Why/How did Gasoline drop so fast to LESS than $2 per gallon.. COME ON.. LOL

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DealMonkey

Lifer
Nov 25, 2001
13,136
1
0
Originally posted by: charrison
I never said there was not too much cash chasing oil, but the oil bubble had its roots in tight supply. Once supply/demand came back into balance, the bubble quickly deflated.
I think what I object to the most, is that some folks seem to cling to supply/demand almost like some sort of religion, arguing that ONLY supply/demand or MOSTLY supply/demand drives the market, when it's been clearly shown that speculation is the driving force behind the huge bubble in oil prices.

"MasterCard SpendingPulse reported Tuesday that even though consumption of gas for the weekend ended Friday was down 2.8 percent from a year ago, it was the smallest year-over-year decline in more than two months. Americans used about 100,000 more barrels per day of gas for the week than they did the previous week."

Consumption of gas is down 2.8% from a year ago, yet gas prices are down over $1/gal from a year ago, a 50%+ drop in gas prices? How does demand destruction even begin to correlate here?
 

Thump553

Lifer
Jun 2, 2000
12,651
2,395
126
This morning's paper reported that US domestic demand for gas rose last week-I think the figure was by 100,000 barrels.

And the CPI figures released today show one of the largest drops ever-because of the decrease in gasoline cost. Remember back when gas was rising and gas (and food) were excluded from the CPI calculations?

I hate to sound like a tinfoil hat paranoid, but it sure seems to me like we are being manipulated.
 

LegendKiller

Lifer
Mar 5, 2001
18,256
68
86
Originally posted by: Thump553
This morning's paper reported that US domestic demand for gas rose last week-I think the figure was by 100,000 barrels.

And the CPI figures released today show one of the largest drops ever-because of the decrease in gasoline cost. Remember back when gas was rising and gas (and food) were excluded from the CPI calculations?

I hate to sound like a tinfoil hat paranoid, but it sure seems to me like we are being manipulated.

LOL. Do you understand the difference between core and headline CPI? Energy and food costs were never excluded from headline, only from core, as is always the case.

Only the uneducated are manipulated.
 

brencat

Platinum Member
Feb 26, 2007
2,170
3
76
Originally posted by: alien42
Originally posted by: miketheidiot
yeah lets forget the billions of dollars that hedgefunds put into the market.

stockpiles of oil and gas both increased as the price increased, this was never about supply and demand.

Originally posted by: LegendKiller
LOL. And global deleveraging with hedge funds facing $100BN in redemptions within 3 months, forcing them to massively sell out of oil futures position more than halving the amount of oil futures outstanding.

I've said all along that this had nothing to do with supply/demand. As mike said above, it's always been about investment gains to make up for the mortgage debacle.

these are the truth
Agreed. Mike & LK are right on the money here. The supply/demand argument is just rubbish. And I too have spent my entire career on Wall St as well...
 

LegendKiller

Lifer
Mar 5, 2001
18,256
68
86
Originally posted by: charrison
Originally posted by: LegendKiller
Originally posted by: charrison
Originally posted by: LegendKiller
Originally posted by: charrison
Originally posted by: dahunan
Remember this was all about Peak Oil and running out of oil etc.. right? .. lol

now they are giving it away..l

Supply and demand was tight. Prices got high which caused demand destruction and new sources to come online. Add inthe world economy is going in the tank, which demand for oil is down...

LOL. And global deleveraging with hedge funds facing $100BN in redemptions within 3 months, forcing them to massively sell out of oil futures position more than halving the amount of oil futures outstanding.

I've said all along that this had nothing to do with supply/demand. As mike said above, it's always been about investment gains to make up for the mortgage debacle.

That no doubt played a part as well. But supply was tight, which did help set this commodities bubble.

Supply wasn't "tight", no more "tight" than it has been at any other point in the last 10 years. It's laughable you think that this had anything to do with supply/demand in the face of the actual amount of oil futures outstanding down by 53%. Meanwhile, OPEC is cutting "supply" as fast as prudently possible to keep prices up.

This whole thing was driven by hedge funds, I am saying this as a person who works on Wall St. and reads Hedge Fund Report every week.

