Oil Prices are Down. Can anyone Explain Why?

[Texmaster]

As far as I know we are still in summer, the peak of oil use, haven't heard a peep about OPEC reducing their rates.

So WHY did oil prices DROP? Can anyone explain this to me?

Without a legitimate reason there can only be 2 assumptions.

#1 OPEC is producing more
#2 the Oil Companies have been holding back

 

[Total Refected Power]

SLOWING ECONOMY!!!!!!!!!!!!!!!!!!!!

 

[rudder]

refineries are catching up with demand. How they got behind in the first place (greed) I will never know. But now gas supplies are growing again.

 

[Texmaster]

<< SLOWING ECONOMY!!!!!!!!!!!!!!!!!!!! >>



The economy has been slowing for 2 years and prices have been going up.

I dont think that is the reason

 

[Texmaster]

<< refineries are catching up with demand. How they got behind in the first place (greed) I will never know. But now gas supplies are growing again. >>



I agree but isn't it interesting how little coverage its been getting?

 

[Carbo]

The US has been skimming all the petroleum floating in our oceans from all the various oil spills, so now we have a surplus.

 

[goodoptics]

I'm not aware why but I think that's good news for us.

 

[Spook]

No, the refinery answer is correct... There were several refineries down for mainentance, and I believe a few more came online.... We could get the oil, but the refineries couldn't produce enough gas...

 

[desy]

Its both
The US economy has been in decline for 9 months not 2 yrs.

WASHINGTON (AP) - Manufacturing activity in the United States plummeted in June, the ninth straight monthly decline, providing fresh evidence that the battered industrial sector
continues to bear the brunt of the year-long economic slowdown.

The U.S. Federal Reserve reported Tuesday that industrial production at American factories, mines and utilities declined by 0.7 per cent last month, following a 0.5 per cent drop in May.
June's decline was the sharpest since industrial output fell by 0.9 per cent in January.

The latest snapshot of the industrial sector's performance was weaker than many analysts were expecting. They were predicting manufacturing activity would fall by 0.5 per cent in June.



The production is catching up, The demand decreased due to high prices

 

[AndrewR]

It's those oil bastards that Bush is protecting!! They are stopping their amazing greed!!

Or, it could just be market and production factors, as it always was.

 

[Windogg]

Supply and demand. Refineries are coming back from routine maintainace. Enough special fuel blends mandated by certain regions are now available.

Why is it not making news? Because alarmist conspiracy theories sells papers and gets people to watch the news. Cute puppies and sunshine doesn't.

 

[Demon-Xanth]

Hybrid cars started to look too good

 

[AndrewR]

Demon: Bah! My Dodge Dakota Quad Cab with a V8 looks good -- not those trumped up radio controlled cars with lawnmower engines.

 

[desy]

LOL at Demon
Its why I bought a mototcycle
http://www.canada.com/cgi-bin/cp.asp?f=/news/cp/stories/20010713/business-375016.html

OH they are also letting Iraq sell on the market again &quot;supervised&quot;

 

[Nucleophyle]

Did anyone consider that this is the free market correcting itself? 60% of the world's oil is produced from non-OPEC countries. With oil prices over $25 a barrel, it becomes profitable for non-OPEC countries that have no quotas like Canada, Mexico, UK, Colombia, and Argentina to increase their output.

Canada and Mexico combined provide the U.S. about as much oil as the top two OPEC countries, Saudi Arabia and Venezuela combined.

In recent months, pushed by record profit margins and the continued high price for oil, many non-OPEC countries have stepped up exploration and production.

Keep in mind that OPEC quotas are completely optional too. Here's what MSNBC has to say:
&quot;OPEC is a voluntary organization that aims to coordinate the production policies of its member countries through consensus decision-making. Each member country retains absolute sovereignty over its oil production.&quot;

So any individual OPEC country that sees really high oil prices could increase production on its own to profit from it.

Couple all this with a GLOBAL economic morass, where everyone is driving less, using less electricity from burned oil, and oil companies increasing supply to profit from high prices, and the drop from record high oil prices is understandable.

Why the oil companies would hold back when prices are sky-high is beyond me. If they're holding back supply, they are selling less and thus their profits are trimmed. If prices are sky-high, I'd sell all the oil I had to milk the high prices for as long as possible. Because if I don't increase output, someone else will.

 

[RDMustang1]

hybrid cars good, gas guzzling trucks bad!

