Actually, I’d find this scenario considerably more compelling if you had said “Administration beats war drums over Iraq, panicking oil futures buyers”. But seriously, there’s not a factual statement anywhere in the above that I can see.
I really fail to see why so many here think that the growing disparity between available supplies of crude and rapidly growing demand have nothing at all to do with gasoline prices at the pump. Here is an AP article from April clearly stating several reasons for the run-up in prices at the time. Feel free to tell me which of these you think the Associated Press is lying about, and what interest the AP might have had in lying about the facts of this matter. For example, is it not in fact true that many refiners do scheduled maintenence in the spring to avoid being shut down during the peak summer driving season? Was the switch from MTBE to ethanol (mandated by the government in response to very well documented pollution issues) part of the plot to run up prices? Throw me a bone here, people.
I am totally with the supply/demand argument, and I have advanced it myself. I am also anything but a conspiracy theorist. Nonetheless, unless I am misunderstanding the S/D argument at a very fundamental level I think there is something else driving this.
I ask you, is there anybody, anywhere in the world that has not been able to get gas for their car that would ordinarily be able to? In other words, demand has not gone down, but supply has, which in turn drives the price increase. But I’ve never heard a story of any country being unable to meet demand for their people. How do you explain the price increases if there is no demonstrable reduction in supply?
I do not think that the government is driving this (what, Bush and friends can fix the world markets now? What an imagination!), but something is. Speculators, perhaps? Is it possible that they could have driven the price up so high so quickly?
I’m involved in the service side of the oil industry, not crude or products marketing, so I will not pose as an expert on this subject, but I’ll take a stab at this one.
As I understand it, it has to do with the way in which crude oil is marketed to refiners. Some oil is purchased by refiners for more or less immediate delivery; this is the spot market. Much oil, however, is purchased for later delivery, as a hedge against short-term price increases, and to ensure refinery runs are filled out when they are needed. This is the futures market. Both spot and futures oil is sold to the highest bidder on an open market. If buyers are bidding up futures prices, as they have through much of this year, they are doing so in part because they believe prices will even higher later on. Futures prices are currently coming down, and thus refined products prices with them, in part because looming shortages feared earlier this year have not in fact manifested themselves.
Because of the way this market is constructed, prices can thus go up and down by a considerable amount without there necessarily being a shortage right now. The mere prospect of reduced supply at some point in the future is sufficient to drive a rise in prices. I have an accountant friend who is fond of saying something along the lines that “all markets are irrational”. People see wild swings in the stock market all the time without necessarily believing that someone specific is manipulating it at each point. Since the crude trade is carried out in a similar fashion, I see no reason why it would not be equally irrational.
Now, I would never say there is no possibility of one or more large companies attempting to influence the market to their own ends, and I’ll agree that the consolidation of the industry in recent years raises the possibility of a near-monopoly position for a few companies further down the road. But I’ve had enough association with the industry to feel quite certain that it is not feasible at this time that covert actions by one, or a few, oil companies could materially affect the market to the extent that prices have changed over the past year.
The DOE has a pretty good web page explaining how the oil commodity market works. I don’t have the link handy, but I’ll be happy to look up the link if anyone’s interested.
If it does not fly, then surely you can show where it is incorrect. So far, however, what you have presented here is mainly superstition, not fact. Go ahead and take my explanation apart if you have a better one. I remind you that one way you could do it would be to demonstrate that the reasons given in the AP article that I linked to on this spring’s price rises are not factual. I await your no doubt much more sensible explanation.
I should point out, however, that from your earlier posts you seem to have the notion that there is a perfectly linear 1-to-1 relationship between demand and price. I’m not expert on economics, but I am unaware of anyone who is such an expert who would subscribe to that.
If it were simply market effects. It would be going up and down quickly. It would not be predictable. The premise was 2.00 gas is coming. There would be no way to predict is changing market forces and speculation were key. They apparently are not. Gas as predicted is steadily dropping.
