Gas

[Jenny Z]

You might want to fill up before tomorrow... I just went, the gas stations are already getting a bit crowded. :P

http://money.cnn.com/2008/06/06/news...ex.htm?cnn=yes

[kenw]

yup, it went up a bunch today: $138/bbl, up over $10 just today

[Bender]

glad I bought a motorcycle 6 weeks ago....

[Jay Henley]

Anybody know what it is going to take to get some kind of alternate transportaion (bullet train) like other countries have? Is it because it would be too hard to lay down new tracks everywhere and create some tunnels. I think that is what I heard on the news the other day from the critics of a new rail system.

[RightAngle]

I'm just so confused as to what the ACTUAL problem is. Don't take this the wrong way but I'm so tired of hearing "its bush's fault" and stuff like that. Is OPEC just cutting production? Have we pushed demand up that high?

I'm not looking for a political battle here so please, please, please don't take it there I'm just curious if someone knows more than me that isn't so "media hype" type truth.

[Jenny Z]

It has something to do with trading oil futures, but I'll be damned if I know how it works.

[MikkiStreak]

Originally Posted by RightAngle

I'm just so confused as to what the ACTUAL problem is. Don't take this the wrong way but I'm so tired of hearing "its bush's fault" and stuff like that. Is OPEC just cutting production? Have we pushed demand up that high?

I'm not looking for a political battle here so please, please, please don't take it there I'm just curious if someone knows more than me that isn't so "media hype" type truth.

I think OPEC is focused on more than they probably should be. Yes, they have the largest reserve of oil; but they aren't the biggest supplier to the US.

About 1/4 of the world's oil demand is from the US. We use about 25-30% of the oil supply ourselves, and most other countries only use about 5-10% each.

Last I knew, we actually produced 40% of the oil we use here in the states; and the other 60% comes from foreign countries: Canada coming in second, then Mexico, Saudi Arabia, Nigeria and Venezuela (and other countries after that). (Which has always made me scratch my head since I heard how our government wants an oil embargo against Venezuela, but yet, we already use their oil to supply us.)

We've been increasing our demand and dependence on oil products (not just gas) for a long time. But I agree with the statement about trading prices affecting this also. It reminds me of the energy traders when Enron went down...

We've had an increase in demand world-wide. At one point, I heard China's demand had increased about 20%, which impacts all the other countries. OPEC has the largest supply available than other countries, so they impact the price too when they increase/decrease production. We've also had several weather impacts on our supply here: Katrina took out some of our production wells, and some of our existing wells are old and need upgrades done to them as well. Since we supply the biggest portion of our own consumption, each of these have driven up the price as well.


Also, Russia is right behind us as one of the largest suppliers of the world's oil. Right now, their government is having problems with their largest oil production company, and that company may possibly file for bankruptcy; which would shut down access to a big portion of the oil supplied to the world.

Take this opinion however you want. I read bits and pieces of national and international news and remember portions here and there.... but, by no means, do I know nearly enough (or as much as I'd like to know) about it...

[CincoJoe]

This is only the beginning....the economy is about to take a big dump. Start saving your pennies.

[Jeff_Green]

Oh geeze. The economy will only take a dump if everyone keeps saying it will and everyone keeps feeding into "the sky is falling" beliefs. That is why the economy tanks. Everyone says it is going to tank so they start saving their money, being as frugal as possible putting as little as possible into the economy.

There are many reasons why gas is so expensive. One reason is we are too stubborn to supply the majority of our own oil. We don't want to drill off the coast of our country so we will allow others to do so and make huge profits.

Building refineries is a financial loss to oil companies because of all the restrictions placed on them so they won't build any more. The refineries that WE have are already operating at max capacity so that when something happens and part of one has to be taken offline then prices jump.

China and it's huge surge in citizens driving cars increases the demand which inflates the price.

Which reason do we want to complain about today?

[epoh]

Actually, the oil companies would love to build more refineries, however, Congress keeps on preventing them. They just voted a few weeks ago to continue to not allow new refineries - thanks guys! </sarcasm>

Futures manipulation is primarily to blame for the current prices. Here's a recent article about it - http://www.consumeraffairs.com/news0...prices246.html

And here's a link to a (rather long) entry on wikipedia about futures trading - http://en.wikipedia.org/wiki/Futures_exchange

[3n-Out]

Isreal said today that they would basically attatck Iran if they countinued with thier nuclear program. Iran said they would shut down the main and only shipping lanes of major oil transfer from the middle east. It's a hopeless situation we are all held hostage to major oil. It's going to get way worse before it appears to get better, but it never really will get better. It will never ever be like it was just 2 years ago... 5 years ago with gas at 1.49 gallon that was a dream. Don't you just remember the good ol' times..

[AndrewCCM]

Bottomline: Figure up how much you spend extra per year based on each $1 of increase in gas per gallon. I bet you spend more on a camera body.

True it sux... But in the grand scheme of things, people spend way more money on things that are not essential and going out to eat.

I hate it as much as the next guy, but think about it...People pay $30k+ for cars, when a $20k car would be just fine...then complain that they are paying a few hundred more a year on gas. That $10k difference will be traded in or sold way before the gas price increase reaches anywhere close.

It's all perspective.

BTW: There was a report (actually a couple) that shows that we have billions of barrels of oil right underneath our own soil that we don't even tap. Various reasons for that, but... it's there.

IMHO.

[Jenny Z]

Originally Posted by AndrewCCM

BTW: There was a report (actually a couple) that shows that we have billions of barrels of oil right underneath our own soil that we don't even tap. Various reasons for that, but... it's there.

IMHO.

We really should have started drilling off the Gulf Coast a long time ago... might not have completely helped the current situation, but it sure couldn't have hurt.

[Gambit]

Originally Posted by epoh

Futures manipulation is primarily to blame for the current prices. Here's a recent article about it -

While that's partially true, a "speculator" has no place to actually PUT the gas/oil. So, when the contract term is up, it needs to be in the hands of somebody who has a tank, and they aren't speculators, they're customers. If the market wasn't there, the customers wouldn't pay that much for the contract.

A lot of the problem is the falling dollar. Why's the dollar falling? Because people think other currencies are worth more. When you don't have anything to back your currency except the government's word, and people lose faith in the government/economy, they lose faith in the currency. The most recent evidence of "losing faith" is the lowering of interest rates, making currency easier to get, which means you don't value it as much. If we raise our interest rates, then the dollar will be valued (note I didn't say worth) more against other currencies.

I read one analyst's column that took the position we'd been living on borrowed time ever since the tech bust. Personally I think it goes back a lot farther. We all know the government has a huge bill coming due sometime (social security, war, medicare, lots of other spending). And as is always the case with government debt, it's really on our backs. As a nation, our credit is going to get tighter, except in boom times when we can run up more debt!

I don't know that I'd advise folks to stop buying things. But I'd certainly would advise folks to avoid buying things on credit. Interest rates will go up a lot, soon, much like the last time there was a serious gas crisis-- when single-digit mortage rates were unheard of.

I'll agree with the sentiment on refineries. I heard they were going to try to build a new one in South Carolina, I think. The "not in my backyard" syndrome applies to refineries as well as nuke plants, though.

[djroga]

Do the words speculation, panic, greed, and foolish ring any bells?