Demand is down, and they are moving supply down to match the new demand.


But tell me this, iron ore is a commodity that does not have future trading also spiked sparply due to demand. Was that due to those funds as well. Those funds played a part, but the root was tight supply due to global demand on commodities.

Demand isn't down that much and they are moving supply down to match what they consider the optimal price, far above what the market considers the optimal price. They have yet to figure out that the price set in the last 12 months was nothing more than a big joke played on the world by the hedge funds and banks. When the banks had to deleverage and the hedge funds had to redeem, they had to sell out of the futures positions, most cases at a loss.

Why do you think that T. Boone Pickens' hedge fund is down nearly 40% in the last 3 months? Wow, I guess it was "demand destruction", right?

You're being played like a fiddle and you somehow are still to naive to realize it.

You don't need a futures contract to become overpriced. Was there ever futures contracts on housing?

 

beyoku

Golden Member
Aug 20, 2003
1,568
1
71
Originally posted by: miketheidiot
Originally posted by: CycloWizard
Obviously someone hasn't been paying attention to the precipitous drop in demand. LOLLERSKATES!!!!1!

price was still rising while global demand was falling.

Its really funny, right as money starts pouring out of mortgage securities, it starts pouring into commodity contracts particularly oil, and oil prices spike in spite of increasing global security, increasing global supply and a decrease in demand, and all this happened in an economy that had already started rapidly decelerating in late 2007, right as the bubble was starting.

Looking at the last 18 months and coming to the conclusion that it was pure 'supply and demand' for the products themselves is ridiculous. There was much more going on than the simple econ 101 explanation that laymen seem to like so much.

QFT
 

Genx87

Lifer
Apr 8, 2002
41,095
513
126
Originally posted by: Atreus21
I don't understand why demand should be down. I mean, I didn't suddenly decide I didn't feel like fueling my car anymore because of the economic downturn.

You may not but many people have. World demand is down and expected to remain down. They are cutting supply due to this lower demand.
 

dahunan

Lifer
Jan 10, 2002
18,191
3
0
Originally posted by: LegendKiller
Originally posted by: charrison
Originally posted by: LegendKiller
Originally posted by: charrison
Originally posted by: LegendKiller
Originally posted by: charrison
Originally posted by: dahunan
Remember this was all about Peak Oil and running out of oil etc.. right? .. lol

now they are giving it away..l

Supply and demand was tight. Prices got high which caused demand destruction and new sources to come online. Add inthe world economy is going in the tank, which demand for oil is down...

LOL. And global deleveraging with hedge funds facing $100BN in redemptions within 3 months, forcing them to massively sell out of oil futures position more than halving the amount of oil futures outstanding.

I've said all along that this had nothing to do with supply/demand. As mike said above, it's always been about investment gains to make up for the mortgage debacle.

That no doubt played a part as well. But supply was tight, which did help set this commodities bubble.

Supply wasn't "tight", no more "tight" than it has been at any other point in the last 10 years. It's laughable you think that this had anything to do with supply/demand in the face of the actual amount of oil futures outstanding down by 53%. Meanwhile, OPEC is cutting "supply" as fast as prudently possible to keep prices up.

This whole thing was driven by hedge funds, I am saying this as a person who works on Wall St. and reads Hedge Fund Report every week.

Demand is down, and they are moving supply down to match the new demand.


But tell me this, iron ore is a commodity that does not have future trading also spiked sparply due to demand. Was that due to those funds as well. Those funds played a part, but the root was tight supply due to global demand on commodities.

Demand isn't down that much and they are moving supply down to match what they consider the optimal price, far above what the market considers the optimal price. They have yet to figure out that the price set in the last 12 months was nothing more than a big joke played on the world by the hedge funds and banks. When the banks had to deleverage and the hedge funds had to redeem, they had to sell out of the futures positions, most cases at a loss.

Why do you think that T. Boone Pickens' hedge fund is down nearly 40% in the last 3 months? Wow, I guess it was "demand destruction", right?

You're being played like a fiddle and you somehow are still to naive to realize it.

