How does govenment they control price of oil ?

I was just wondering about this .... and couldnt come up with anything plausible...anyone have an idea on how the us government controls the price of our oil ?

The U.S. government has virtually no control over the price of oil. They can step into the market and sell oil from the strategic petroleum reserves, but those reserves aren't really that huge and in a real crisis would not keep the price of oil from skyriocketing even if they sold all of it (which they never would, since we want it to power our military if the supply of oil is cufoff).

They have practically no control of oil prices in the short term, aside from the strategic petroleum reserve and their ability to tax fuel at high levels (which many world governments do). They might be able to impact oil prices in the longer term by promoting alternative energy sources, but that's about it. Then again, that can lead to situations like the spike in ethanol this summer. Although it has since moderated somewhat, the price increase in ethanol made the jump in oil look absolutely tame by comparison.

Originally posted by djohnsto77
The U.S. government has virtually no control over the price of oil.

Since this is clearly contrary to everything we know about the NYMEX/IPE please feel free to explain how you came up with this extremely strange conclusion.

They can step into the market and sell oil from the strategic petroleum reserves, but those reserves aren't really that huge

Actually the US strategic petroleum reserve is HUGE and can be easily used to ward off completely small to medium scale disruptions that does not go on for many months. If only that was how the Bush regime chose to use the reserve but as it evident from the following links they deliberately used it to drive up oil prices all over the world.

www.senate.gov...

releases.usnewswire.com...

www.senate.gov...

democraticleader.house.gov...

www.washingtonpost.com...

and in a real crisis would not keep the price of oil from skyriocketing even if they sold all of it (which they never would, since we want it to power our military if the supply of oil is cufoff).

Actually the strategic reserve ( not taking into account the large volumes of oil in private inventories) are at least in theory large enough to win wars with ( multi million barrel supply disruptions that lasts 6-12 months) if distribution can be effectively conducted/manage.

Stellar

The U.S. government has virtually no control over the price of oil.

how is it that the prices before election times drops significantly? there must be a way to control it. i think the govt decides to use the homeland oil reserves and stops buying as much from abroad. that would decrease the prices, at least where it mattered; in the voters pockets.

[edit on 10/5/2006 by bokinsmowl]

They don't.... unless you're a conspiracy therorist...

Originally posted by StellarX

Originally posted by djohnsto77
The U.S. government has virtually no control over the price of oil.

Since this is clearly contrary to everything we know about the NYMEX/IPE please feel free to explain how you came up with this extremely strange conclusion.

They can step into the market and sell oil from the strategic petroleum reserves, but those reserves aren't really that huge

Actually the US strategic petroleum reserve is HUGE and can be easily used to ward off completely small to medium scale disruptions that does not go on for many months. If only that was how the Bush regime chose to use the reserve but as it evident from the following links they deliberately used it to drive up oil prices all over the world.

www.senate.gov...

releases.usnewswire.com...

www.senate.gov...

democraticleader.house.gov...

www.washingtonpost.com...

and in a real crisis would not keep the price of oil from skyriocketing even if they sold all of it (which they never would, since we want it to power our military if the supply of oil is cufoff).

Actually the strategic reserve ( not taking into account the large volumes of oil in private inventories) are at least in theory large enough to win wars with ( multi million barrel supply disruptions that lasts 6-12 months) if distribution can be effectively conducted/manage.

Stellar

Only one or two of those links worked for me, one to a re-election 'ad' for Pelosi, and one for the Washinton Post, the Post article said that (to paraphrase) the President's moves would have little effect on it, and the Pelosi article stated that provisions in a new bill COULD cost up to 3 cents a gallon. The other data shows how world supply PERCEPTION caused the price to drop when the US 'threatened' to start using it's strategic reserves.

However, going back to the stock market analogy, supply vs. demand. More importantly, the price of oil is based on perception of supply vs. demand, not what's going on right now. Sure, the price of oil can hinge of what the president says about Iran, because it's a HUGE OPEC partner, but the government cannot directly change the price of oil.

The reason for NOT tapping into the strategic reserve is because it's there to win wars. Of all the likely scenarios lately, the most likely large scale war is with an OPEC associated country. So what's the first thing that will happen? They shut off the oil to us, or worse, global production. So there must be enough oil in the reserve to do what it's supposed to. Strategic Oil Reserve, not public oil reserve.

