Originally Posted By X-san Wow. Where does this end? Anyone recall the low from a year or two ago? Hasn't it just about doubled at this point!?
Originally Posted By dshyates "Where does this end?" When the demand goes down. Soon enough we will have to find an answer. Some are speculating the China is buying up huge quantities and stockpiling it to break the US economy.
Originally Posted By fkurucz ^^^All it would take is for them to stop lending us money. The bottom line is that demand is rising and OPEC and the indpendent oil producing countries have chosen not to increase production. If this continues they will own us lock, stock and barrel. We dug our own grave.
Originally Posted By fkurucz And don't worry about your Suburban, Hummer or Pickup truck. It will have some value as scrap metal.
Originally Posted By fkurucz >>"Where does this end?"<< My guess: $200 a barrel by year's end. At the pump? $5-6 a gallon. I guess oil could come down if the entire global economy crashed. Great Depression II?
Originally Posted By EighthDwarf <<The bottom line is that demand is rising and OPEC and the indpendent oil producing countries have chosen not to increase production.>> That sounds nice but it is not accurate. Supply is not the problem here. Take a look at this: <a href="http://www.opec.org/opecna/Press%20Releases/2008/pr072008.htm" target="_blank">http://www.opec.org/opecna/Pre...2008.htm</a> <<In recent months, oil prices have become increasingly volatile, mainly driven by financial market developments and the increased flow of speculative funds into oil futures. The turmoil in some global equity markets and the considerable depreciation in the US dollar have encouraged investors to seek better returns in commodities, particularly in the crude oil futures market. This has driven prices higher. There is clearly no shortage of oil in the market. OECD commercial oil stocks remain above the five-year average, with days of forward cover at a comfortable level of more than 53 days. US crude inventories, meanwhile, rose by almost six million barrels last week, which is a further indication that oil supplies are plentiful.>>
Originally Posted By oc_dean This is increasingly becoming crippling. The oil companies seem to think we all can just keep paying more ... like we have wallets with endless amounts of cash.
Originally Posted By EighthDwarf <<The oil companies seem to think we all can just keep paying more ... like we have wallets with endless amounts of cash.>> They're right. Demand for gasoline is very inelastic, meaning demand does not decrease very much as prices increase.
Originally Posted By X-san Yup. The only real danger for the oil companies is if they take things too far and the gubment steps in complaining of gouging issues (which, with the oil spot price still at a record high, ain't gonna happen).
Originally Posted By Elderp It stops when we stop buying it. As long as they rise prices and we still buy it then prices are going to go up. As for myself, we are serious considering moving in closer to work. It means a smaller house but what you going to do, we have done the math in our house $5/gal and we will sell the house.
Originally Posted By X-san Elder, the thing is the math is so complex right? I can understand the "$5 and we're done" concept, but be sure you consider the longterm as well...that smaller house might be worth considerably less than the big one in the longterm no? Tough decision anyway, right? Yikes! I wish you the best of luck!
Originally Posted By DisneyFreak96 I know several people who are considering life changing decisions such as Elderp. I know one woman who may drop out of University because she simply can't afford the drive (and this is a private U!). I know another two people looking for jobs closer to home.
Originally Posted By Mrs ElderP Gas prices are in elastic in the short term, and in the mid term, even, but I doubt that you can argue that they are in elastic in the long term. People can move closer to work, (like we will probably end up doing eventually) they can buy a smaller, more fuel efficient car the next time they buy a car, some can figure out other, cheaper, less convient transportation like car pools, van pools, and mass transit. A few weeks ago npr had a story about how in the major metropolitain areas (Washington DC and Suburbs, Atlanta, and others) have all seen housing prices *rising* inside metropolitan areas. People are choosing to shrink their commutes. <a href="http://www.npr.org/templates/story/story.php?storyId=89803663" target="_blank">http://www.npr.org/templates/s...89803663</a>
Originally Posted By fkurucz <<That sounds nice but it is not accurate. Supply is not the problem here. Take a look at this:>> So OPEC says that there is no shortage. Isn't that like quoting a crack dealer regarding drug supplies. FWIW, I recall the Saudi oil minister not so long ago saying the they were not going to increase production.
Originally Posted By EighthDwarf <<So OPEC says that there is no shortage. Isn't that like quoting a crack dealer regarding drug supplies.>> Nope. Oil is tightly regulated and its production is monitored by everyone. <<FWIW, I recall the Saudi oil minister not so long ago saying the they were not going to increase production.>> He knew supplies were sufficient. I know Americans like to think of the Saudis as money-grubbing anti-Christs but that is too simplistic. Even for Americans. If you wanna blame someone, blame the financial institutions and soveriegn wealth funds that are looking for a quick buck in the aftermath of the credit crunch. They are driving up commodity prices. So in essence we are all paying for the credit crisis through higher food and gasoline prices. But most people would prefer not to know that.
Originally Posted By Dabob2 My guess (and mind you, it's just a guess): Gasoline rises to about $4.25 a gallon by mid-June or 4th of July. Psychologically, we've sort of prepared ourselves for 4-dollar gasoline, and $4.25 isn't "that much more" in our reptilian brains. After the 4th of July it will decline slightly and hover around $3.80 or so by the Fall, which will allow us to feel relatively "good" about it. It will stay there through the election, thus becoming less of an issue. Next winter we will see another rise, first in heating oil, then in gasoline, as we mentally prepare ourselves for $5.00 gas; when it doesn't quite get there, we feel "well, it could have been worse." Meanwhile, inflation in general creeps up as the cost of getting goods in the stores continues to climb. But although we see mini-trends to cut consumption like a rise in small car sales, basically consumption remains where it is. That's my guess.
Originally Posted By EighthDwarf You may be right of course, but it's hard to say. I think we are heading toward inventory overload as producers are trying to supply as much oil at these prices as they can right now. So once this artificial demand tails off there should be a glut of oil that will put downward pressure on prices. My guess is we're close to a peak and we should see the price per barrel fall back down to the $80 range (its real mid-term equilibrium) by year-end. But that's just my guess.
Originally Posted By X-san That is a bold guess, Eighth... Are you short selling oil? If you're right, you could make a fortune in a few months!
