Why oil costs over $120 per barrel
It’s hysteria generated by the global media. Just because it’s on the hour, every hour on Sky News doesn’t mean a topic deserves a sticky.
Mind you, the price of oil is strongly coupled to the overall stock market performance (maybe not as strongly coupled as interest rates). And, given the sheer number of oil threads being started, maybe it should be a sticky after all!
I don’t think we should have a sticky as they should be limited - they push discussions down the page. Maybe we should use a good idea from AAM and have a “Key Posts” sticky?
doh… his was supposed to be in the rising price of petrol topic.
key posts sticky is a good idea, as is limiting them on the front page, they do tend to push discussions down.
with repect to the link, intresting comment about speculation, that is, the OP thinks it is not possible for speculation to create such a rise in the price, and is in direct conflict with 2pack earlier post stating oil will drop below $100 pb
edit, the spelling and grammar is a tragic
I’ll sticky this for a few weeks, since it is a topic on everybody’s mind at the moment.
I should declare I do have a bias in the peak oil debate, and have attended the ASPOconference in Cork last year.
However this is the economic forum and it would be interesting to hear (peak oil or no) what effects the high oil prices are having on you?
Are you driving less?
Do you notice less/more traffic on the road?
What are you doing to mitigate the high price? hoarding, switching to public transport, motorcycles etc.?
How secure are Ireland’s energy supplies in event of significant disruption?
How will pensioners deal with the rising cost of home heating?
Do you find Whizzbangs pumps.ie useful?
There are other aspects I’m sure people would like to discuss.
i’m driving everywhere at 55mph at the mo, to study the effects on my fuel consumption. At the mo, it is looking like saving me 25% on fuel consumption, plus its so much more relaxing, so i’ll probably stick to it going forward. ideally, i’d change the car, but its not worth it, its a 1998 mazda 626 with 135k on the clock 1.8glx, its essentially worthless to sell, but it is unervingly reliable, and is probably good for another 100k, at approx 42mpg on my new regime, i’ll be keeping it for a while.
I would love to dump the car altogether. hopefully the new rail line in midleton will come on line , as without it, there is no real way to travel to work. outside Dublin, Public transport is non existant. My plan is to buy a little “suitcase bicycle” and ride to the trainstation, and then from cork station to work. the quicker i can do this, the better.
If the rail line is delayed or postponed, i’m off closer to the City.
WRT supply, as an engineer, i have had first hand experience, of irelands only refinery (Whitegate) and oil Terminal (Bantry).
both installations secure irelands supply very well. i must say, whiddy island is an education if you ever get to go there, the disaster of the beatlegease, and the size of the storage tanks(worlds largest) make it a facinating place to work.
if i remember correctly, whiddy island has 300 days supply, which is fantastic.
Intrestingly , Whitgate cannot process the heavy parts of the crude oil they recieve and re-sell it back on the market. this is a big problem in all of the worlds refineries. oh, and i think CPW bought it from the state for £1.
CPW tried to sell the refinery last year but with no bidders, they decided to keep it and invest in upgrades which is good.
it also has a modern low sulphur diesel plant which is a right good money earner. i have no idea why CPW wanted to sell, neither does anybody who works there.
Traffic has dropped dramatically in the last 6 months. i almost do not get stuck in traffic any more going through the tunnel in cork. very conspicious.
Domestically, the high tech heating control systems i installed 3 years ago is starting to pay off, at the time i installed it (Cost €600) i thought the pay back period would be 20 years +, however, my bills are considerably lower than my neighbour, who has roughly the same occupancy patterns.
some €30-50 per bill on the gas. at the moment.
I’ll be driving to france later this year, and it will be intresting to see how petrol prices compare. My parents in the UK are being really squeezed in the UK at the Mo. and have both switched to small (mini) cars.
One thing i have noticed on my travels, people are driving slower.
On the point of speculation,
I am an idiot WRT the economics off all this.
Why, is it so difficult to asses how much of the rise in oil prices is speculation? and why, do “INDUSTRY EXPERTS” have such polar views?
My gut tells me that oil prices are high due to supply/demand, but how come its so damn hard to prove???
…but not, I hope, when you’re going in reverse?
“Next press release I see that has the phrase “going forward,” I’m shorting the stock. A company that resorts to trite and redundant clichés can’t have great prospects, going forward.”
[/departs for Pedants’ corner]
My geothermal heating is going to pay for itself in a third less time - 6 years instead of 10 (electricity prices have not risen as much as heating oil).
If the US avoids recession(they said their economy grew by 0.9% in Q1 '08) and the dollar starts rising back to previous levels(that €1.30 bracket) and the price of oil stays at or above €120 lets say, does that mean we are screwed at the pumps even more?
Point is we hear that investors are speculating on oil now, will they withdraw from this once the dollar recovers and hence help bring down the oil price from present levels?
And oh yeh, Whizzbangs site could have a date of the list of prices found, its a pain trying to find out which one is the latest price!
Just to be clear, that is an annualised 0.9% rate of growth, i.e. actual Q1 growth was 0.225%.
Great paper(seen on economist’s view ) regarding the relationship between monetary policy and oil prices.
“Apparently the Saudis have decided to leave theirs in the ground. “King Abdullah, the country’s ruler, put it more bluntly: ‘I keep no secret from you that, when there were some new finds, I told them, ‘No, leave it in the ground, with grace from God, our children need it’.’’’ (Financial Times 19 May). I see the interest rate as part of the Saudis’ decision. Because the current rate of return on financial assets is abnormally low, they can do better by saving the oil for the future than by selling it today and investing the proceeds. Holding back production raises today’s oil price, to a point where the expected future return on oil has fallen to the same level as the interest rate. Hence the inverse effect of real interest rates on real oil prices. The same logic governs others’ decisions regarding how much copper to mine, how much forest to log, etc.”
Oil is a bubble like others, we’ll see some huge hedge fund losses when this breaks later this year. Should be fun!
As someone who drives 30,000-40,000 miles per year it’s not particularly good news but prices would have to go a fair bit higher before I’d consider reducing discretionary driving / switching to alternatives (which in rural areas are generally either poor or non-existent).
I’d be very conscious of fuel economy when buying a new car though.
Hope you’re yielding to those who want to drive at the speed limit when safe to do so!
Partly it’s a speculative bubble, but there are some nasty fundamentals there - with most of the big producers due to go into export decline in the next decade, $200 oil may be a mark quickly surpassed.
Oil @ $125.5 this morn,
some $10 less than the top.
is this the bottom of the top of the top of the bottom???
is this cheap?
if is does not fall any further, is this the floor price with the froth removed??
how many questions??
Which is less than a 10% drop - easily within normal variability or retrenchment after such a big rise.
If you could tell, you’d be a billionaire by the end of the year.
Historically no. In 2020, it will look a bargain.
Wait to see the big buyers like airlines take out hedges - then you’ll know that they think it is at or near the floor.
4, including this one
the world uses 84 million barells a day. 1000 million barells = 1 billion
therefore the world uses 1 billion barells every 12/13 days. the biggest find in recent history off the coast of brazil of 50 billion barells will last around 80 days at current demand. demand forecast to increase by circa 40-50% to 120 million barrels a day by 2020 due to china and india wanting cars. do the math , its worrying. commuting 100 miles a day to work could soon be very very expensive.