Originally posted by djohnsto77
The U.S. government has virtually no control over the price of oil. They can step into the market and sell oil from the strategic petroleum reserves, but those reserves aren't really that huge and in a real crisis would not keep the price of oil from skyriocketing even if they sold all of it (which they never would, since we want it to power our military if the supply of oil is cufoff).

Right, the governments workers or politicians, cannot ask them to raise the price of gassoline.

Now, why on earth would the government do that.. sure they can do it.. but why.. and thats the bigger question not how. How is easy, corporations and the leaders of our country are essentially #%! buddies. In bed together they work to prosper and high oil prices is something that benifits them both. Big time to, lemme show ya how.

We go to war with Afgahnistan and Iraq and eventually Iran. The entire ME, or a good chunk of it is opened up to the oil companies, no more state run oil, now it resides in the hands of Exxon and such.

The government has to pay for this war, after giving tax breaks and record deficit spending oil prices sky rocket with record profits. Now I don't care who you are, what profession you claim to be or how much economic experience you boast. When a company gets record profits, MASSIVE profits, and the price to extract the same material or resource does not change significantly .. then that is fixed pricing.. Say what you will, its fixed.

The government profits as well, lets assume with these made up numbers Exxon pulls $100 B in profits. The government get about 50% of that as an excess tax. So Exxon gets $100 B, they keep $50 B, Gov keeps $50 B and hence G W saying Iraqi oil would pay for the war. With American dollars that is. No wonder in the news of record profits the governments spending is up, yet the deficit is down.

I believe we call that indirect taxation without representation. Revolution anyone?

Hey all, if you will go here-> www.abovetopsecret.com...

and page 3, I have been trying to explain the Futures Mkt. Take a look and add what you like.

Roper

Originally posted by R3KR
I was just wondering about this .... and couldnt come up with anything plausible...anyone have an idea on how the us government controls the price of our oil ?

Dude, the answer is quite simple. They subsidise petrol (which they call gasoline) by lowering the tax on in (or even terminating it at all). That is, the average American buys cheap petrol at the cost of the federal budget. Bush needs to fool the American people that invading Iraq has secured supplies of oil (while in reality it has only secured contracts for Halliburton).

Originally posted by sp00ner
Only one or two of those links worked for me, one to a re-election 'ad' for Pelosi, and one for the Washinton Post, the Post article said that (to paraphrase) the President's moves would have little effect on it, and the Pelosi article stated that provisions in a new bill COULD cost up to 3 cents a gallon.

It's always strange how some people manage to avoid reading what they should to become better informed. All those links works perfectly well and if your not going to learn at least find a decent excuse.

The other data shows how world supply PERCEPTION caused the price to drop when the US 'threatened' to start using it's strategic reserves.

And?

However, going back to the stock market analogy, supply vs. demand. More importantly, the price of oil is based on perception of supply vs. demand, not what's going on right now.

Under normal market conditions supply will meet demand and it's only when the media alters perception ( the large speculators certainly know what's really going on) that people can be fooled into thinking that there are supply problems.

Sure, the price of oil can hinge of what the president says about Iran, because it's a HUGE OPEC partner, but the government cannot directly change the price of oil.

What the government says changes perception and thus allows corporations and stock exchange market makers to actually change prices and thus affect supply and demand. Without government or such powerful forces intervening supply would meet demand and prices would be naturally regulated but that is clearly not happening.

The reason for NOT tapping into the strategic reserve is because it's there to win wars.

It is actually there to regulate supply, and thus prices, in times of supply disruption.

Of all the likely scenarios lately, the most likely large scale war is with an OPEC associated country. So what's the first thing that will happen?

I Agree and the reason the US chooses to make war on oil rich countries is to restrict the flow of oil and thus provide sufficient cause for raising prices.

They shut off the oil to us, or worse, global production. So there must be enough oil in the reserve to do what it's supposed to. Strategic Oil Reserve, not public oil reserve.

Strategic oil reserve IS a public oil reserve as last i checked America was not a dictatorship and it's supposed to be run by the people FOR the people. The strategic oil reserve has nothing to do with wars and everything to do with the government wanting to manipulate prices when it suits them. Private holders in the USA will stock up on oil in case there may be disruptions but if the government puts the excess capacity in the strategic reserve the flow of oil into private hands is restricted.