You don't need a futures contract to become overpriced. Was there ever futures contracts on housing?

And my biggest problem with all of this was that gas/oil was a world economic security concern... 100's of Millions of people who really couldn't afford it were being forced to pay 200% more for something because some fatcats found a way to make huge profits as they were Screaming FUCK THE WORLD.. with their billions
 

Genx87

Lifer
Apr 8, 2002
41,095
513
126
Originally posted by: miketheidiot
Originally posted by: Genx87
Originally posted by: miketheidiot
Originally posted by: charrison
Originally posted by: dahunan
Remember this was all about Peak Oil and running out of oil etc.. right? .. lol

now they are giving it away..l

Supply and demand was tight. Prices got high which caused demand destruction and new sources to come online. Add inthe world economy is going in the tank, which demand for oil is down...


yeah lets forget the billions of dollars that hedgefunds put into the market.

stockpiles of oil and gas both increased as the price increased, this was never about supply and demand.

Right this slide started after a jump in supply in July. If Supply and Demand have nothing to do with it. Then why arent the hedgefunds driving the price to 200 instead of 50?

because the bubble ran out of steam and investors bailed.

Ran out of steam when the supply stopped being so tight. This thing collapsed the week they announced a higher supply due to lower demand. I am with Charrison on this one. The price was definately run up past where it should have by investors. But was allowed to due to such a tight supply. It is no coincidence when the supply outstripped demand the bubble burst. Now OPEC is cutting supply to try and stabilize the price due to a lower demand.
 

LegendKiller

Lifer
Mar 5, 2001
18,256
68
86
Originally posted by: Genx87
Originally posted by: miketheidiot
Originally posted by: Genx87
Originally posted by: miketheidiot
Originally posted by: charrison
Originally posted by: dahunan
Remember this was all about Peak Oil and running out of oil etc.. right? .. lol

now they are giving it away..l

Supply and demand was tight. Prices got high which caused demand destruction and new sources to come online. Add inthe world economy is going in the tank, which demand for oil is down...


yeah lets forget the billions of dollars that hedgefunds put into the market.

stockpiles of oil and gas both increased as the price increased, this was never about supply and demand.

Right this slide started after a jump in supply in July. If Supply and Demand have nothing to do with it. Then why arent the hedgefunds driving the price to 200 instead of 50?

because the bubble ran out of steam and investors bailed.

Ran out of steam when the supply stopped being so tight. This thing collapsed the week they announced a higher supply due to lower demand. I am with Charrison on this one. The price was definately run up past where it should have by investors. But was allowed to due to such a tight supply. It is no coincidence when the supply outstripped demand the bubble burst. Now OPEC is cutting supply to try and stabilize the price due to a lower demand.

Again, there was no higher demand that justified the price. There is a reason why oil futures contracts have declined more than 50%. It's because contracts future-sold the next 8 years worth of production. The problem with people thinking the price went *DOWN* because demand destruction is that they think the price went *UP* because demand creation. However, the problem with that argument is that despite global demand going *DOWN* during the massive run-up in price *AND* the fact that the increase in China's demand was well known, *AND* that OPEC was increasing production in the face of the increase in China's demand, *AND* economic conditions were worsening, prices still went up?

Why? Why, in the face of all fundamentals pointing to the *FACT* that there were no shortages, still room to increase, and falling demand, did prices go up? The simple answer is that there was no fundamental that supported the prices, it was the mere fact that over $100BN of liquidity flooded into the commodities market after the RMBS bubble exploded. Returns were sought.

They are cutting supply to stabilize the price at what *THEY* want their revenue to be fixed at. Why? Because they projected higher revenue due to the manipulation of the futures market, using those future cashflows on projects, such as Dubai. Look at Russia now, they are collapsing. They are in a huge amount of trouble now because they future-sold their own ability to sell oil at a price that wasn't supported by one single fundamental.

Now they're trying to manipulate the market to bail themselves out. However, the biggest problem is that by manipulating the market and not allowing the *ACTUAL* demand for oil (not future-sold oil based upon a ridiculous commodity bubble) to realistically set the price, they *ARE* creating demand destruction by opening up other viable alternatives for oil.