It was not my thread. I never said it was getting to 2.00. If it gets to 2.25 will that be close enough for you. I set no limit and do not care to now. It has gone from 3.09 to 2.43 here. That works for me. I just notice these things happen at election times. Market cooincidence I guess. I am one of the people who believe vigilance is important. I email my Governor, congressmen and senators. I get nice dteady emails from all of them. I smell rats and think all citizens should keep up with their elected officials.
I knew you thought that. You are final arbitor after all. When I gave 6 department heads that were former oil bigshots you said 6 wasnt much. How did you know 6 wasnt a lot? I thought iet was huge. I didnt even include the staffs they brought over.When I mentioned Rice had a tanker named after her ,you said it wasnt anything. I thought it showed how deeply she was ingrained in the industry. You know these things I guess.
Then you said “oil companies are not making record profits if you look at profit margin instead of the highly misleading total amount of profit”. This is rediculous. t was the subject of discussion ,but you declared it misleading. ok You buy the ten cents per gallon. It makes no mathematical sense. I do not buy it. I do not believe the companies. Sorry
One, you didn’t give six department heads. You gave six people in the government who had ties to the oil companies. Even if this were a lot, so what? Simply because they have ties to oil companies proves nothing.
As far as oil company profits, their profits are only “record” when you look at the total amount of money they earn. They earn a lot of money because they are huge companies. If, however, you look at their profit percentages (which is a much more accurate guage of how profitable companies are) then you’ll see that they are only slightly above average.
The ten cents a gallon statistic is simply a fact. You can disbelieve it if you wish, but it’s simply how much oil companies make on a gallon of gas.
Furthermore, people on this board have repeatedly shown your “analysis” to be wrong. I’ve done so with your claim that oil prices dip at election time, but you keep repeating it. There doesn’t seem to be much use discussing this with you since you fail to actually look at the facts in this case.
Six cabinet positions. Not just government jobs. These are big jobs and are in the presidents ear.
What in the hell else do you judge profits by if not the total amount of money they make.That is what profits are.
You named the President, the VP, two department heads, and two lesser administration officials with ties to the oil industry. Again, that proves nothing.
As far as profits, you can’t judging the total number without taking into account the margin of profit. The profit margin is what’s important, not the total amount of profit. The oil companies make a large amount of money in terms of profit only because they are huge organizations. Other companies are much more profitable but are simply smaller companies. Oil companies do not make “record profits.”
Your refining numbers are completely irrelevant, since refiner cost and profit are lumped into the same category. It proves nothing.
Chevron has just found what could prove to be the largest deposit of crude oil ever discovered in the US - doubling the US reserves. Though in very inaccible waters.
Some locations in Greenland shows great promise, possible as much as the rest of the North Sea combined.
Britain just made some big find in the North Sea. Though I think mostly gas.
Those are cabinet positions. They are heads of large important agencies. The total profut and the importance of the positions is apparently your call. I dont want to track down the size for you. Cabinet officials to some less enlightened is a big deal. We all submit to your wisdom on this. You know these things .I have tolook them up. When I see a list of cabinet appointees , I see it as a big deal. Silly me.
Kabong it does not have to pass orders. It sets up a climate of no government watchdogs. Collusion ,in court, is extremely difficult to prove. They are not stupid. When the officials move in ,a email and document shredding starts. The corelation over time and connections of the leadrs involved are pertinant. But it is extremely difficult to prosecute. Generally good political pressure and threays can make them slow down.
These industries have the same interests to such a dergree ,that the mechanism can be practically tacit.It is only in the accumulation of statistics that these things can begin. Enron ingratiated themselves into the administration with huge repub donations.The energy companies have gotten tons back from this administration.I hope I dont have to look up the donations the energy giants gave the administration.It is huge and expects something in return.
So, Gonzo, you are saying that you have no evidence of any wrongdoing and that the mechanism of wrongdoing is so subtle that there will likely never be any evidence. And even though plenty of people have shown you why gas prices fluctuate and have disproven all your claims of a conspiracy between the GOP and oil companies, you continue to believe in it?
I guess it’s easy to believe in whatever conspiracy you want as long as you say you can’t produce any evidence to back up your beliefs because the conspirators are too secretive and subtle. If you are trying to convince the rest of us, however, you need to actually produce some facts backing up your beliefs.