Originally Posted By Dabob2 But if oil fell to $80 a barrel do you really think a gallon of gas would fall to the level it was?
Originally Posted By X-san $80 a barrel isn't really all that cheap anyway. We were there fairly recently, and gas prices in America were already significantly higher than "usual".
Originally Posted By EighthDwarf $80/barrel would bring the price down to about $3/gallon. Not cheap, but tolerable (and about what you'd expect from the real-world long-term problems with oil). And no, I do not trade commodities (not allowed to).
Originally Posted By Dabob2 <$80/barrel would bring the price down to about $3/gallon. > Do you think it would? I think it would bring it down, but not to that level. And there would be some justification for why it didn't, but basically the oil companies will charge whatever they think the market will bear for gasoline.
Originally Posted By fkurucz ^^Correct. If gasoline supplies are short then they could stay up even if oil prices fall. I won't argue against the possibility that oil prices are overvalued right now. As 8D indicated it is possible that because of the high price that production is greater than supply. In that case oils prices should fall within a few months as he said. If I were the Saudi (or any OPEC) oil minister, I would look at this as a way to maximize oil profits. What would my motivation be to crank up production to lower prices on a non renewable resource? Why should I lower the price on a commodity that I know I will run out of some day? Granted, you don't want to kill the goose that lays the golden eggs (the west), but you do want to optimize the profit margins collected from the goose. Play your cards right and you will own half the world once the dust settles.
Originally Posted By dshyates "Play your cards right and you will own half the world once the dust settles." That's fine and dandy as long as you can keep the big angry kid from kicking the crap out of you and taking your candy. United Arab States of America?
Originally Posted By fkurucz If you have enough money you can pay a bigger kid to protect you. In the end that role could belong to the USA. Economic conscription should be able to provide the cannon fodder for the foreseable future.
Originally Posted By EighthDwarf <<<$80/barrel would bring the price down to about $3/gallon. > Do you think it would? I think it would bring it down, but not to that level. And there would be some justification for why it didn't, but basically the oil companies will charge whatever they think the market will bear for gasoline.>> I know what you mean, but I don't think it would play out that way. There is a lot of talk about nowadays about moving away from oil, which is not what oil companies want. They would be willing to adjust the gas price downward provided their profitability margins stayed the same -- especially if it meant the addiction to oil continued.
Originally Posted By Dabob2 I think they might do that too - but not if all the talk about moving away from oil remains just talk. We've been talking about it for 30 years. Everyone knows we need to, yet almost nothing really gets done.
Originally Posted By Sport Goofy Why is anyone surprised with all this? It was all very predictable 7 years ago when we elected Big Oil to the White House. That's when I bought my shares in ExxonMobil. Expect prices to remain inflated through the end of W's administration. Commodity inflation is all just a game to prevent him from having a negative GDP during the time he is in office. As long as we can inflate commodity prices at a higher rate than the government reports inflation, GDP remains positive. Its a parlor trick designed to deceive the American public. The bad news is that when the house of cards collapses on this scheme, it will be very bad for the U.S. economy across the board. Of course, if it all happens after W leaves office, he could care less while he has his feet propped up in Crawford.