So, in effect, there was no oil bubble based upon fundamentals, it was always going to crash and burn because it was a future-sold market based upopn speculation. However, now that they're trying to support a price artificially, through cutting supply (which the market knows is artificial), they are just creating their own competition.

Frankly, I hope they cut supply to support $100/bbl prices, because, at that level, so many other technologies are viable and attractive that they are shooting themselves in the wang.

This was all a massive joke.

 

crownjules

Diamond Member
Jul 7, 2005
4,858
0
76
Originally posted by: LegendKiller
Again, there was no higher demand that justified the price. There is a reason why oil futures contracts have declined more than 50%. It's because contracts future-sold the next 8 years worth of production.

They are cutting supply to stabilize the price at what *THEY* want their revenue to be fixed at. Why? Because they projected higher revenue due to the manipulation of the futures market, using those future cashflows on projects, such as Dubai. Look at Russia now, they are collapsing.

This was all a massive joke.

Would be quite the conspiracy theory if this was all orchestrated by a central "intelligence" to destabilize some of the oil-reliant countries that we (the US) would favor not being in a position of power. In other words, countries such as Russia (belligerent towards us of late), Iran, and Venezuela.

I will agree that, at it's very root, the oil bubble was started by S/D. But there were many other factors coming in to play at the same time, most importantly shit hitting the fan in the US mortgage market. July '07 was when the worries and bad numbers began to start showing up and coincided with the takeoff of oil prices and the decline of the dollar. So in other words, investors in mortgage backed securities and the dollar saw that oil (and a few other commodities) had potential and blew it up.
 

DealMonkey

Lifer
Nov 25, 2001
13,136
1
0
Yeah, no kidding. Crude prices don't jump more than 2x in 6 months on supply/demand alone. Supply and demand issues in the energy markets cause mild fluctuations which are then enormously amplified by speculation.
 

Special K

Diamond Member
Jun 18, 2000
7,098
0
76
Originally posted by: LegendKiller
Originally posted by: Genx87
Originally posted by: miketheidiot
Originally posted by: Genx87
Originally posted by: miketheidiot
Originally posted by: charrison
Originally posted by: dahunan
Remember this was all about Peak Oil and running out of oil etc.. right? .. lol

now they are giving it away..l

Supply and demand was tight. Prices got high which caused demand destruction and new sources to come online. Add inthe world economy is going in the tank, which demand for oil is down...


yeah lets forget the billions of dollars that hedgefunds put into the market.

stockpiles of oil and gas both increased as the price increased, this was never about supply and demand.

Right this slide started after a jump in supply in July. If Supply and Demand have nothing to do with it. Then why arent the hedgefunds driving the price to 200 instead of 50?

because the bubble ran out of steam and investors bailed.

Ran out of steam when the supply stopped being so tight. This thing collapsed the week they announced a higher supply due to lower demand. I am with Charrison on this one. The price was definately run up past where it should have by investors. But was allowed to due to such a tight supply. It is no coincidence when the supply outstripped demand the bubble burst. Now OPEC is cutting supply to try and stabilize the price due to a lower demand.

Again, there was no higher demand that justified the price. There is a reason why oil futures contracts have declined more than 50%. It's because contracts future-sold the next 8 years worth of production.

They are cutting supply to stabilize the price at what *THEY* want their revenue to be fixed at. Why? Because they projected higher revenue due to the manipulation of the futures market, using those future cashflows on projects, such as Dubai. Look at Russia now, they are collapsing.

This was all a massive joke.

Do the member nations of OPEC actually go along with these mandated supply cuts? Wouldn't it be in each country's best interest to overproduce, regardless of what the other countries do?
 

LegendKiller

Lifer
Mar 5, 2001
18,256
68
86
Originally posted by: Special K
Originally posted by: LegendKiller
Originally posted by: Genx87
Originally posted by: miketheidiot
Originally posted by: Genx87
Originally posted by: miketheidiot
Originally posted by: charrison
Originally posted by: dahunan
Remember this was all about Peak Oil and running out of oil etc.. right? .. lol

now they are giving it away..l

Supply and demand was tight. Prices got high which caused demand destruction and new sources to come online. Add inthe world economy is going in the tank, which demand for oil is down...


yeah lets forget the billions of dollars that hedgefunds put into the market.

stockpiles of oil and gas both increased as the price increased, this was never about supply and demand.

