PaoloSmythe

okay, so i appreciate that some / most in here prolly think i think i know everything. well i know you are wrong!

i am completely bemused by the conscious policies which influence the cost of oil, so if any wouldbe Wall Streeters can help me in my confusion i will be grateful.

we are all of course aware of the increase in the price of oil and thus petrol; due to hurricanes, wars, pesky russians etc.....

like an increase in tax, the public are given the news of these higher expenses with much apology and excuses for why it is not the fault of government or oil corps etc.....

but when peace comes along, or when hurricanes turn out not to be so bad the price of oil goes down, but that of petrol does not.

and then yesterday i hear, that due to the 'credit crunch' causing a decline in oil use, oil producing nations are going to reduce their supplies, to INCREASE THE COST OF OIL!

for all the apologies regarding a hyperinflating price of oil, now that there is the chance of perhaps giving us back some of our loses, if not simply making it a reasonable cost.... they are actually and publicly taking steps to make an expensive thing even more expensive, even tho they have every opportunity to make it cheaper for us.

and this is presented and even received as being no big deal?

i just do not get it. at all!

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nzboardlife

Its getting cheaper here...

I think everything like this just boils straight back down to the base idea of demand and supply. Hope that doesn't sound to stupid and obvious, but with our relentless demand and NEED for oil and the decline in oil (so they say), there is no where the price can go but up.
But that doesn't answer your question, does it? ... i'll wonder off now.

PaoloSmythe

i appreciate factors such as supply and demand influencing whether a market is favouring the buyer or seller;

but in this case surely the trend runs contrary to this rule of commerce.

when supply exceeds demand, it becomes a 'buyer's market' due to prices falling, in order to promote greater sales in a stagnating market.

now of course the fact that this oil indistry is supplied by a cartel makes things tricky; but in light of the recent climate of spiralling oil costs, this is all just too brazen to be true. isn't it?

__________________
Just coz you don't understand it
Doesn't mean it makes no sense!

Mooz

Oil and especially oil futures are no longer responding to supply and demand. They haven't been since the 80's. The current price of oil is influenced by a lot of things but the biggest influence (right now) is the buying and selling of oil futures. It's the new housing/dotcom bubble. Or at least it was back in July. Right now we're currently looking at a surplus (meaning we pump MORE than we use) of I think 1.5million barrels a day. With OPEC's recent cut, it's a surplus around 1 million. OPEC cut their output in an effor to prevent another 1998. Back then they pumped so much oil that no one was trading on it and the price fell to $10 a barrel. This hurt oil producing nations pretty bad since it's damn near their only export.

The sharp increase in oil prices lately has been driven almost entirely by people/corporations buying large quantities of oil and oil futures only to resell them at a higher price. These are then bought and sold by another company and another company etc. Most of these are trading hands 5 or 6 times before they get to a company that will actually USE them to produce gasoline or other petrol based products. This inflates the price WELL beyond demand as seen this last july. Oil really should be at $65-$70. That's would be a true supply vs demand situation. National governments need to take steps to prevent mass speculation especially the kind that allows you to bet on the increase in the price of oil without having to even BUY the shares. Until this happens, we're just setting ourselves up for yet another bubble.

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nzboardlife

well there we go, awesome explanation

Mooz

And right back in we go!"

I'm a free market guy and not a big fan of gubment meddling but SOME regulations are needed. Uptick rule good, ban naked short selling good, etc. This is where congress needs to focus some time. Not their petty squabbling. And Fuck Pelosi for talking about how much more the demo congress will get done and how many more days they're going to work. Didn't do shit and took more time off than the damn repubos.

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oneplankawanka

Its hard to get anything done when the pretender and thief can veto anything and everthing he dislikes...or doesen't bode well for his crony shill appointees and the military industrial complex.. so socialism is good when it comes to bailing out corrupt CEO's and greedy bloodsucking corporations but not when it comes to health care or offering help to everyday people?? and we taxpayers end up holding the bag...get real "The best socialist republic we can muster?? only when it comes to the haves and the have mores??? we need change man..

Mooz

That's a pretty weak excuse for not showing up on the hill to at least vote on stuff. As for the AIG and Fannie bail outs, that HAD to be done. Without going into a long economic explanation, leaving fannie/freddie/AIG to go under would have caused a global depression that would make the Great Depression looks like a rainy day at the park. And companies like AIG got wrapped up in other people's mess. They insure things like loans. They actually have 78billion MORE in assests than they have debt. They just can't convert those assest to cash overnight. And they didn't need to until panic and naked short selling bottomed out their stock in just days.

I know people keep making the lame "we could have national health care instead!" but if it weren't for these bail outs, health care would be the last thing on our minds.

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PaoloSmythe

and there lies the responsibility; are you telling me that know one had any foresight over the last few decades?

there is either incompetence or corruption at the heart this

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Just coz you don't understand it
Doesn't mean it makes no sense!

Mooz

Congress is so out of touch with the rest of the nation that yes, they had zero foresight to see this coming. I blame their incompetence. I blame corruption on the big wall street players. And not just corporations mind you, individuals do a lot more to manipulate the market that you can imagine.

A lot of the actually companies blundered into this on sheer incompetence. They didn't see it as a "wow lets milk this dry and to hell with what will happen". They saw an endless bucket of wealth and failed to pay attention to the hell they were causing.

However, bitching and moaning about what should have been done does nothing to fix the current situation. A fix would also include preventing anything like this form happening again.

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I have a word limit on my cynicism