so... whatever happened to the whole demand factor in oil?

[RD]

1) we were fed a line of BS stating that china needs more.. this country needs more.. the demand is huge.. so the price has to go up

2) market has a downturn and the prices crash along with it

3) demand has still not changed one bit

4) a hurricane hits the gulf (same area as katrina) and the gas prices go down?

5) who else thinks the oil companies were just lying their butts off?

I know i am no economics guru.. but.. the demand is still the same as it was before all the non-oil related companies started dying off... the price should still be the same correct?  demand is the same, price should be the same.

I am sorry.. but.. wow.. I actually feel stupid for believing them in the first place.  Now.. I am sorry.. everything they say is a lie in my eyes.  burn me once shame on you, burn me twice shame on me.

your thoughts (not like i will believe them if you are goin to come up with some great economic equation that means nothing to me, but at least i will read them).

[69charger2002]

well my opinion is 2 fold. OPEC sucks, oil companies do make too much and prices are/were higher than they should have been.. the whole "scare" factor was making gas prices spike at times, which is ridiculous. they barely rose with katrina in the gulf, and only after they realized the damage post katrina... did gas prices spike, and even then it was pretty temporary considering the destruction. now if there is a tropical storm off africa that LOOKS like it's headed west.. gas prices spike $.50 and the weather channel talks about oil for 2 weeks straight., HOWEVER.. i DO think demand IS way down from a few months ago. i know that everyone i know, including me, have been driving less than ever since gas spiked to record levels. and if you think about it, just in my industry alone(84 lumber) with the housing business dropping fast, we have lots less deliveries, which means tons less trucks making loads and using diesel/gas. as companies have less sales, and less business, so goes the lessened demand for fuel. that is the main reason i think it's dropping so fast. but you can't help but be pissed that it seems to spike for useless ricidulous reasons at times, especially the last year or 2.. investors were partly to blame for that even after the economy started crashing. they started investing in oil stocks because they were holding up while everything else was starting to fail.. which drove the price up. but finally the bubble burst(thank goodness). that's my $.02 anyway
trav

[bull]

It's called lies, deceit and equivocation among other things. I do think demand is down but I don't think it's down enough to warrant this big of price drop. Yup, we're getting the mushroom treatment alright.

[Old Moparz]

Must be all the hybrid cars.

[SFRT]

oil prices are linked to FUTURE speculation of demand not current. Commodities speculators are selling off the options they where holding for future production, driving the price down.

recession= less future production=less demand for oil.

[Todd Wilson]

oil prices are linked to FUTURE speculation of demand not current. Commodities speculators are selling off the options they where holding for future production, driving the price down.

recession= less future production=less demand for oil.

That is probably the biggest reason why the prices are so high. Those speculators buy zillions of barrels of oil or fuels  and usually never have to pay for them or take delivery of them. Make them guys start paying and taking what the speculate/buy on and we wouldnt have the problem. Its all done on paper.  Buy a zillion barrels of oil today and that creates a shortage (supply and demand BS) and tomorrow the price goes up so they then sell their zillion barrels back to the system for a profit. All done on paper. I think wall street is feeling the pain some in the $ department with the markets being down so a lot of this speculating has slowed created a false supply on paper for the most part. I think America as a whole has cut down on their driving this year as well as business's having slowed sales which would not put delivery vehicles on the street as much.


Todd

[PocketThunder]

Maybe next tuesday has something to due with it? ...?   

[Old Moparz]

Maybe next tuesday has something to due with it? ...?   

And I wouldn't doubt for a second that no matter who wins next week, they'll take credit for the price decrease.

[RECHRGD]

I need someone to explain to me why now that crude is less than half of what it was at the peak, gas prices have not dropped the same percentage.  I'm still paying around $2.65 for regular unleaded.  How much were we paying for gas the last time crude was $68.00?  It seems like the petroleum industry got us used to the high prices and now with the drop in crude they're just increasing their profit margin.  Bob

[Ponch ®]

  Yup, we're getting the mushroom treatment alright.

"feed 'em shit and keep 'em in the dark"

[MichaelRW]

And how about all the other things that went up in price like increased delivery charges, food prices, airline tickets, cruise ship fuel surcharges, etc. They always add these types of costs but they never go back down. 

[RD]

And how about all the other things that went up in price like increased delivery charges, food prices, airline tickets, cruise ship fuel surcharges, etc. They always add these types of costs but they never go back down. 

great point!!! has milk gone down? anything else?  hmmmmmm  I bet they are just ringing in the profits in lieu of another fuel increase that they (we) are sure is going to happen.  A lil' stockpiling of $$ so to say.

