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Oil Price Bubble about to BURST
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IHateMyJob2004
Lifer
That's 30-35 for those that are reading the OP.
And yes, there is a bubble. I concur 100% with the supply demand comment. BUST
aircooled
Lifer
in the early to mid 80's gas stations were racing to add the third digit when gas topped $1.00 a gallon then it went back down to about .60 cents a gallon before gradually rising again (at least where I lived), I remember filling up my beetle for 5 bucks 🙂
I'm sure it could happen again....
I'm sure it could happen again....
IHateMyJob2004
Lifer
Well, peak oil will eventually hit. (thread killer)
But $40-$50 per barrel will be normal in a year if you ask me.
Many hedge funds use leverage (borrowed money) to "invest." This rings especially true to hedge funds that trade commodity futures. Futures contracts currently dictate the oil prices and most traders are "speculators" in that they don't ever literally receive the oil from purchasing the futures contract. Instead of receiving oil, they just settle and pay the paper loss.
The problem with hedge funds and futures trading is that these fvckers are leveraged 100:1, i.e. deposit $10 million and but $1 billion in futures. Imagine all the pumping this causes...I think this is one of the primary reasons why Forbes thinks oil futures prices will pop.
I mean think about it, a year ago price was at like $35. How are you gonna tell me that within one year demand has changed so much that Futures prices (month-to-month futures contracts) are trading DOUBLE that. Supply and Demand does not warrant that price. I mean 2 million new chinese drivers ain't gonna make a dent in the oil market.
EDIT: Futures market is merely pieces of paper being traded. Just like the pieces of paper that had internetcompany.com on it with XX number of shares printed were trading for $100, the oil futures is doing the same. It WILL burst.
yukichigai
Diamond Member
Okay, let's go through the supply/demand part of this.
In order for crude oil to get from the barrel to your car it has to be refined. What were damage in the hurricane? Oil refineries. So let's look at this: in order for gas companies to get you the same amount of gasoline it's going to cost more if they even can output the same amount, (unlikely) which means the price of gas to us will go up. However, given the severity of the price at which this will go up they can't just crank up the price as much as they want. They have to find the balance of supply and demand: what price is acceptable enough to people to generate the highest profit. However, this profit will be lower than what was made previously, which means the gas companies will only be able to afford so much oil, less than they used to. We buy less, OPEC profits go down. And since we can only afford so much and can only process so much they have a limit on how high the price can go and how many barrels they can sell us. This means that there's only so much money they can make from us, period, and it'll be less than what it was.
Or that's what Macroeconomics taught me anyway.
In order for crude oil to get from the barrel to your car it has to be refined. What were damage in the hurricane? Oil refineries. So let's look at this: in order for gas companies to get you the same amount of gasoline it's going to cost more if they even can output the same amount, (unlikely) which means the price of gas to us will go up. However, given the severity of the price at which this will go up they can't just crank up the price as much as they want. They have to find the balance of supply and demand: what price is acceptable enough to people to generate the highest profit. However, this profit will be lower than what was made previously, which means the gas companies will only be able to afford so much oil, less than they used to. We buy less, OPEC profits go down. And since we can only afford so much and can only process so much they have a limit on how high the price can go and how many barrels they can sell us. This means that there's only so much money they can make from us, period, and it'll be less than what it was.
Or that's what Macroeconomics taught me anyway.
Amused
Elite Member
Funny. I remember hearing all this fear mongering back in the 70s (Not forbes, but the canned responses in this thread to his article).
We'll have to wait and see, but I never put any stock into the "peak oil" chicken littles. It sounded too much like bullsh!t to me.
Anyhow, we'll have to wait and see.
We'll have to wait and see, but I never put any stock into the "peak oil" chicken littles. It sounded too much like bullsh!t to me.
Anyhow, we'll have to wait and see.
To be honest... I'd like to know what the hell is wrong with crude oil prices. I know why petrol prices are insane - lack of refinery capacity. But the entire gulf coast refining system is now completely offline - which should be a drop in crude demand. And yet... Crude prices are still going up. You can cite China and India all you fvcking want, but there's NO WAY IN HELL that their demand is increasing at that rate unless they're opening 3 refineries every day and running every one of them at max capacity.
IHateMyJob2004
Lifer
Phokus id raise a good point. But I have yet to go to a gas station and there was no gas.
IHateMyJob2004
Lifer
But if hte US refineries DEMAND LESS CRUDE, why is the cost for a barrel of gasoline going up? Speculation?
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