Oil prices

[EghtySx]

I don't understand why oil is getting so high?  Why do we let Opec set their own prices when we don't let our own farmers, etc. even do it?  Why don't we tell them what we are going to pay them for their oil.  If they don't like it tell em to sell it somewhere else.  Point is, there is nowhere else, they can either sell to us at our prices or not sell it at all.

[Standing Wolf]

There's plenty of oil in the United States; the leftist extremists, however, would much rather see us pour billions of dollars into Islamic terrorist savage coffers than disrupt the caribou.

Drilling in Alaska alone would drive down the world price of oil P.D.Q.

[atek3]

Why don't we tell them what we are going to pay them for their oil.

I wish I could draw a supply and demand curve for you.  You see America (a net consumer) wants oil, the cheaper it is, the more we will buy.  OPEC (net oil producers) want to sell oil, the more expensive it is, the more they will sell.  If America says, we'll only pay "X" dollars a barrel when the world price is some price higher than X, America will get fewer barrels of oil, thus a return to the seventies and fuel shortages.  If America refuses to buy above say 40 dollars a barrel, Europeans and Chinese, who will pay 41 dollars a barrel will get the oil.  So if america offers 42, Europeans offer 43.  And eventually the process repeats until the price is bid up to the "market price" which currently is ~54 dollars a barrel.    

The weird thing about oil is, its priced in dollars.  In 2, Oil was 30 dollars a barrel, or 33 euros a barrel.  Now oil is 54 dollars or 41.70 Euros.  So oil has soared... in dollar terms.  Oil is up pretty modestly in most other currencies.  One thing propping up the value of the dollar is that foreigners have to buy dollars in to trade for oil.  If OPEC wanted to screw us they'd start pricing it in Euro's... or Renminbi.

atek3

[atek3]

Drilling in Alaska alone would drive down the world price of oil P.D.Q.

Not very much oil in ANWR anyway... wait to drill it until the price is 100 dollars a barrel

[bratch]

Supply and demand my friend plus the added political "tax" on it.

China and India have recently decided the need oil and in a big way.  More people wanting the same amount of oil. Price goes up.

People are afraid of whats going to happen in the Middle East, Lots of oil over there. Price goes up.

Believe it or not the big bad oil companies don't want $60 a barrel oil.  Oil at $60 promotes alternative research; alternative research limits demand for petroleum.  

Kind of cutting off your nose to spite your face.

Be thankful America had such a cheap resource for so long and prepare to budget more for the future for gasoline and Nat. Gas.

[jamz]

It seems to be what the market will bear.



-Love, James

[MikeB]

It's less about the price of a barrel of oil and more about the taxes and refining.

 First most taxes on oil aren't x cents per gallon but a percentage of the price so when the price of a gallon of gas goes up the taxes go up.

 The refining is a major problem as we (mostly thanks to enviromentalists) haven't built a new refinery in about 3 decades. The refineries we do have are producing gasoline/diesel/etc. at about their peak outputs. This means that you can't really add any more gallons of gas to market. Limited supply equals higher prices. Then in addition to all this thanks to the enviromentalists again, we have different mixtures or fuel required in different areas of the country. This means the refineries have to stop production of one mixture to start another, this causes even more limited supplies.

[charby]

second on China and India being thirsty for oil

[Waitone]

--No refineries built in the US in 25+ years.
--Boutique blends prevent free movement of fuel around the US.
--Federal, state, local taxes.
--Inventory build up for summer driving.
--Environmental hands off areas for exploration.
These all lead to higher prices.

I question the assertion China and India demand are the cause.  While their growth RATE is high, their establlished base is small.  

More like a cause of increasing prices is in a commodity market where supply and demand are closely match, an ever so slight decrease in supply will whip prices around until demand settles at the new price level.

I'll repeat it again.  I'm shocked we have a petroleum industry at all with disincentives the government imposed on the market.

[bountyhunter]

"I don't understand why oil is getting so high?  Why do we let Opec set their own prices?"

OPEC is a collection of countries (the USA also belongs to OPEC).

How should we force them to set the prices lower?

Invade?  That hasn't worked out as well as we had hoped going in....

[bratch]

The U.S is not a member of OPEC.  Venezuela is the only Western member.

[RevDisk]

I don't understand why oil is getting so high?  Why do we let Opec set their own prices when we don't let our own farmers, etc. even do it?  Why don't we tell them what we are going to pay them for their oil.  If they don't like it tell em to sell it somewhere else.  Point is, there is nowhere else, they can either sell to us at our prices or not sell it at all.

They are getting so high for a variety of reasons.  One is the falling value of the dollar.  Simply put, the dollar isn't worth as much overseas.   The answer isn't simply "environmentalists are to blame!"

http://www.post-gazette.com/pg/04210/352857.stm

Yakos, Russia's largest oil exporter, is having major problems with its government.  Taxes, internal political problems, etc.  Venezuela has had many internal problems, including a failed coup against its President.   A good number of OPEC countries are scaling up their capabilities, which somewhat interferes with day to day oil production.  Iraq is shipping very little oil.  Nigeria is having internal issues also.  Also, Europe and China are buying more oil.

Simply put, there are a lot of problems.  The US can't force OPEC to dance to our tune.  They are not under our control, and the US are not part of OPEC.  In fact, the USA have a direct hand in many of the issues that caused the rise in oil.  America's support for Venezuela's opposition, the 'liberation' of Iraq, etc.  The falling value of the dollar has many reasons, and it's really not helping matters much.

[theCZ]

"Drilling in Alaska alone would drive down the world price of oil P.D.Q."

That's still a very temporary fix.  Not even a fix really as ANWR doesn't contain enough oil to make a difference over time.

[Sylvilagus Aquaticus]

There is a bill in the Texas legislature to study ways to revitalize production in the East Texas oil field.

http://www.kilgorenewsherald.com/front1.shtml

Notice the masthead of the newspaper.  This is a lake of oil, found in 1930, that is 6 miles wide and 50 miles long.  There is an estimated 650 million barrels still trapped in the formation from several billion barrels extracted over the past 75(!) years. At one point there was so much oil produced it drove the spot price to ten CENTS a barrel.

http://www.tsha.utexas.edu/handbook/online/articles/view/EE/doe1.html

http://txgenes.com/TxGregg/OilField.html

That's just the easy oil.  It's only about 3300 feet below the surface. More production is between strata from 6500 to 12000 feet.  Near Nacogdoches, Texas, in the 1980's, water well drill rigs were scarce because everyone and their dog was snapping them up to drill wells because easy oil was found as shallow as 300 feet.

Me, I'm going to West Texas for a couple of days this weekend to watch the spontaneous parades that are breaking out there with the higher oil prices.  

...and yes, my family has been in the oil business a long time.

Regards,
Rabbit.