[Charger_Fan]

On the "supply & demand" line of bs we've been shoveled, I never did buy into that one.  There's no way in hell that the demand was suddenly rising as fast as those friggin' gas prices were. It was all controlled by the jerks at the top of the system & they just fed us whichever line they thought would work best that time...next time it will be some other excuse.

I'll betcha the prices start climbing again sometime in the next few weeks, along with a freshly manufactured excuse, too...yep, we're definitely getting the mushroom treatment.

[ITSA426]

Four years ago gas prices took a dip, just before the election.  I don't know.  I heard on the radio this morning that if things get much worse for the oil companies they may have to lay off some politicians.  Gotta keep those record profits up!

[moparstuart]

Four years ago gas prices took a dip, just before the election.  I don't know.  I heard on the radio this morning that if things get much worse for the oil companies they may have to lay off some politicians.  Gotta keep those record profits up!

[bull]

  Yup, we're getting the mushroom treatment alright.

"feed 'em shit and keep 'em in the dark"

I was hoping someone would ask what it meant.

[Mike DC]

   

A major oil speculation bubble gets popped + the high price created some real long-term demand for alternative fuels + huge election right around the corner = lower prices. 



Politically speaking, IMHO this is absolulely a perfect storm to expect a freakish price drop.  It happens almost every election with both parties, let alone the situation right now.  The oil industry's much-preferred political party is having their future influence seriously threatened by this election, and it's basically happening in all three branches of the Federal govt at the same time. 

   

[Brock Samson]

  Prices always drop just before a presidential election, i think that would be particularly true with the current admins ties to oil.

I was absolutely shocked to see a reg unleaded price of $2.99.98 last night first time it's been below three bucks here since the last election... 

And as far as the Corporation's specific lies - one reason they give for our San Francisco gas prices being the highest in the nation BTW, (we had prices near to $ 5.00 this past June) is it's supposed distance from a refinery, but infact a huge west coast refinery is 20 miles north of San Fran. proper.
Noone has ever called them out on that B.S. 

anyhow, I'm gonna go out and fill all four tanks..

[bull]

So, if the prices are dropping due to the election then it's as RD says: demand has little to nothing to do with it.

[CharcoalCharger]

I need someone to explain to me why now that crude is less than half of what it was at the peak, gas prices have not dropped the same percentage.  I'm still paying around $2.65 for regular unleaded.  How much were we paying for gas the last time crude was $68.00?  It seems like the petroleum industry got us used to the high prices and now with the drop in crude they're just increasing their profit margin.  Bob

I agree.  I was wondering the same thing.  Everyday a barrel of oil drops by X amount of dollars (now $68), and we see only pennies drop off every few days.  If I'm not mistaken (and I might be) gas was $50+ a barrel at $1.46 a gallon in 2001.  How is it oil went from a high of $147 to $68, and in my area gas has only dropped to about $2.50 a gallon?  Shouldn't it me closer to $1.80-$2.10?   

[J-440]

  How about this conspiracy theory?  Oil prices were high right before the Fannie Mae/Fudgie Pack explosion along with the other banks and loan companies.  Maybe some insiders warned big oil (who may or may not have other investments in Wall Street) that a crash was coming, they jacked up their prices, made huge profits from us schmucks, when the crash came they were unaffected and then lowered the price of crude in our time of need so they could look like the good guys.  Hmmm...

[SeattleCharger]

Four years ago gas prices took a dip, just before the election.  I don't know.  I heard on the radio this morning that if things get much worse for the oil companies they may have to lay off some politicians.  Gotta keep those record profits up!

I agree.  heh  This is what I said in the gas price check in thread:   This is what the deal is IMO.

  "Oil companies trying to buy us off before election, if they are giving up a few hundred million in profits for us to think things aren't that bad from the republican/oil government, they will more than make it up under mccain and palin, hundreds of billions of dollars in profits more under them.     
 
