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Thread: $1.99 gas .

  1. #41
    Quote Originally Posted by SG_Player1974 View Post
    Thank you for agreeing with my main point that the recent fluctuations of oil and thus, gas prices at the pump, are basically politically influenced and NOT due to the old "supply and demand" BS.
    Erm..what?? What he just explained was some of what is behind the glut of oil on the market. Glut...oversupply....
    You can't be a real country unless you have a beer and an airline. It helps if you have some kind of a football team, or some nuclear weapons, but at the very least you need a beer. -Frank Zappa

  2. #42
    Quote Originally Posted by Gilligan View Post
    I think it entirely implausible too. My own rough estimate is that something "around" 3.00/gal is sustainable over a longer term. But not a whole lot less than that.
    I'd agree. We're talking about a big ballpark here, but something around there is probably right.

    That does assume, however, that things remain more or less what we might expect when it comes to, e.g., global economies, drilling innovation, as-yet-undiscovered reserves. If we found some new, easy to access, huge source in our own backyard that no one imagined might exist - then that might change the calculus some. Or if Russia conquered the Middle East and put different decision makers in charge of the cheapest, most readily accessible, sources of oil in the world. Or if we sooner than might be expected figured out how to take large-scale advantage of some alternative energy sources. Or if...

    But, yeah, without some seismic game changers... we should all enjoy the cheap gas and oil while we've got it, because it's likely to be more expensive a year or two from now.
    Nearly all success in electoral politics boils down to convincing people that you recognize that they are not the problem, that someone or something else is.

  3. #43
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    Quote Originally Posted by Gilligan View Post
    Erm..what?? What he just explained was some of what is behind the glut of oil on the market. Glut...oversupply....
    Yep... and also the geo-political reasons why the glut isn't being dealt with which leads to pricing.

  4. #44
    Quote Originally Posted by SG_Player1974 View Post
    Yep... and also the geo-political reasons why the glut isn't being dealt with which leads to pricing.
    What geo-political reasons were those? All I see are a bunch of financial self-interests at work...long-term ones and short-terms ones in competition with each other. US production rose because of the higher value of a barrel of oil and various innovations in extraction technologies. Production in many other parts of the world rose because of similar technology improvements coupled with the remarkable number of "new" reserves discovered with increasingly more effective and sophisticated exploration methods.
    Last edited by Gilligan; 01-06-2015 at 12:56 PM.
    You can't be a real country unless you have a beer and an airline. It helps if you have some kind of a football team, or some nuclear weapons, but at the very least you need a beer. -Frank Zappa

  5. #45
    Quote Originally Posted by SG_Player1974 View Post
    Thank you for agreeing with my main point that the recent fluctuations of oil and thus, gas prices at the pump, are basically politically influenced and NOT due to the old "supply and demand" BS.
    The pricing is about the supply-demand balance (and expected supply-demand balance going forward). This is about supply and demand.

    However, and of course, supply and demand is affected by various things - to include, e.g., market manipulation from the likes of OPEC. I haven't seen anyone here denying that the state of the supply-demand situation is dependent, at least in part, on OPEC's decision not to cut production to support oil prices. That's part of the supply-demand situation, it's part of why the market is currently over-supplied / under-demanded. The development of newer sources of oil, e.g. shale, at a quicker pace and on a larger scale than might have been anticipated a few years ago is also part of why the market is currently OS/UD. A slowdown in Chinese growth, and many other things, are also part of why the market is currently OS/UD. But, the reality that the market is (or has been) OS/UD, is without doubt the primary reason that oil prices have fallen recently. And they've fallen so far because it doesn't take much OS/UD to drive prices down a lot just as it doesn't take much US/OD to drive them up a lot, not if that imbalance persists (or is expected to persist) for a while, anyway.
    Nearly all success in electoral politics boils down to convincing people that you recognize that they are not the problem, that someone or something else is.

  6. #46
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    Quote Originally Posted by Gilligan View Post
    A LOT of "closed/old" wells and properties were put in production (or back in to production) as the price of oil kept increasing steadily over the past 6 or so years. Heck, I'm a 1/5 owner of an oil property in Texas that had its wells closed down in the early 60s..and just two years ago, out of the blue, a drilling company tracked us down and negotiated a new lease deal to open it up again. Guess I won't be seeing any big royalty check on that now..
    Serves you right, you 1%er you.


    "Conservatism is the new counter culture." - Lola Lee - youtuber

  7. #47
    Quote Originally Posted by BOP View Post
    Serves you right, you 1%er you.


    Inorite? Just to be extra cautious and fiscally conservative, I even cancelled my order for the new Veyron. ;-(
    You can't be a real country unless you have a beer and an airline. It helps if you have some kind of a football team, or some nuclear weapons, but at the very least you need a beer. -Frank Zappa

  8. #48
    Quote Originally Posted by Tilted View Post
    Who has suggested a 35% decrease in demand? Or, really, anything near that?

