Oil and gasoline futures

[RoyalShock]

Pretty sharp drop the past three days. Oil is down $15/barrel and gasoline is down $.35/gal. I'm assuming this is due to a recent report of increased supplies?

Pump price here is down $.06 today. Can we expect a continued decline over the next week?

[capnkirk]

i'm thinking it is going back up and will level off in mid august.

[Maggie]

http://news.yahoo.com/s/ap/20080716/ap_on_bi_ge/oil_prices

As this article points out supply, I am sure was a factor. However, the Fed advising Congress that it believes that inflation is currently too high is also a big factor. Because such a comment seems to indicate that, the Fed may act to protect the dollar (whose declining value has impacted oil prices). Remember when Bernake (about a month ago) gave a series of speeches in which he stated that he was committed to a strong dollar, the price of oil fell. However, those gains where wiped out when the Fed failed to raise interest rates.

Also, the article in the AP fails to mention that President Bush removed the executive order imposing a moratorium on offshore drilling. The perception that the US may allow more drilling off shore will influence the futures market (I think I wrote this a while ago in some other thread) and, therefore, the price of oil. With regard to this issue, it is up to Congress now – so don't hold your breath.

[DUShock]

May have something to do withthe SEC saying they're cracking down speculation and possible market manipulation in the energy sector.

[Maggie]

May have something to do withthe SEC saying they're cracking down speculation and possible market manipulation in the energy sector.

Remember, the people that have proposed this “solution” have also proposed “solutions” that range from the impractical (sue OPEC) to the absurd (nationalize the oil industry).

I think this “crack down” on speculators is not really that relevant to the price of oil. It is an attempt by certain people in Congress to deflect blame for the current situation.

Keep in mind after tilting at these windmills, House Democrats brought the so-called “use it or lose it” law to the House floor in June. As we have all heard they charged that, with million acres under lease allegedly containing millions of barrels of crude, domestic producers were consciously sitting on a ready supply of oil — as if today’s exorbitant prices weren’t sufficient incentive to bring as many barrels as possible to market. The Democrats’ bill threatened to confiscate or double the price of non-producing leases. However, the Secretary of the Interior already has the authority under current law to revoke leases that are not exploited within five years (it can take that long to explore and get a well running). Furthermore, it is obvious to me, a lay person, that you can’t produce on every acre or even every 100 acres.

I guess the point is – don’t believe the hype.

[NCAABound]

The problem with it going down so quickly without a true reason, is that it will probably go back up just as quick. The speculators and value investors will percieve it as priced too low for the current market and push it back up.

[ABC]

The problem with it going down so quickly without a true reason, is that it will probably go back up just as quick. The speculators and value investors will percieve it as priced too low for the current market and push it back up.

It's called a market.

The market sets the price, not speculators.

[InWuWeTrust]

some of my clients were asking me today about this - i attribute it to supply and demand... over the past few days, reports are showing that supplies are rising, while demand is falling - hence the price reductions. i wouldn't expect to see a drastic drop here, because we are paying about 20 cents below the national average for a gallon of unleaded.

[Maggie]

some of my clients were asking me today about this - i attribute it to supply and demand... over the past few days, reports are showing that supplies are rising, while demand is falling - hence the price reductions. i wouldn't expect to see a drastic drop here, because we are paying about 20 cents below the national average for a gallon of unleaded.

Demand is has been down for a while now. The fact you guys are paying less than the national average -- good for you. I don't enjoy such benefits. Then again I don’t drive that much – unless I get to play golf. :D

[wu_shizzle]

When EV's like the Tesla become affordable, that will do wonders toward easing supply demands.

http://www.teslamotors.com/

[TxShox]

Could it be pond scum to the rescue? Not anytime soon, but maybe, just maybe in the future.

[rrshock]

Could it be pond scum to the rescue? Not anytime soon, but maybe, just maybe in the future.

Weren't they gonna do something with algae at the proposed coal plants in Holcomb. Something about trapping CO2, then using it to grow algae to make ethanol?

[TxShox]

Weren't they gonna do something with algae at the proposed coal plants in Holcomb. Something about trapping CO2, then using it to grow algae to make ethanol?

Did some quick research this morning... looks like their application to build the coal plant got denied by the Secretary of the KDEH because it would put too much CO2 in to the atmosphere.

Then I found information about some bill that would allow them to build the coal plant, but it was vetoed by Gov. Sebilius (sp?) because it would put too much CO2 in to the atmosphere.

Haven't found anything else.

[rjl]

Re: Oil and gasoline futures

I'm assuming this is due to a recent report of increased supplies?

Reportedly it's due to the projected decrease in demand due to the worsening US economy. Recent news that China is lessening its gas subsidies plays a part too.

Increased supply in the amounts we're talking about wouldn't make that much of a difference. Here's a story from Time which sites a government study that states if all the currently prohibited areas such as the ANWR and off-shore were opened for drilling, gas prices would drop 4 cents a gallon by the year 2027.

The same study predicts that global demand for gas will raise 30% by around the same time, so any dip in the oil market will be short lived.

[engrshock]

Weren't they gonna do something with algae at the proposed coal plants in Holcomb. Something about trapping CO2, then using it to grow algae to make ethanol?

Did some quick research this morning... looks like their application to build the coal plant got denied by the Secretary of the KDEH because it would put too much CO2 in to the atmosphere.

Then I found information about some bill that would allow them to build the coal plant, but it was vetoed by Gov. Sebilius (sp?) because it would put too much CO2 in to the atmosphere.

Haven't found anything else.

There has been no mention of water concerns with the coal plants out in western Kansas even though power plants use large amounts of water. The water supply in western Kansas is already strained and the aquifer has been dropping for years. Why has this not been a concern that has been raised?