ANWR is pretty far from Prudhoe Bay. I know it looks close on the map, but that’s because you aren’t used to the scale. ANWR itself is the size of Pennsylvania. And it will take years before we can pump a drop from ANWR. And that oil ain’t going anywhere, and oil prices are just going to get higher. Production from ANWR isn’t going to make gas prices drop more than a few cents, so I don’t understand the hunger to drill there. The real value is the value of the oil, not the effect on the price of oil.
My point is, oil futures prices are soaring-and inflicting harm on everybody.
This is because speculators are bidding up the prices.
WE don’t have to release a drop of oil from the reserve-just the word that we will will be enough to calm the market and drop the prices.
Of course, Obama isn’t smart enough to do this…it might interfere with his golf game.
Just wait till these prices filter through the food chain-you will see food prices p 75-100%…but heck, who really cares? Not Obama.
What reports are you reading? In the last OPEC meeting the members all agreed to limit their production to attempt to keep prices at around 75-80 dollars a barrel.
Yes, I know some members cheat on production but the point is that the main producers including Russia aren’t producing at capacity right now because it isn’t needed right now or is in their best interest to do so. OPEC could point this out if they wanted to calm the markets but for some reason haven’t.
So what I’m saying is that tapping into the reserve does nothing for the prices of oil because there is no oil shortage. The normal laws of supply and demand aren’t working in this case for a number of reasons but #1 is assholish speculation, or if you prefer, plain old greed.
I hate to tell you this Ralph, but get used to it. Welcome to the future. Nothing we do can stem the rise of oil prices for more than a short period. They are going to keep rising and rising. The genie is not going back in the bottle. Oil is a problem from now on.
But you know what? I’m here munching on a banana- which cost me next to nothing- from a different freaking continent. If things are getting dire, then we are fiddling while Rome is burning. We still build huge, insanely difficult to heat homes that require us to propel ourselves and two tons of steel huge distances to do anything. If you are going to convince me that anyone is actually concerned, you are going to have to show that at the level of the individual. And from what I see, we are not actually concerned at all. We just want the free fossil fuel gravy train to continue.
I beg all of you- start planning now. The magic fuel fairy is not going to save our lifestyle. But we can work on an individual level to moderate our personal dependence on fossil fuels so that the transition is not as traumatic for us. When you buy a house, think about how you are going to live in it when gas is $10.00 a gallon. Because it will be.
Per the most recent CFTC Commitment of Traders report speculators are net short oil. Speculators are selling oil right now. If you were to eliminate speculators oil would be much higher. Are you sure that’s what you want?
Out of curiosity to those of you who think that speculators are teh evihlx, what would oil commodities trading look like, in your view, without speculators in the mix? How would you buy and sell oil, and how do you think it would differ if speculation and speculators were outlawed or done away with??
-XT
And I wish that people who claim others are ignorant of economics would actually spend some time to understand how it works.
Speculators are a good thing. Futures markets are a good thing. They are part of the mechanism that ensures smooth transitions from one product to another as supply changes. They also buy up risk, and that makes markets less risky for everyone else.
This is how it works: Let’s say there’s instability in the supply of oil. This instability may be temporary, but it may be the start of a general decline in availability. A speculator has to look at all these factors and try to determine what the future price of oil will be. Other speculators are doing the same thing.
If enough speculators think that oil is going to be in short supply in the future, they start bidding up the futures price. Because oil is a commodity, they are buying an actual quantity of oil on a future date. On that date, they will actually have to take delivery - or sell their contracts at the then-current price to someone else who wants to take delivery. If the price of oil doesn’t go up to the price they thought it would, they take a loss. If it goes up more, they profit.
This has the effect of pushing up the current price of oil, which is a good thing, because it forces everyone to modify their usage based on the best estimate of the supply of oil in the future. It also stimulates production and development of alternatives - all things you want to start as early as possible if the price of oil in the future is in fact going up.
Without anyone bidding on the futures markets of products, we’d all be caught napping by sudden price changes. We’d be unaware of the fact that certain commodities might run out. There would be no price pressure to force us to conserve and look for alternatives to commodities before we lose access to them.
Speculation can work the other way, too. If speculators see that demand for a commodity will drop in the future, or supply will increase relative to demand, then they may start selling short, which has the effect of pushing the price down and giving us valuable information about planning for use of that commodity in the future.
And for their part, the speculators are making a profit by buying and selling risk. The good ones (or lucky ones) make a profit, and the others lose money. But their actions protect the rest of us from that risk, and transmit information to the rest of us about the future price of commodities so we can make smarter decisions today. They’re providing a service, and making a profit doing so - just like insurance companies.
