Gas Prices

Row1and

Guest
Apr 7, 2005
835
0
0
We can all accept that the recent decline in gas prices is awesome. In fact, that could count as my Christmas gift and I'll be content with that.

The question is how long? How long before the gas prices start to go back up again? I just have a gut feeling that this enjoyment of low gas prices will not last long at all. I'm also not saying that it'll be tomorrow or the next day that the prices go back up, but with the running out of natural resources and the increase in population, I'm sure that it'll happen.

 

z0mb13

Lifer
May 19, 2002
18,106
1
76
I read a news article saying that despite the drop in prices, saudi arabia is still pumping at full capacity. Why? Because they still want the world to be addicted to oil. Once the world really turn into alternative energy, they are hosed
 

ViviTheMage

Lifer
Dec 12, 2002
36,189
87
91
madgenius.com
Originally posted by: z0mb13
I read a news article saying that despite the drop in prices, saudi arabia is still pumping at full capacity. Why? Because they still want the world to be addicted to oil. Once the world really turn into alternative energy, they are hosed

They must know it's coming...and maybe that is why there is a drop in price?
They will have no buyers ... eventually:D
 

Queasy

Moderator<br>Console Gaming
Aug 24, 2001
31,796
2
0
Could keep dropping for a while. Unfortunately, it is dropping for the wrong reasons.

Dec. 4 (Bloomberg) -- Crude oil may dip below $25 a barrel next year if the recession that?s slashing fuel demand around the world spreads to China, Merrill Lynch & Co. said.

Global oil demand will contract in 2009 as economic growth slows to its weakest since 1982, Merrill Commodity Strategist Francisco Blanch said in a report today. In October, when oil was around $100 a barrel, the bank predicted that prices may slide to $50. Crude traded at $45.30 in New York today, the lowest since February 2005.

?A temporary drop below $25 a barrel is possible if the global recession extends to China and significant non-OPEC cuts are required,? Blanch said. ?In the short-run, global oil demand growth will likely take a further beating as banks continue to cut credit to consumers and corporations.?

Crude hasn?t fallen below $25 a barrel on the New York Mercantile Exchange since November 2002.

Global oil demand has slumped as the U.S., Europe and Japan face simultaneous recessions for the first time since World War II. The number of Americans collecting jobless benefits rose to 4 million in the week to Nov. 22, a 26-year high, the Labor Department reported today. European Central Bank President Jean- Claude Trichet said the euro region?s economy will shrink in 2009.

$50 Average

Merrill reiterated a Nov. 26 forecast that oil futures traded in New York will average $50 a barrel next year. Prices ?could find a trough? at the end of the first quarter and undergo a ?modest recovery? in the second half as economies strengthen, according to today?s report.

?We expect strong cooperation to emerge? among members of the Organization of Petroleum Exporting Countries as prices fall below $50, Blanch said. OPEC, producer of more than 40 percent of the world?s crude, was still pumping about 1 million barrels a day more than its official target of 27.3 million barrels a day last month, according to a Bloomberg survey.

Producers in Canada may shutter almost 800,000 barrels a day if prices decline below $35 a barrel, Blanch added.

Merrill?s $50-a-barrel assessment for 2009 is the second- lowest among 32 analyst estimates compiled by Bloomberg, after a prediction of $43.13 by ANZ Banking Group Ltd. issued on Nov. 18.
 

z0mb13

Lifer
May 19, 2002
18,106
1
76
Originally posted by: ViviTheMage
Originally posted by: z0mb13
I read a news article saying that despite the drop in prices, saudi arabia is still pumping at full capacity. Why? Because they still want the world to be addicted to oil. Once the world really turn into alternative energy, they are hosed

They must know it's coming...and maybe that is why there is a drop in price?
They will have no buyers ... eventually:D

The drop in price is due to the speculators (hedge funds) pulling out of the market, and of course due to drop in demand as well
 

dullard

Elite Member
May 21, 2001
25,651
4,166
126
In the short term, gas and oil prices have very little to do with actual supply and demand. In the long term, however, supply and demand are quite important. Right now, the price of oil is fairly close to the long term historical balance of what the world can afford based upon world incomes. Thus, we are right about at what long term prices should be.

However, as we all know, in the short term, oil could easilly shoot back up above $100/barrel or down below $20/barrel.