that the CIA world factbook gives an oil consumption number for China in 2007 that is less than the DOE's number for 2006. And that what I presume the CIA's 2006 numbers were(which is what I think you cited) was a level of demand that DoE's numbers indicate was reached sometime between 2004 and 2005. So if I had to guess, it seems that the CIA numbers are running about a year behind the DoE numbers for some reason.

Edit: Or another option, it seems the numbers from the DoE site are likewise old, probably from early 2006 or there abouts. The 2006 consumption number on the DoE site was a forecast of average consumption. Not an estimate of consumption that had already happened(and their 2005 number was likely to be a very rough estimate at that point in time, hence it showing red in the spreadsheet). Which is where that difference in numbers with the CIA is coming into play. The percentiles that Sandia Natl labs was giving on the other hand weren't forecasts, they were estimates of consumption that has already happened.

This just makes it seem like nobody actually has any real numbers on it and they're always estimating. Since we're talking in terms of 1 or 2 years the data doesn't really constitute a trend anyway. So I'll just say this. When the US is consuming 25% of the worlds oil, and our usage drops, prices should drop. Period.

After 9-11 US consumption fell. Prices rose.
around 2003-2004 consumption saw a brief rise, presumably because of the war blah blah. Prices rose.
between 2005 and now consumption has fallen. Prices have risen faster than ever before.

But its a moot point because OPEC themselves said that oil prices have little to do with supply and demand. Which is how I started this whole thread.

$120.21
Prices continue to rise as people continue to be surprised by the things the news has been saying for months.

Most economic data remains an "estimate" until 1 or 2 years after the fact when dealing with "first world" nations such as the United States. Generally speaking, the estimates that are out within ~6 months of the time period in question are very close to the "final numbers" that get put out there.

I'd lay odds on the DoE site I linked to having numbers for 2005 that aren't in red on the spreadsheet sometime in June or July, as they update that site to have numbers for 2007 on it. If that particular page is still being maintained(it may not be).

Dealing with more "third world" nations gets more interesting when trying to do economic analysis on them. Record keeping may not be as good, and as such, may not be accurate at all. Which means more time is need to collate the various data points that do exist to try to come to a more solid number on where things stand there. So seeing them still classify India's consumption numbers for 2005 as an "estimate" isn't terribly surprising.

And where have you seen indicators of US Demand dropping? The sources I've found indicates US Demand for oil is continuing to increase, albeit at a greatly reduced rate... Unless you're discussing seasonal demand, which does run in cycles and is somewhat meaningless in the discussion of Oil prices. It will go down in some months, but it goes up in other months... And the trend(over the course of a year) will be a net increase.

Now Gasoline Prices are another story, but that has a lot more to do with refinery capacity in the United States, and that fact that we have like 300 different "blends" of Gasoline...

But going back to this:



2 years of data doesn't constitute a trend, and 6 years(2000 to 2006, which I have cited) evidently doesn't either?

And then you're talking about how US consumption of Oil has been dropping? It certainly wasn't prior to 2005. Which means that you have less than 2 full years to work with on demonstrating a "trend" in that direction. (Using numbers for 2007 that aren't reliable just yet)

Going back to this table:
http://www.eia.doe.gov/emeu/aer/txt/ptb0501.html

The only years in this decade that saw a decline in petrol use was:
2001 (52,000 fewer barrels per day versus 2000)
2006(estimate) with 214,000 fewer barrels per day versus 2005

...compared to:
China's (forecast as of August 2006) increase in consumption during 2006 of 456,000 barrels per day versus 2005.

So yay, the US used almost a quarter million fewer barrels of oil per day in 2006, while China started using almost half-a-million more barrels of oil per day. I think I can why lower demand in the US failed to result in a drop in the price of oil...

My point is that all the data, all the facts and numbers and rationales behind higher oil prices are inconsistent not only with reality, but also with OPEC's previous rationales.

When somebody tells me that they are doing things a certain way because X is true. Then 2 years later they turn around and say they are doing it because X ISN'T true, I'm inclined to think that neither reason is real.

Sidenote:
While campaigning it seems that the black guy with a funny name was somehow responsible for a ceasefire agreement in Nigeria. A hotspot and key oil producer where tension around oil pipelines has led to higher oil prices.

BEHOLD AS ALL OF OUR HYPOTHESIZING COMES TRUE AND GAS PRICES FALL BECAUSE OF THIS GOOD NEWS!

$123.80
"Government report shows that crude inventories jumped more than expected and gasoline stockpiles grew."
o_O

SHENANIGANS

$125.98
On news that nothing changed whatsoever. Nothing to see here. Move along.

To quote CNN Money in the article you linked:






The other side of the equation is that CNN Money was reporting on a report from Energy Information Administration (the place I've been citing), which was reporting on US Inventories only. The Crude oil market consists of a lot more countries than just the US. Just because we're building a larger stockpile of fuel supplies on hand for domestic consumption doesn't mean that Oil consumption numbers in other countries have gone down.

<=== doesn't buy it
<=== thinks it's all made up
<=== also thinks the stock market is the ultimate ruination of the human race

^ apparently thinks capitalism is wrong, despite it being the emerging system in every country of notable success.

I've got no problems with capitalism. But capitalism doesn't necessitate a stock market.

Go ahead and invest in companies. Don't speculate on commodities please. Without some sort of forum for monetary exchanges (like the market) a ton of companies wouldn't ever have been able to get off the ground. I just don't think that forum needs to be as much of an international clusterfuck as what we're doing now.

Right now, when people hear that the price of oil has been going up steadily and is projected to basically double in price they are going to do the only thing that makes sense in a free market. Help drive it up there faster. Jump on board and get off just before the bubble pops.

It would be less annoying if everyone could participate in the market in a meaningful way. But when less than 1% of the people have more than 99% of the money... I'm less optimistic.

I heard that Nigeria just bought a 100-year lease to explore for oil in some part of the Gulf of Mexico while the US is not willing to do so. Don't the stupid environmentalists who prevent us from doing so realize that we would get the oil out in a more environmentally friendly way than fking Nigeria would??!@?@!?@!?

Well Nigeria will probably just lease it to a U.S. or Euro Country. Then they will exploit the finds while adhering to the STRICT drilling/recovery standards of Nigeria.

Just a bit of sarcasm there. "BIG OIL" most likely gave Nigeria the money to lease it. For the above mentioned reason.

Sometimes I am a pessimist. (> 99.8% )

(sometimes I also post with a buzz, like now)

$126.27 on news that people with money can predictably make money by spending their money on driving up the price of oil. If only there were some economic jargon that described this phenomenon...

I find if funny how financial news sources treat record oil prices as a good thing. Maybe they are too busy speculating on what's going to happen tomorrow to think about what happened 80 years ago and what could happen 2 years from now if they keep this crap up.