Saudi Arabia insists oil prices unrealistic

Discussion in 'Politics, Religion, Social Issues' started by Xtremehkr, Mar 7, 2005.

  1. Xtremehkr macrumors 68000

    Xtremehkr

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    #1
    Link

    So why are prices so high? Conservatives have been claiming lately that the fact that oil prices are so high is proof of us not having invaded Iraq for Oil. Um, apparantly the supply has nothing to do with the price when they think they can get away with charging twice as much.

    But really, why are prices so high?
     
  2. zimv20 macrumors 601

    zimv20

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    #2
    forgive my ignorance on the matter, but in what currency are the prices set? if it's the euro, then perhaps the weak dollar may explain at least some of it.
     
  3. skunk macrumors G4

    skunk

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    #3
    Oil is always priced in US dollars. Of course, that means that for us, as the dollar falls, the impact is less.
     
  4. IJ Reilly macrumors P6

    IJ Reilly

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    #4
    And as the dollar falls, the oil producing nations get less in world currencies for every barrel they pump; therefore, OPEC has a greater incentive to keep the price high. The rising price of oil is partially a function of the declining value of the dollar.
     
  5. mactastic macrumors 68040

    mactastic

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    #5
    Petroleum supply is also far from the only factor in pump prices. AFAIK, there is a refining capacity problem in the US, particularly as it relates to low-sulphur petroleum. In addition, we are now entering the transition phase between winter and summer formulations.

    I do find it interesting that the Iranian faction of OPEC seems happy with the current prices, particularly in light of the article that was recently posted here about the Iranian desire to set up a seperate oil market outside the London exchange.
     
  6. Xtremehkr thread starter macrumors 68000

    Xtremehkr

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    #6
    I didn't realize the dollar had lost half its value. These prices are artificially high in my opinion. Probably won't come out for years to come though.
     
  7. diamond geezer macrumors regular

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    #7
    It's not about the US getting cheap oil, petrol companies have been announcing record profits and what's good for them is good for the criminals running your Government.
     
  8. Xtremehkr thread starter macrumors 68000

    Xtremehkr

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    #8
    Yeppers, Chevron posted its highest profits in its 125 year history. Puts things in a whole different perspective doesn't it?
     
  9. Hoef macrumors 6502a

    Hoef

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    #9
    It is 70% colder than normal in Europe and US NorthEast was colder too .... This greatly impacts demand for oil.
     
  10. skunk macrumors G4

    skunk

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    #10
    And of course demand is rocketing in India and China. Market Forces, dear boy, Market Forces! :cool:
     
  11. Xtremehkr thread starter macrumors 68000

    Xtremehkr

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    #11
    And what about the part concerning the record profits all around? Collateral damage?

    Link

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    A cold "snap."

    Link

    Oil demand is up, which cannot be a surprise given that the industry does moniter these things. Demand has not increased by an exponential amount though.

    Though profits have increased by close to 100% for some companies! Hmmm. How fortunate.
     
  12. skunk macrumors G4

    skunk

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  13. Desertrat macrumors newbie

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    #13
    To add another "bit": I ran across a squib in browsing around that large institutional investors are buying into the commodities markets. This includes the oil market.

    These high prices are in the spot market; many transactions are priced under long-term contracts which won't be affected until contract-renewal time. The spot market is greatly affected by fears of uncertainty in supply. Uncertainty includes political stuff--Venezuela, e.g.--as well as sabotage of facilities in places as disparate as Iraq and Colombia. Any vertically integrated oil company is in fat city.

    Commodities in general are in a bull market, particularly when looked at in dollar terms. In Euros, it's less of a problem. The dollar has gone from 83 ¢ per Euro to $1.32, a 60% loss in buying power for us. In Euros, the California housing market is near static. :)

    The doubling of the world price for steel, due in large part to infrastructure investments in China and other Asian countries, has not yet shown up in consumer items--but it will. The same holds for many other materials.

    On the demand side for oil, China has gone from being an oil-exporting nation to one of imports. They now exceed Japan and are second only to the U.S. Other countries are using more oil as their own economies continue to grow.

    Seat of the pants, my own opinion is that if "uncertainty" is taken out of the equation, the probable floor for oil prices is around $40 a barrel. I don't see any lessening of transportation needs on a world basis that would lead to enough reduction in demand to allow lower pricing. But, just my 2¢...

    'Rat
     
  14. Xtremehkr thread starter macrumors 68000

    Xtremehkr

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    #14
    Link

    More on that post later though.
     
  15. Desertrat macrumors newbie

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    Terlingua, Texas
    #15
    ""I really feel that California will never, ever be able to satisfy the demand'' for housing, (Delva) said.'

    Hmmm. From earlier comments, he doesn't believe interest rates will ever rise to or above seven percent. Good. There will never be any inflation; the rise in prices of steel and copper and cement will never affect the prices of consumer items or construction materials--and jobs will continue to pay ever-higher wages.

    In the 1970s, oil prices were expected to continue an ever-upward path. The oh-so-smart bankers practically begged Mexico to borrow money, to be repaid from sales of oil from the new Campeche strike. The Houston real estate market boomed.

    Oops. Things changed. I note that while the types of change varies, the fact of change is the only constant.

    Maybe I'm too affected by what I've read of economic histories. Maybe I'm too affected by family/friends' comments about the 1930s. Maybe I'm too affected by what I read about the emerging economic behaviors and strengths of formerly backward nations, in the global competition for resources. Sobeit: I just don't see these good times rolling on forever. I wish it could be so, of course; I bear no ill will toward anybody. But it's not engraved in stone that the U.S. will forever be able to have an unending Saturday night spree...

    'Rat

    'Rat
     
  16. skunk macrumors G4

    skunk

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    #16
    So true, 'Rat 'Rat! :)
    That's going to be the hardest thing to swallow.
     
  17. Desertrat macrumors newbie

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    #17
    I don't remember the poem perzackly, but sumpn like:

    "I light my candle at both ends;
    It will not last the night.
    But, ah, my foes and ah, my friends,
    It makes a lovely light!"

    My jaundiced view has it that some folks are also lighting that sucker in the middle.

    :), 'Rat
     

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