    If you're suggesting that such a large drop in prices, if we're going to attribute it to changes in supply-demand realities and/or expectations (which would be a correct attribution), necessarily implies a similarly large drop in supply or increase in demand, then that suggestion is misguided. That's not how supply-demand dynamics work, that's not how markets work. Yes, it's possible in some circumstances that the percent increase or decrease in price lines up pretty well with the percent increase or decrease in supply or demand, but that's not going to be the typical case - and it's likely more happenstance than anything in those particular cases. And it's certainly not going to be the case when it comes to some markets and some products in particular - e.g., global oil.

    For a number of reasons that I'd be happy to walk through with you, there is great inelasticity in global oil pricing. Small differences in the supply - demand balance, if they are (or are likely to be) sustained over a significant period of time, can mean huge differences in prices. We aren't talking about a huge (relative) spike in global oil supply or a huge (relative) drop in global oil demand. We're talking about fairly small (a percent or two perhaps) shifts in those things that have evolved over recent months and years. The reality of those shifts have hit global markets - and become unavoidable (or undeniable) - in the last 6 months of so. So, prices have adjusted as will be needed to rebalance supply and demand (again, huge price differences to effectuate smallish supply and demand adjustments). Prices have not only corrected, they've over-corrected. And, by the way, in the past such smallish (would-be) shifts have often been met with some market manipulation, so to speak (e.g. intentional cuts or increases in production), such that they didn't eventually result in large price swings. That's part of why global oil prices had been so stable over the preceding four or so years.

    It can't be emphasized enough - for legitimate, natural, reasons - oil pricing happens at the margins. What's going on at the margins of supply and demand determines, for the most part, pricing. And various things happen to change the outlook at those margins, so without someone or someones actively manipulating the margins of the market, oil prices can be quite volatile. The story here (not the long-term story, but the immediate story) is that no one has stepped in (read: OPEC, Saudia Arabia in particular, has not stepped in) to offset natural developments in oil markets in order to stabilize prices.
    I understand that production from Russia and Iraq is at 30 year highs and that US production has about doubled in 5 years. I am surprised that OPEC has been so slow to cut production. Have they become less relevant than they were in their glory days?
    Last edited by intertidal; 01-06-2015 at 08:07 PM.

  9. #49
    Quote Originally Posted by intertidal View Post
    I understand that production from Russia and Iraq is at 30 year highs and that US production has about doubled in 5 years. I am surprised that OPEC has been so slow to cut production. Have they become less relevant than they were in their glory days?
    U.S. production hasn't doubled, but after nearly 4 decades of declining production it's been growing impressively over the last 5 or so years. I think it's more like up 50% over that time.

    As for OPEC, yes I think they have been becoming less relevant and less capable of controlling global oil prices. But they remain quite relevant still. I suspect the recognition that their grip has been slipping some is part of what's behind their current position and their recent decision not to cut production. They'd pretty quickly be better of financially if they'd cut meaningfully, but they're willing to take the hit because they think they have to or they may be even more irrelevant and fairly powerless. They are making a stand while they're still strong enough to do so.

    In essence what they've said to the rest of the oil producers is this - we need you guys to join us, to act in concert with OPEC. This cartel needs to be bigger, get on board with us and together we can keep oil prices where we all want (or need) them to be. You guys benefit from what OPEC does, and we aren't going to go on doing it by ourselves anymore. At some point they won't be able to, so it's time to - in effect - expand their membership roll.


    EDIT: I'm gonna take back what I said in the first paragraph. I just looked at individual monthly numbers and there were a couple of aberrant months there back around the financial meltdown when production dropped off a cliff for a short period of time. Using those months as a baseline, and looking at monthly rather than annual production, you can say that we've doubled production sense. We've actually more than doubled it. Looking at longer snapshots, we haven't really gotten there though we're getting into that ballpark right now.
    Last edited by Tilted; 01-09-2015 at 11:50 AM.
    Nearly all success in electoral politics boils down to convincing people that you recognize that they are not the problem, that someone or something else is.

  10. #50
    Quote Originally Posted by Tilted View Post
    U.S. production hasn't doubled, but after nearly 4 decades of declining production it's been growing impressively over the last 5 or so years. I think it's more like up 50% over that time.

    .
    It is (was) possible that we could equal or exceed, in 2015, the previous all-time peak production level from around 1972. But I would guess that the precipitous drop in oil prices might keep that from happening.
    You can't be a real country unless you have a beer and an airline. It helps if you have some kind of a football team, or some nuclear weapons, but at the very least you need a beer. -Frank Zappa

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