Right this slide started after a jump in supply in July. If Supply and Demand have nothing to do with it. Then why arent the hedgefunds driving the price to 200 instead of 50?

because the bubble ran out of steam and investors bailed.

Ran out of steam when the supply stopped being so tight. This thing collapsed the week they announced a higher supply due to lower demand. I am with Charrison on this one. The price was definately run up past where it should have by investors. But was allowed to due to such a tight supply. It is no coincidence when the supply outstripped demand the bubble burst. Now OPEC is cutting supply to try and stabilize the price due to a lower demand.

Again, there was no higher demand that justified the price. There is a reason why oil futures contracts have declined more than 50%. It's because contracts future-sold the next 8 years worth of production.

They are cutting supply to stabilize the price at what *THEY* want their revenue to be fixed at. Why? Because they projected higher revenue due to the manipulation of the futures market, using those future cashflows on projects, such as Dubai. Look at Russia now, they are collapsing.

This was all a massive joke.

Do the member nations of OPEC actually go along with these mandated supply cuts? Wouldn't it be in each country's best interest to overproduce, regardless of what the other countries do?

The member countries do have a huge interest in skipping the quotas, since the "cheat" gains more revenue at the higher-quota driven price. The extra money earned is higher than what it would be if the quota included the "cheat" supply.

Most countries also have an interest in producing the quota, mainly because they have a finite resource and want to get the max price for it.
 

Genx87

Lifer
Apr 8, 2002
41,095
513
126
Originally posted by: LegendKiller
Originally posted by: Genx87
Originally posted by: miketheidiot
Originally posted by: Genx87
Originally posted by: miketheidiot
Originally posted by: charrison
Originally posted by: dahunan
Remember this was all about Peak Oil and running out of oil etc.. right? .. lol

now they are giving it away..l

Supply and demand was tight. Prices got high which caused demand destruction and new sources to come online. Add inthe world economy is going in the tank, which demand for oil is down...


yeah lets forget the billions of dollars that hedgefunds put into the market.

stockpiles of oil and gas both increased as the price increased, this was never about supply and demand.

Right this slide started after a jump in supply in July. If Supply and Demand have nothing to do with it. Then why arent the hedgefunds driving the price to 200 instead of 50?

because the bubble ran out of steam and investors bailed.

Ran out of steam when the supply stopped being so tight. This thing collapsed the week they announced a higher supply due to lower demand. I am with Charrison on this one. The price was definately run up past where it should have by investors. But was allowed to due to such a tight supply. It is no coincidence when the supply outstripped demand the bubble burst. Now OPEC is cutting supply to try and stabilize the price due to a lower demand.

Again, there was no higher demand that justified the price. There is a reason why oil futures contracts have declined more than 50%. It's because contracts future-sold the next 8 years worth of production.

They are cutting supply to stabilize the price at what *THEY* want their revenue to be fixed at. Why? Because they projected higher revenue due to the manipulation of the futures market, using those future cashflows on projects, such as Dubai. Look at Russia now, they are collapsing.

This was all a massive joke.

I never claimed demand justified the price. What I am arguing is the supply was tight enough to let these guys run up the price. In the end when supply caught up with demand this whole thing took a giant shit. I understand we can argue the finer details of how it goes down and I will admit you will have better knowledge of that side. But this thing took a nose dive about 10 mins after it was announced supply was higher than expected by several million barrels due to a lower demand. And it has been spiraling out of control ever since due to an expected lower demand. So much so they are cutting supply to meet demand.
 

crownjules

Diamond Member
Jul 7, 2005
4,858
0
76
Originally posted by: Special K
Do the member nations of OPEC actually go along with these mandated supply cuts? Wouldn't it be in each country's best interest to overproduce, regardless of what the other countries do?