 

[AndrewR]

Mustang: Ok, we'll have an accident. I'll take the truck, you take the hybrid.

 

[Texmaster]

<< Its both
The US economy has been in decline for 9 months not 2 yrs. >>



Actually I was mistken adding on a another year but it has been over one year. The economy began to slow in May of last year.



<< WASHINGTON (AP) - Manufacturing activity in the United States plummeted in June, the ninth straight monthly decline, providing fresh evidence that the battered industrial sector
continues to bear the brunt of the year-long economic slowdown.

The U.S. Federal Reserve reported Tuesday that industrial production at American factories, mines and utilities declined by 0.7 per cent last month, following a 0.5 per cent drop in May.
June's decline was the sharpest since industrial output fell by 0.9 per cent in January.

The latest snapshot of the industrial sector's performance was weaker than many analysts were expecting. They were predicting manufacturing activity would fall by 0.5 per cent in June.



The production is catching up, The demand decreased due to high prices >>



Well thats informative thanks.

 

[airis2001]

This is on the long side so bear with me.
Are you talking about oil or gasoline prices, I know gas is cheaper but i though crude was holdign steady. keep in makd that teh pump to pump life for oil or teh time it takes for it to be pumped, shiped refined shipped again and pumped in to your car is something lke 6-8 weeks. Gas prices spiked because of seveal reasons:
1) A bad winter created a lot of demand for heating oil, so when refinaries were suposed to be making summer gas, they still were makign heatilng oil, reserves never were able to be built up
2) To meny belnds needed in teh summer, There are something like 20 diernt blends needed aroudn this nation and 3 grades in each blend, soa total of like 60+ types of gas are needed in this country. Why so meny? The EPA mandates that areas that have pollution problams fix them before they can get more federal funding for certian projects, these areas are called non-atianment zone, each zone has a differnt problam, and one wy theis problam is solev is to mandate a special blmed of gas. teh troube it that this gas can only be used in that area, and no other, and no other type of gas can be used in that area, so a small number of refinaries are providing gs to an area, and if tehre is a problam at the refinary or in teh piplines used by it to suply teh gas, other types of gas can not be used in teh special blends place, supply droppes, prives rise.
Thsi could be solved if teh EPA would pick a few blends of gas and allow severa areas to use each blend, more refinaries would be making each blend s a problam at one rfinary would not be so much of an issue.
3) WAY more cars on the road, and lower average millage. you can tell tis by drving, there are alot more cars out there, and a lot of tehm are SUV's and minivans, which do not get good millage. over the past few years, teh average millage of all consumer cars sold has gone down, so we have more cars using more gas per mile and to top it off, people are diving more,
This is a simple answer to this quesion, I am a transportation geography stuuden so i have studied this a lot, and some of teh numbers i have seen scare me.
back to teh gs/oil price issue, keep inmind that most of teh oil we (the U.S.) imports, comes from venesula and a couple of other central and south american nations, nto teh middle east
Ari

 

[desy]

The manufacturing industry is the greatest consumer of energy and the biggest indicator of overall economic activey.
Sorry if I had to draw the corelation for you.

 

[Dunbar]

I find it funny how the media was whispering &quot;$3 a gallon&quot; in spring and now that it's less than half that in Chicago (which got hammered last summer) in the peak of summer you don't hear a peep.

 

[Alienwho]

it must be those &quot;damned SUV's&quot; fault, after all they are the sole deciders of gas prices

 

[Windogg]

In the long run the only fuel price that counts is diesel. Diesel fuels the trucks and trains that bring all the goods to be processed and eventually into the stores which we buy from. Diesel is also is also the same fuel that people use when they use oil heat. Yea gas prices going up does hurt but the overall impact is less than if the price of all good and services went up because of high diesel fuel.

 

[DoubleN]

I heard on the radio some people saying that it was around $1.15 where they lived in different parts of Texas...I'm in Houston and we haven't seen it drop that low yet (we're like $1.40-1.50?), but I'm crossing my fingers!

 

[Nucleophyle]

Here are a couple of sites to check on:

Bloomberg: Energy
This page has the latest wholesale price of crude oil, gasoline, heating oil, natural gas, and even electricity.

AAA Media Site
This page is for the media, but anyone can get to it. They have the average national price for gasoline, and they have it broken down by state and metropolitan area. Updated daily. Very cool.