Oil Crosses $107 - New Record

[JMHX]

NEW YORK (AP) -- Oil prices surged Monday to a new inflation-adjusted record and their fifth new high in the last six sessions on an upbeat report on wholesale inventories. Gasoline prices, meanwhile, were poised to set a new record at the pump, having surged to within half a cent of their record high of $3.227 a gallon.

Light, sweet crude for April delivery rose $3.02 to $108.17 on the New York Mercantile Exchange after earlier setting a new trading record of $108.17.

Link
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There's a lot of psychobabble about how we need to get into alternative fuel because we're witnessing Peak Oil - ridiculous. If anything, the majority of this is due to the complete collapse of the dollar against almost every other Western currency. It doesn't help that Venezuela has embargoed our purchasing of their oil - not speaking to the third largest producer in the world is a good way to drive prices up across the board.

[Memorize]

When in doubt, blame America!

[JMHX]

At 3/10/08 03:54 PM, Memorize wrote: When in doubt, blame America!

I blame America for what is America's fault - mainly the collapse of the sub-prime mortgage market and the resulting tidal wave that has sent everything from consumer discretionary to industrial growth into the negatives since November 2007. This ripple effect, coupled with already rampant insecurity about the stability of world economic growth, helped drive the dollar down to historic lows that deepen almost every trading session. The Euro, the Pound, even the Canadian Dollar have seen their values skyrocket as the dollar tumbles.

Since the majority of oil purchases are done using currency conversions, it follows that as the buying power of the dollar relative to foreign currencies falls, the price of foreign-purchased goods will get more expensive. This accounts for why the price of oil is going up even as demand for oil - American drivers, American heavy industry - has fallen in line with the economic downturn. The rate at which oil has leapt in the past six months rules out any shortage (as OPEC has noted, production has remained consistent and can be opened up more) or any sharp spike in demand. It certainly isn't that oil is getting rarer, but that more dollars are needed to buy the product.

[CogSpin]

Get ready for martial law people. What are you going to do when the Depression comes? When 90% of you live in urban environments, what are you going to do? You're going to turn into animals overnight.

[Nylo]

At 3/10/08 03:18 PM, JMHX wrote: If anything, the majority of this is due to the complete collapse of the dollar against almost every other Western currency. It doesn't help that Venezuela has embargoed our purchasing of their oil - not speaking to the third largest producer in the world is a good way to drive prices up across the board.

Eh, I'd say it was the fact that oil prices are not only dependent on stable political situations, but that the rest of the world is trying to industrialize as well.

Of course, the dollar going to shit doesn't help. I just wouldn't put it at #1 on my list of "OH MY GOD, NO!!!!!!!!!!!!!"

[Imperator]

At 3/10/08 04:28 PM, Nylo wrote:
Of course, the dollar going to shit doesn't help. I just wouldn't put it at #1 on my list of "OH MY GOD, NO!!!!!!!!!!!!!"

Only reason I would is because US power relies predominantly on being an economic empire. Remember, the terrorists hit the WTC on 9/11, not the Statue of Liberty. I think that's a pretty good indicator of where our global influence lies.

And a crumbling dollar means a crumbling empire.

[JMHX]

At 3/10/08 04:40 PM, Imperator wrote:

At 3/10/08 04:28 PM, Nylo wrote:

And a crumbling dollar means a crumbling empire.

Well said.

[kamil-fucker]

a crumbling dollar is a problem for all most all western and more nations, as a lot of currency's are tied too the dollar.
this is because America just 'prints' dollars to buy their oil, thus creating hyper inflation.
( know it sounds crazy, it's true tho, no link to prove it, but you might find something on google.)

[JMHX]

Hyperinflation: Inflation exceeding 50% a month.

Maybe Zimbabwe, but not the United States.

[stafffighter]

A lot of people fail to realize that money, while at times hypothetical, is is a very real force and no nation exists in a vacume. But with the good ole American comfort zone the ignorant masses are going to complain about filling their gas tank and then not change or think about anything.

[AdamRice]

This is going to weigh in heavily on my decision of the daily driver I'm buying this summer.

I found this 1986 Ford F150 for $3000, it's clean as hell and runs like a top, I really like it too, but the damn thing gets 14 mpg on average.
What I should get is a 5 speed Ford Ranger with a little 4 banger in it. I found one at a dealership for $3100, but the clutch on it is broken. Back to the drawing board.

This is turning into a real problem.
The US currency is devaluing in relation to foreign currencies.
Inflation is eating away savings, especially improperly invested savings.
For example, I've got a fairly large sum of money just sitting idly in my checking account. This is border line retarded. I should invest the majority of it into something that will gain interest so that it doesn't keep devaluing from inflation. I have way more on idle reserve then I need for my typical conservative daily spending habits.

Top that off with the talks about potentially imposing a carbon tax on fuels in the future (that'll be the day I completely lose faith in this country)

By the way, I wish you would post here more often JMHX, your topics are frequently engaging.