This is not to say that it always works well and that there are never market failures that cause speculation to simply increase short-term volatility. I worry about automated trading algorithms and other mechanisms that may screw us over to some degree from time to time. But in general, speculation about the future and having people put their money on the line to back up their speculation is a good thing.
It will only be $10/gallon if, at $10/gallon there is still enough demand for it to justify that price.
In my opinion, that will only happen if the price rises to that level very, very quickly. If it’s a change that will take ten years, then long before it gets that high we’ll be building nuclear plants as fast as we can, we’ll be drilling for more oil in all the places that are currently off limits, Alberta will be massively investing to scale up the oil sands, small cars and electric cars will be all the rage, etc.
There are plenty of alternatives to $200/bbl oil. There are no alternatives to $25/bbl oil. The question is whether we can transition to the alternatives fast enough to avoid major price shocks.
And that’s one reason speculation is a good thing. It helps give us a window into the future of oil prices so we can start the transition to alternatives earlier.
As for the Strategic Petroleum Reserve - I think the American public and most administrations are totally unserious about the reserve. Political pressure drives politicians to using the SPR as a political tool. So I suspect that when a real crisis comes - say, there’s a major disruption in oil supply due to a war or blockades or natural disaster, and whole areas of the country are grinding to a halt, the SPR will have long since been depleted because the government will open it up and sell it off long before the real crisis hits.
That’s the main reason I’ve supported the ban on drilling ANWR. THAT is your real strategic reserve. The ban will be lifted when a real oil crisis hits. Of course, it will take time to actually get that oil to people and refine it, but at least it will be available.
I agree. The way I see it, the purpose of the SPR is to buy us enough time to tap into the ANWR. The ANWR is our real reserve.
But even putting aside strategic needs, it makes economic sense to keep the ANWR in reserve. In the long term, oil is going to keep going up in price. There’s an obvious advantage to being the last guy to sell. Why sell it now at $100 a barrel when it might be worth $500 a barrel in ten years?
Except ANWR isn’t a “reserve” in the sense that if we pump the oil from ANWR we’ve got no worries. ANWR isn’t going to meet our consumption, it won’t be free to develop ANWR, and it will take a decade before oil from ANWR reaches the market. Oil is a global commodity, and a little more domestic oil production isn’t going to move the price by more than a few pennies.
Oil is never going to be $500 a barrel, because at that price nobody is going to drive a gasoline car, everyone will have to switch to electrics. Or we’ll manufacture liquid fuel from coal or biomass.
I’ve read different numbers, but isn’t the SPR only supposed to equal about 30-100 days’ worth of imports? Is that really enough time to exploit ANWR, especially in a world where we’ve actually been completely cut off from the rest of the world’s oil? What would have to be going on in the world for that to happen?
Oil might cost $500/barrel someday, but who’s going to buy it? Most things could be running off wind/nuke/solar energy for the equivalent of say $450/barrel.
The price of oil is set by supply and demand. GLOBAL supply, and global demand. If we tap the SPR at a rate high enough to lower the price of oil, then it won’t last very long.
If we don’t tap the SPR, the demand for oil will decrease due to the high price. This will stabilize the price at some point, after some oscillations caused by speculators.
The US could sell off the SPR at the current high price, then cause some world event that would make the price of oil drop, and replace it at the new lower price for a tidy profit.
Yeah, you know you wanna tap that . . .
Some people just like it black and sticky.
The pipeline was designed to feed the whole area. we’re talking about moving the goal post a few miles.
But hey, send the money overseas where it will somehow be spent better. We don’t need the oil, or the taxes or the jobs that come from using our own natural resources. Fuck those rich oil countries. let them rot in their own wealth. If Russia decides to drill in the Artic Sea or China taps into the Gulf of Mexico then screw it’s all one big global market.
And how many times ya think you can do that before somebody catches on?
No, he’s smart enough to get the moral of The Boy Who Cried Wolf.
CMC fnord!
If by “a few miles” you mean 100 miles, then yeah.
http://www.globalresearch.ca/index.php?context=va&aid=8878 It is being done by huge investors. I gave you a site last time showing the Saudi Minister of oil saying the price was 60 percent up due to speculation. It is sad that you never learn.
Why now? Why wasn’t it time when it hit $1.50 a gallon, or $2.50, or any other given number? Why wouldn’t it not be time until it hit $5.50, or $9.50? What’s magical about $4.50?
You do know that comparable economies have higher retail oil prices and manage to get along perfectly fine? Here in Australia, with the healthiest economy in the Western world, retail petrol prices are approaching $AU 1.50 a litre = ~ $US 5.70 a US gallon, vs $US3-$3.50 over there (we hardly use heating oil).