    JUst watch, gas prices will go back up right after the election, which will help prove that the oil companies could have had them low all this time if they had wanted,   600 billion in profits they have made in recent years," 

[SeattleCharger]

bunch a scammers

[SFRT]

theres a lag effect between the options market (todays price of oil) and the pump price. the pump price reflects the oil bought and refined and shipped
previously. I'm actually surprised its gone down so quickly, they are trying to get something out of suddenly low demand 'gas in stock' withjout being upside down for the quarter, month, week etc.

all those companies are paying bills based on the previous high prices, so if they where to suddenly price the gas at 1 dollar a gallon, they would lose
all their money, since they owe more for that batch.

the people that really take it in the ass are the franchise gas station owners, they are forced to pay whatevr the parent company decides, its a harsh business. The dude selling gas for 3 bucks might actually have had to pay 3.50 for it by the terms of his franchise agreement.

[TruckDriver]

JUst watch, gas prices will go back up right after the election

Try there going up like crazy as I type this. They weny up for the last two days straight, and today already, it is up to $69 a barrel after hovering around $62 a barrel on Monday.

When stocks go up, so does oil. That's why I hopeing to stock market would crash to the point they would close it down. When that was happening to stocks, oil was nose diving. I'd like to kick the person who thought oil should be on the stock market.

05:30 - $ 69.04   up-1.54 2.28% 

[poppa]

The correct answer in it's simplest form is....GREED.
They know you need it and you'll pay for it.

[MichaelRW]

If it's greed when the price goes up did they all of a sudden recently get altruistic now that the price has gone down?

[Mike DC]

 
It's not complicated.  Just a short term loss in hopes of a long term gain.  It's no secret which political party the oil industry would rather see holding power. 

[BrianShaughnessy]

Cheapest gas in my neck of the woods today is $2.59 gas for 87.

It'll be interesting to note what it does in the next few weeks/months.

[Rolling_Thunder]

its called Capitalism -

[Charger_Fan]

its called Capitalism -

Could also be called dropping the soap & bending over to pick it up...

[bull]

The oil co. profits are probably down to 100% now instead of 200%. Poor little rich boys.

So where's all the oil exec apologists on this thread? They circled the wagons and fought back hard when gas was $4+/gallon and no they're nowhere to be found.

[Troy]

So where's all the oil exec apologists on this thread? They circled the wagons and fought back hard when gas was $4+/gallon and no they're nowhere to be found.

Choose one...
1. They are out spending their dividend checks.
2. They are out doing real research instead of making half-assed guesses about the world
3. They are taking advantage of the "cheap" gas and driving their cars before winter really sets in
4. All of the above

In answer to the question...
In the month after gas prices peaked at $4.11 per gallon, Americans drove 15 billion fewer miles in August 2008 than they did in August 2007 -- the biggest single monthly decline since the data was first collected regularly in 1942.
http://www.businessweek.com/ap/financialnews/D943OG1O0.htm

Despite the surge in profit, Exxon said oil production was down 8% in the third quarter, compared to the same period last year."
http://money.cnn.com/2008/10/30/news/companies/exxon_earnings/index.htm?cnn=yes

Troy

[bull]

So where's all the oil exec apologists on this thread? They circled the wagons and fought back hard when gas was $4+/gallon and no they're nowhere to be found.

Choose one...
1. They are out spending their dividend checks.
2. They are out doing real research instead of making half-assed guesses about the world
3. They are taking advantage of the "cheap" gas and driving their cars before winter really sets in
4. All of the above

In answer to the question...
In the month after gas prices peaked at $4.11 per gallon, Americans drove 15 billion fewer miles in August 2008 than they did in August 2007 -- the biggest single monthly decline since the data was first collected regularly in 1942.
http://www.businessweek.com/ap/financialnews/D943OG1O0.htm

Despite the surge in profit, Exxon said oil production was down 8% in the third quarter, compared to the same period last year."
http://money.cnn.com/2008/10/30/news/companies/exxon_earnings/index.htm?cnn=yes

Troy

So did our 15-billion-mile decrease make a dent in China's alleged increase? We're supposed to be thinking globally now and numbers about the US dip in usage tells us nothing about the global usage other than to say the biggest user used less. And how much is 15 billion when it's broken down on a per-driver basis?

BTW, since the oil companies seem to be the only ones that aren't suffering too badly during these touch economic times I think they should be the ones to bail out GM and Ford. They've had this sick little dysfunctional/symbiotic/parasitic relationship since the get-go so who are we to step in now?

[Ghoste]

Hmmm, thats an interesting proposal Bull.  They certainly stand to benefit from getting a few more SUVs and pickups on the road.

[Troy]

It's been proven to be an absolute waste of time for me to look up reams of information for people unwilling to listen to an alternative point of view. I tried to keep it short and simple by only posting two of the first ten items that I pulled off Google. Feel free to try it - you can spend hours learning something new!