For the most part they do. Saudi Arabia has been known to throw an occasional hissy fit when the rest of OPEC wants to cut production. Being the largest producer of oil in the world, SA has much more leverage than their counterparts and they like being buddy-buddy with the US, who doesn't want them cutting production because we need to suckle on their sweet crude oil.

But in the end, SA generally falls in line with what OPEC wants. They just like to throw their weight around and make a stink.
 

dmcowen674

No Lifer
Oct 13, 1999
54,894
47
91
www.alienbabeltech.com
Originally posted by: Genx87

Ran out of steam when the supply stopped being so tight. This thing collapsed the week they announced a higher supply due to lower demand.

I am with Charrison on this one.

The price was definately run up past where it should have by investors. But was allowed to due to such a tight supply. It is no coincidence when the supply outstripped demand the bubble burst. Now OPEC is cutting supply to try and stabilize the price due to a lower demand.

Why do you ignore the fact that oil depots never ran short of oil?

The facts show not only did we never run short of a 9 year supply but actually even had an overflow of oil at the oklahoma depot facility.

You guys that stupid or CEO's of these OIl companies?
 

dmcowen674

No Lifer
Oct 13, 1999
54,894
47
91
www.alienbabeltech.com
Originally posted by: LegendKiller

Frankly, I hope they cut supply to support $100/bbl prices, because, at that level, so many other technologies are viable and attractive that they are shooting themselves in the wang.

This was all a massive joke.

Yes and the joke is on people like Genx, Charrison and all other Americans with apparently no brain.
 

desy

Diamond Member
Jan 13, 2000
5,433
204
106
We didn't run out of oil HERE
They did elsewhere in the world 'google it' and its a GLOBAL traded economy in terms of price, so somebody was willing to pay more to keep it coming IE rich North Americans
 

dmcowen674

No Lifer
Oct 13, 1999
54,894
47
91
www.alienbabeltech.com
Originally posted by: Genx87
I never claimed demand justified the price. What I am arguing is the supply was tight enough to let these guys run up the price.

In the end when supply caught up with demand this whole thing took a giant shit. I understand we can argue the finer details of how it goes down and I will admit you will have better knowledge of that side. But this thing took a nose dive about 10 mins after it was announced supply was higher than expected by several million barrels due to a lower demand. And it has been spiraling out of control ever since due to an expected lower demand. So much so they are cutting supply to meet demand.

I proved everything you and others in here spew is 110% pure lies, deciet and garbage.
 
Sep 12, 2004
16,852
59
86
Originally posted by: dmcowen674
Originally posted by: Genx87
I never claimed demand justified the price. What I am arguing is the supply was tight enough to let these guys run up the price.

In the end when supply caught up with demand this whole thing took a giant shit. I understand we can argue the finer details of how it goes down and I will admit you will have better knowledge of that side. But this thing took a nose dive about 10 mins after it was announced supply was higher than expected by several million barrels due to a lower demand. And it has been spiraling out of control ever since due to an expected lower demand. So much so they are cutting supply to meet demand.

I proved everything you and others in here spew is 110% pure lies, deciet and garbage.
A little trip down memory lane for you, Dave.

You used to conspiratorially rant about how gas prices were manipulated by the Saudis and Bush/Cheney.

It is very clear the price at the pump has absolutely nothing to do with the true definition of Supply and Demand, it is 110% Political only.

The Conspiracy has to be cystal clear for all to see now.

Based on the incredible ramp up of prices overnight when Oil went from $25 to $35 a barrel, Gas should be at least $4 even close to $5 a gallon at this time in the U.S., but of course it is not. Why is it not??? Because all of the Thugs in Political power from the Saudi's, Oil Execs, to the President know the implications of crippling the World in an instant by doubling and trippling transportation costs.

When will the U.S. begin rationing Fuel and can imagine the impact???
You haven't proven anyone wrong except yourself.

But, hey. Drive for 5, baby. :roll:
 

piasabird

Lifer
Feb 6, 2002
17,168
60
91
Maybe them Arabs just artificially raised the price of oil/gas through manipulation of the market. That is it; this was all a conspiracy to collapse the American Economy fo Barak O-Bumma could win. Yah! That is what happened.