[Memorize]

At 3/10/08 04:00 PM, JMHX wrote:

I blame America for what is America's fault - mainly the collapse of the sub-prime mortgage market and the resulting tidal wave that has sent everything from consumer discretionary to industrial growth into the negatives since November 2007.

Or rather...

Hugo Chavez: *random threat on trade with US*
OPEC: "Yeah... we're going to need to raise the price of a barrel by $5... just in case... indefinitely..."

As I said: When in doubt, blame America.

[JMHX]

Except that OPEC doesn't raise the price of oil - it's decided on a free market standard. While they have control over supply - which has not changed - they don't simply meet and decide oil is going to be $108 a barrel. Hugo Chavez's main argument against the United States is that we ignore him, and he is determined to do anything to get the attention of the United States. Had we met with him when he was newly elected and not the populist threat he is today, it is likely much of the trauma of the Venezuelan oil cutoff could have been avoided. Now, having waited, talking to him will be spun as a victory for Chavez, which the United States cannot afford.

I'm in no way saying the United States is the cause of the world's problems, but it is also short-sighted to overlook the US-based problems that are driving oil up so rapidly in comparison to everything else.

[Memorize]

At 3/11/08 01:11 AM, JMHX wrote: Except that OPEC doesn't raise the price of oil - it's decided on a free market standard.

Except that there's no reason to even have a discussion on oil simpley because some dellusional nut like Hugo Chavez makes some random threat (really, what else is new?).

There's also no reason for barrel prices to rise just because Hugo Chavez makes said random threat.

And we're still talking about the people who decided "No. We will not increase supply".

I'm in no way saying the United States is the cause of the world's problems, but it is also short-sighted to overlook the US-based problems that are driving oil up so rapidly in comparison to everything else.

Especially when they shouldn't be.

[Imperator]

At 3/11/08 03:23 AM, Memorize wrote:
There's also no reason for barrel prices to rise just because Hugo Chavez makes said random threat.

As of late I've been under the impression they do it just because they CAN.
There's no reason, yet the bastards do it anyways. Hell, if I were in their shoes, it'd be $200/barrel tomorrow, cause in all honesty, what the fuck would you do about it?

My main problem with the whole oil debate used to be between people saying "shit's gonna hit the fan" vs "nah, we're fine".

Now it's between WHEN shit's gonna hit the fan. I've still got problems with the "we're ok" side, because they're procrastinating, basically.

It's like cramming before an exam. You know when the test is, and the brain isn't designed to memorize a semester's worth of info in 6 hrs.

Ah yes, discussing the historicity of the Peak Oil debate........who would've thunk.......

[KeithHybrid]

Hence why I do not own a car. On top of all the other costs for keeping one, I'm not going to pay a penny over two bucks a gallon.

Public transportation FTW

[JMHX]

At 3/11/08 03:23 AM, Memorize wrote:

At 3/11/08 01:11 AM, JMHX wrote: Except that OPEC doesn't raise the price of oil - it's decided on a free market standard.

Except that there's no reason to even have a discussion on oil simpley because some dellusional nut like Hugo Chavez makes some random threat (really, what else is new?).

Well, given that this is slightly more than "some random threat" in that Exxon-Mobil has been cut off from purchasing Venezuelan oil, and that this case could very easily extend to the rest of the United States pending actions on the Venezuelan-Colombian border, I would say that there's a fair reason to point a finger at Chavez for causing unrest and tension in world oil markets.

[RommelTJ]

At 3/11/08 08:08 AM, KeithHybrid wrote: Hence why I do not own a car. On top of all the other costs for keeping one, I'm not going to pay a penny over two bucks a gallon.

Public transportation FTW

Same here. Although it's a bit inconvenient sometimes, especially with bitchy ass girlfriends.

[JMHX]

Perhaps if automotive companies put fuel efficiency discoveries to work by making lighter cars.

Step 1: 4,000lb car gets 14 MPG
Step 2: Discovery on fuel efficiency
Step 3: 4,500lb car gets 14 MPG.

Wouldn't you think they'd maintain size and get more efficiency? NOU! We need our triplepickups.

[Slizor]

Well, given that this is slightly more than "some random threat" in that Exxon-Mobil has been cut off from purchasing Venezuelan oil, and that this case could very easily extend to the rest of the United States pending actions on the Venezuelan-Colombian border, I would say that there's a fair reason to point a finger at Chavez for causing unrest and tension in world oil markets.

They're two completely separate issues. The cutting off of Exxon-Mobil is an extension of the arguments over the Orinoco tar sands 2006 nationalisation. The idea of Venezuela cutting off the US because of Colombian actions in Ecuador is not very likely. In fact, considering the reliance of Venzuela on US markets and refineries, Venezuela is unlikely to stop selling oil to the US for a long time (at least until China has suitably equipped itself.)

[reviewer-general]

somewhat unrelated...

FACT: The Federal Gov't. makes only 18.4 cents on every gallon of gas sold. State taxes range from 8 cpg (Alaska) to 32.1 cpg (Wisconsin). If we go by the average cost of a gallon of gas (3/10/08) ($3.225), that leaves anywhere from $2.961 to $2.720 going to the oil companies. Considering that Exxon Mobil set record profits for 2006, could there POSSIBLY be a little unfairness in the situation?