I didn't post the rest of the links about the global recession and how most all of the oil companies have scaled back (or put on hold) their spending on exploration and alternative processes. This is going to impact many of the "new" sources of oil. For example, much of the projects up in Alberta - shale and sand recovery - were expecting a decent return at $80 per barrel but at $60 they aren't so attractive. So now we're going back to buying cheap oil from the Mideast (higher margins). With oil this cheap the impetus to develop new energy is severely hampered. Tack on the jobs lost by the canceled projects and it certainly doesn't improve the overall economic situation.

FYI - 15 billion miles is $3,187,500,000 (at 20 mpg and $4.25 per gallon). I posted that because when I say stuff like "$10 billion is a big number but isn't that much profit considering the size of the company" no one wants to look at the details. When it's the other way around the details quickly become important. Last year oil companies averaged around 9-10% profit while the S&P 500 average was closer to 13% (off the top of my head and I don't have time to get the exact numbers). Big numbers, record profits, but nothing any more special than thousands of other companies. They just make a good target for angry people.

Troy

[dsd70bee]

I think that part of the reason gas has not come back down to what you would think that it should be is because of the taxes that are added to it now. I would like to know the exact amount of tax per gallon now compared to the amount of tax that was on it in 2001.

[bull]

It's been proven to be an absolute waste of time for me to look up reams of information for people unwilling to listen to an alternative point of view. I tried to keep it short and simple by only posting two of the first ten items that I pulled off Google. Feel free to try it - you can spend hours learning something new!

Well, sorry but when people distrust the source of that information reams of data don't do diddly. News reporters interview oil company bean counters who get their info from their bosses and none of it seems to jive with reality and so the masses are understandably a little suspicious.

[Mike DC]

 
This is gonna sound surprising, but most of the big oil companies actually may not be in very good long-term situations. 



Oh, sure, they're profiting A TON of money right now. 

But their feasible in-the-ground oil reserves may not even offset the declines in production at their existing oilfields.  Notice the fact that some of the big oil companies are even showing signs of getting into alternative energies.



The future of oil looks like it'll be a bunch of smaller operations filling the need that's currently being filled by a few huge companies.  That means less stability in the market (read: higher prices).  It'll be dealing with a whole bunch of smaller Hugo Chavezes instead of dealing with a few huge Saudi Arabias.   

   

[Troy]

It's been proven to be an absolute waste of time for me to look up reams of information for people unwilling to listen to an alternative point of view. I tried to keep it short and simple by only posting two of the first ten items that I pulled off Google. Feel free to try it - you can spend hours learning something new!

Well, sorry but when people distrust the source of that information reams of data don't do diddly. News reporters interview oil company bean counters who get their info from their bosses and none of it seems to jive with reality and so the masses are understandably a little suspicious.

Which is exactly my point - why try to legitimately answer a question when I know the response will be "well I still don't believe it". If someone claims to have a "fast" car it's easy to be skeptical and it's possible to have a completely different opinion of what constitutes "fast". If that person happens to have a series of dyno sheets, a handful of time slips from multiple tracks, and a couple of recent speeding tickets it would be a lot easier to verify their claims wouldn't it? It's difficult to lie through that much scrutiny from that many sources.

The great thing about publicly traded companies is that any normal schmuck can look through their financial statements (which happen to be audited by several sources - public and private - along with government oversight). Those same schmucks also have access to current and future operations divulged in shareholder meetings, press releases, and independent reports/investigations. Luckily for us, there's an entire industry that does nothing but analyze the financial performance of companies. The worldwide picture can be a little harder to gauge since the government (or governments) are usually the source of the data and it's usually a couple of years old by the time the reports get released. That doesn't mean it's impossible to find information - you just have to look in different places (and put forth some sort of effort).

With all that in mind, could a person honestly believe that Americans are the only people in the world to change their driving habits due to the cost of gas? It's not just driving either, didn't you hear about poor P. Diddy (or whatever he's called these days) parking his private jet?

I'll turn this around: where's the proof that demand hasn't lessened. Surely there's some reputable facts out there somewhere that show it's all an elaborate money-grabbing ruse conjured up by the media, financial information outlets, and the entire energy industry along with countless related companies and most of the major governments in the world. The very first post in this thread states that "3) demand has still not changed one bit" so I'd like to see the references to back up that statement before trying to refute it. Otherwise I'll just say "well I still don't believe it" and if someone demands proof I'll say "because I know that Bull rides his bike to work now".

