Yeah…about that t-shirt. Blaming OPEC for the high gasoline prices kind of misplaces, or at least greatly oversimplifies, the problem. Right now, the U.S. doesn’t even import most of its oil from OPEC countries.
OK, that chart is a little old but the percentages haven’t changed that much.
Additionally, OPEC members aren’t really restricting the flow of oil. In fact, many, including myself, think they can’t increase production much if any at all (see Peak Oil). And what excess production capacity OPEC nations do have is often tied up in political and military turmoil (see Iraq and Nigeria).
The problem is really more of a supply and demand thing with speculators making things even worse. You can throw in oil company profits and our own massive consumption as adding to the problem as well. So where can I get an “Up Yours, SUV Driver” (or pick-up truck driver like me) t-shirt? But, hey, if you can blame foreigners for your problems, I’m sure it’ll at least make you feel better.
8 comments:
you are right. it is supply and demand. and as most people recently heard not only have the sales of SUVs and Trucks gone down, its so much so, GM is closing 4 SUV factories. honestly, im not even sure why people were ever so enamored with them in the first place. i can understand work trucks or the truck one might use to pull a trailer (of any kind), but the people that drive around in giant SUVs just to have have really big tires with ridiculous rims, is what i dont understand. you are also right about people wanting to blame the big guys and foreign countries for this problem. its our fault. im glad i bought a honda.
Dave,
You are correct that the supply and demand market became out of whack due somewhat to speculators. In fact the market is trying to correct itself right now somewhat. (Oil was down about $9/barrel the other day.)
In that light, if we were to announce that we would authorize drilling, hell anywhere not just in Alaska, then the futures market would react accordingly and the price would go down.
My theory is very similiar to that of a public company that announces a huge deal. Their stock prices tend to increase assuming all other factors remain constant. They havent actually earned the money yet but the company will have more value in the future.
RM Math:
Announcing new drilling will decrease price
=
Announcing a huge deal in public company will increase stock.
Geek,
If you are right, then my econ teacher at Yale was wrong. I will go with my Yale Professor.
If GE announces a trillion dollar deal tomorrow their stock will rise. What the heck do you think the speculators base their bids on? They do have something called a Futures market. But then again, you probably have never owned a stock in your life, so you wouldnt know.
RM not only has math problems, he can't read.
Please show me where I said stocks won't rise when a company announces a huge deal.
Stocks (and Yale) are for elitists.
True you did not specifically state that stocks wont rise on a big deal announcement however you implied that my logic was faulty. In fact it is not.
I was making something called an "analogy":
An analogy is comparable to metaphor and simile in that it shows how two different things are similar, but it’s a bit more complex. Rather than a figure of speech, an analogy is more of a logical argument. The presenter of an analogy will often demonstrate how two things are alike by pointing out shared characteristics, with the goal of showing that if two things are similar in some ways, they are similar in other ways as well.
In this case, I claimed that stocks prices increase sometimes due to good or promising news.
Dave started his post out with the fact that speculators are somewhat responsible for the increase in oil prices and I agree with him.
Thus my argument was that so called "good news" ie. A country like the US announcing more drilling would have the same effect as a company announcing a big deal. In the company's situation the stock price would increase. In the oil speculators view, they would see that in the future more oil would be on the market diluting it somewhat. This would cause them to bid down the price of a barrel of oil.
In fact this often happens in other commodity markets such as dairy and grains.
Anyway, have a good weekend.
I know what an analogy is, elitist.
The first fact is the oil jumped up to record highs again. Second, after you get approval to drill in Alaska, buy the land, build the roads, housing, rigs, extend the pipeline, start drilling and send the first barrel to the US, it will be a couple years before you see a gallon of gas and it might be a couple cents cheaper, woohoo, I'll buy an SUV!
The price of oil is so high now, it is now feasible to start extracting oil from things such as oil sands/tar/shale. This would provide more oil, but it won't be cheap oil, just a little cheaper. Lets say you are a business man and found 30$ oil, would you sell it for 30$?!? Umm no, you would sell it for a couple bucks cheaper then the going rate, to maximize your profit (and screw American buyers), this lowers the price for nobody.
Now, Mr. Yale, if we were to go by you poor analogy, lets say a massive amount of oil was discovered in the Dakotas and people are setting up oil wells, you'd think the price of oil futures would go down.
Guess what, you are wrong again.
Have a nice weekend.
Hmm, no comments from the peanut-brained gallery....
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