Stellar

[edit on 21-10-2006 by StellarX]

Originally posted by StellarX

Originally posted by djohnsto77
The U.S. government has virtually no control over the price of oil.

Since this is clearly contrary to everything we know about the NYMEX/IPE please feel free to explain how you came up with this extremely strange conclusion.

Dj is not really wrong. While the government oversees the trades and legalities etc, the commodities market are corporations. They are not governmental.
It is investor driven with government reports fueling prices at key times.


Pie

Originally posted by ThePieMaN
Dj is not really wrong. While the government oversees the trades and legalities etc, the commodities market are corporations. They are not governmental.
It is investor driven with government reports fueling prices at key times.

So do you deny that government sets the policies and restrictions by which these markets function? If our governments wanted to prevent this sort of speculation and market manipulation they could easily put a stop to it and while they may fear for their lives if they tried that is what we are paying them for. Our governments are at best fully complicit and at worse , and i think i have provided great amounts of evidence in favour so far, the real perpetrators.

Stellar

Originally posted by StellarX

So do you deny that government sets the policies and restrictions by which these markets function? If our governments wanted to prevent this sort of speculation and market manipulation they could easily put a stop to it and while they may fear for their lives if they tried that is what we are paying them for. Our governments are at best fully complicit and at worse , and i think i have provided great amounts of evidence in favour so far, the real perpetrators.

Stellar

Stellar
No of course I won't deny it, but mostly the governments function is supposed to be protecting the investor. (ie: fraud, manipulation, etc) They don't govern or set the prices.
Yes they could put a stop to it but we are based on capitalistic society, so if they would stop speculation on commodities , then they would have to also stop for Stocks and Bonds too. This would stifle our economy as well as industry that functions on investor capital.
I don't think its the government that fudges with the prices, but moreso organized crime, corporations,politicians and even individuals. It could very well be that an SEC officer may be paid off to overlook an offense but I don't think the government itself would be able to profit from manipulating the markets. A politician sitting on a committee that generates a crop report would be able to benefit from foreknowledge of a particular report and corner the market but the entire Government as a whole?? I don't see that as happening.


Pie

Originally posted by ThePieMaN
Stellar
No of course I won't deny it, but mostly the governments function is supposed to be protecting the investor. (ie: fraud, manipulation, etc) They don't govern or set the prices.

So basically the protect the haves from the have-nots by creating a system where the haves steal from the have-nots and get state protection? Who funds the campaigns of the political parties?

Yes they could put a stop to it but we are based on capitalistic society, so if they would stop speculation on commodities , then they would have to also stop for Stocks and Bonds too.

So why should speculation on commodities be allowed in your opinion? What does stocks and bonds add to the common man's economic outlook?

This would stifle our economy as well as industry that functions on investor capital.

Which can only happen when money can be moved around the world so easily that it can flee from one market to the next driving down restrictions; it's a feedback loop where those with money gain ever more power by being allowed to select against any market that tries to resist their speculative attacks.

I just do not see how you connect real economic activity ( exchange of goods) with capitol based speculation and investment were goods do not actually change hands.

I don't think its the government that fudges with the prices, but moreso organized crime, corporations,politicians and even individuals.

Since the government writes the laws and corruption is so hard to do with modern pc /database systems it's pretty obvious that the laws are bad and enforced only on the average guy while avoiding corporate fraud that is so massive by comparison.

It could very well be that an SEC officer may be paid off to overlook an offense but I don't think the government itself would be able to profit from manipulating the markets.

So we should consider individuals to be at fault instead of the system they function in? The average individual may be corrupt but they certainly do not write or choose monetary policy and enforcement measures. Why blame the individual for what is clearly a institutional problem allowed by government for it's own benefit?

A politician sitting on a committee that generates a crop report would be able to benefit from foreknowledge of a particular report and corner the market but the entire Government as a whole?? I don't see that as happening.

This is not a question of the government trying to enrich themselves, as they have easier ways to do that, but a far larger scheme in which government power is used to entrench the power and influence of those who wants a global society where there are no barriers and starved workers in one country compete against starving workers in another and the powerful gain ever more control.

Stellar

US can not change the set prices of oil, but when you have powerful friends abroad like Bush links to the Saud Royal family, a simple phone call can work wonders when needed.

Is all about politics favors and corporate links.