;

[JMHX]

At 3/11/08 04:24 PM, Slizor wrote:

The idea of Venezuela cutting off the US because of Colombian actions in Ecuador is not very likely. In fact, considering the reliance of Venzuela on US markets and refineries, Venezuela is unlikely to stop selling oil to the US for a long time (at least until China has suitably equipped itself.)

Your argument is hinging on the fact that Chavez is a rational person who would put the wellbeing of his nation ahead of making a point and creating an enemy. The current situation in Venezuela does not support that idea.

[Slizor]

The idea of Venezuela cutting off the US because of Colombian actions in Ecuador is not very likely. In fact, considering the reliance of Venzuela on US markets and refineries, Venezuela is unlikely to stop selling oil to the US for a long time (at least until China has suitably equipped itself.)

Your argument is hinging on the fact that Chavez is a rational person who would put the wellbeing of his nation ahead of making a point and creating an enemy. The current situation in Venezuela does not support that idea.

I disagree. While there are some examples of irrational leaders doing irrational things (such as Idi Amin's expulsion of the Asians) these are merely exceptions to the rule that states act in a rational way. As soon as you stop seeing the actions of another state as rational then you give up on efforts to understand their actions and to predict what they will do - according to your irrational argument, they could (and, most likely, will) do anything even if it is against their own interests. Also, disputing the rationality of "enemy" states and their leaders has repeatedly been done by the media in an effort to discredit and ridicule (and, as such, I am highly suspicious of arguments that utilise similar veins of thought.)

Furthermore, the judging of the rationality of someone is a very subjective thing. It is not correct to simply proclaim actions irrational without understanding the motivation and reasoning behind the actions.

[MortifiedPenguins]

This is no crumbling empire, this is not massive depression thats going to last for a decade and half, it's a contraction that ever business cycle has had.

We've had large growth for seven to eight years now, were simply just filling out what any market economy does.

We will have a recession, yes, but not an end of the world collapse.

More of a Black Tuesday and the Savings and Loans crash.

[GriffinLancer]

At 3/11/08 10:14 PM, MortifiedPenguins wrote: This is no crumbling empire, this is not massive depression thats going to last for a decade and half, it's a contraction that ever business cycle has had.

We've had large growth for seven to eight years now, were simply just filling out what any market economy does.

We will have a recession, yes, but not an end of the world collapse.

More of a Black Tuesday and the Savings and Loans crash.

Oh yeah, that makes this a WHOLE LOT BETTER. /sarcasm.

Most likely, America will have enough of venezuela's shit. Just saying. Not for it.

[MortifiedPenguins]

At 3/11/08 11:44 PM, GriffinLancer wrote:

At 3/11/08 10:14 PM, MortifiedPenguins wrote:

Oh yeah, that makes this a WHOLE LOT BETTER. /sarcasm.

Compared to a Depression, yes it does.

The Savings and Loans Crisis was a slight recession, that resulted in the great economic growth of the 90's.

If this is what this slowdown leads to, great.

[AdamRice]

At 3/12/08 02:28 PM, MortifiedPenguins wrote:

At 3/11/08 11:44 PM, GriffinLancer wrote:

At 3/11/08 10:14 PM, MortifiedPenguins wrote:

Oh yeah, that makes this a WHOLE LOT BETTER. /sarcasm.

Compared to a Depression, yes it does.

The Savings and Loans Crisis was a slight recession, that resulted in the great economic growth of the 90's.

If this is what this slowdown leads to, great.

Yes, but during the 80's there was less globalization and foreign industrial competition from China and India. Oil was still traded using dollars back then too.
Not that I wish to suggest that what may happen will be on par with the last great depression. I would however be doubtful of any major 90's reminiscent economic growth following this recession.
Logically the markets will go down, and then pick back up again, I'm just less optimistic about the recovery.

I can only hope that the best case scenario will surface and you will be correct.

[ASHero]

The cost of oil is hardly a pressing issue in comparison to the increasingly multifaceted war front of the "Iraq War", the possibility of an increased effort in the Middle East under another Republican President, the American economy becoming the weakest it has been in decades, and the housing issues that are plaguing home owners/buyers. Increase taxing on oil I say, if the government will use such procured capital for more beneficial gains.

[AdamRice]

At 3/12/08 03:37 PM, ASHero wrote: The cost of oil is hardly a pressing issue in comparison to the increasingly multifaceted war front of the "Iraq War", the possibility of an increased effort in the Middle East under another Republican President, the American economy becoming the weakest it has been in decades, and the housing issues that are plaguing home owners/buyers. Increase taxing on oil I say, if the government will use such procured capital for more beneficial gains.

If anything, all US taxes on gasoline, diesel, and home heating oil should be completely abolished. This includes ludacris innovations such as ultra low sulfur diesel that costs much more to refine.

[JackPhantasm]

Gas is 3.45 where I live.

What is this Europe?!