Troy

[RECHRGD]

Just wondering if Troy or someone else can enlighten me on the price of diesel.  I'm 60 years old and diesel was always the "cheap" fuel in the past.  In 2004 I bought a new Ram 2500 CTD and diesel was still a little lower priced than regular gas.  Since then it has steadily been rising.  At the peak of the gas price run up regular gas was about $4.00 around here and diesel peaked at about $5.29.  Now gas has dropped to about $2.00 but diesel is has not dropped a like percentage and is running about $3.29.  I know the EPA has probably required more additives to be included in the processing of diesel, but the pricing seems excessive to me.  One would think that the demand for diesel has dropped right along with the demand for gas in this economy that we are now experiencing.  Bob

[SFRT]

diesel is made at the same refineries gasoline and heating fuel are. theres a severe production bottleneck, and refineries choose to make gasoline and heating fuel over diesel, pushing up the price...in addition to an increased share of refining going to  other fuels, demand for diesel has gone up so the price is higher.

I know some people in the oil industry and the big problem is refining capacity. theres been almost no new capacity added for years, and most of the investments by the 'oil companies' has gone into either new fuel technologies or finding cheaper ways to refine ever crappier crude. what does get processed is usually whats seen as 'most important'-gasoline and heating fuel. Diesel is third in line most of the year.

theres actually 'plenty' of oil, its the system that turns it into fuel thats messed up.

[Ghoste]

Well, yeah, that and the fact that Bull is riding his bicycle to work now. 

[bull]

Well, yeah, that and the fact that Bull is riding his bicycle to work now. 

Yup, it's all thanks to me. Actually, I have heard that there are a lot more people riding bikes now, at least in my area of the world. And I just spent $70 and a new pair of petrolium-based bicycle tires last night.

It's interesting to me that the US has sort of switched places with the Chinese in this regard. They get more industrialized and get off their bikes and start driving more which apparently drives up the demand and the cost of fuel and in response the Americans stop driving so much and start riding their bikes.

[Troy]

Just wondering if Troy or someone else can enlighten me on the price of diesel.  I'm 60 years old and diesel was always the "cheap" fuel in the past.

Bob, I've mentioned this in the past so I'll just restate my answer from before. However, I haven't researched it lately so the reason may have changed slightly. Diesel is something like a byproduct of the refining process. It's always been cheaper and that hasn't changed. What has changed is the demand for diesel around the world. For example, if you look at the European market you'll see a very high percentage of diesel vehicles (also many small turbocharged engines which are prime for diesel fuel). Their gasoline prices have been high for years (partially due to little or no refining capacity of their own) so they've been on the hunt for cheaper/more efficient energy sources for much longer than we have. It makes good business sense to load the refined diesel fuel onto a boat and ship it overseas than to keep it here and sell it for a discount. We have an artificial shortage because of it but, even with our "high" prices we're still paying a lot less than many other places.

In regards to this thread, a timely article came out today:
Oil prices slumped Friday, despite signals from OPEC that it may slash production again, with the markets instead focused on the most recent reports showing drastic cutbacks in spending and consumption by businesses and consumers.
...
The decline in sales was led by a huge drop in auto purchases, but sales of all types of products from furniture to clothing fell as consumers retrenched.

That likely means fewer vehicle miles driven, both because of job losses and less trips to the shopping mall and less money spent on vacations. Businesses are slowing down as consumption drags.
http://news.yahoo.com/s/ap/20081114/ap_on_bi_ge/oil_prices

Troy

[Mike DC]

 
Diesel was cheap for a long time (and not as favored among US consumers) partly because it was environmentally dirtier than gasoline.  Or at least it's traditionally been dirtier at the tailpipe, although maybe there's no big production difference. 


The recent trend in Diesel has been towards cleaning up the operation of burning it.  It might be seeing a price increase that's related to cleaning it up in one way or another.

[Troy]

Yeah, I don't know what has to change in the manufacturing process for the Ultra Low Sulfur grade so that may increase the cost to produce. I can't say that I've seen a big price difference between it and the regular (Low Sulfur) stuff though.

Oh, I forgot to mention that I bought my diesel truck when diesel was still cheaper than gasoline as well. It's been upside down ever since. Even with the better mileage it still costs a lot more to operate so it's next on the chopping block while I reduce my fleet.

Troy