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Gas Could Fall To $2 Per Gallon If Congress Acts On Speculators: Analysts

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posted on Jun, 25 2008 @ 10:35 AM
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Though I'm not getting my hopes up, this would be great if it actually happens AND actually drives down prices at the pump.
Either way, I'm not going to change my plans of buying the newest and most fuel effecient gas-hybrid on the market.
Can you say 230 miles per gallon kids? I can....and will next year when I'll be spending less on a new car payment and gasoline combined then I am on gasoline alone right now.
Let's hope this happens.




posted on Jun, 25 2008 @ 10:35 AM
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reply to post by dbates
 


I think it does create a "virtual shortage" because it falsely increases the demand. The whole issue was that the other two international markets were allowed to "mix" into the NYME and so it created a huge surge in an otherwise fairly stable market. The fact that regulations don't exist to cap out any speculations, and limit the terminal access would make the said commodity pretty hot, therefore raising its value across the board.

I'm no expert, but this seems logical to me.

Here's some basis below:




The commodities market total notional value does not come anywhere near the actual amount traded OTC and through third party transactions, but the wholesale fuel prices at many gas stations are set directly off of the market exchanges that are subject to massive manipulation. If one wished and decided to collude with other holders of large amounts of refined product you could drive up the price on the NYMEX, etc. through speculative hedge fund accounts and then you have an excellent reason to raise the wholesale price of your product, which the cost to you has not changed on. You simply expanded your margins. What do you think the dollar value of contracts for settlement is for gasoline vs. the total amount sold during that same contract period? They are setting the price off of markets that are inefficient and easily manipulated.





in January 2006, the Bush Administration’s CFTC permitted the Intercontinental Exchange (ICE), the leading operator of electronic energy exchanges, to use its trading terminals in the United States for the trading of US crude oil futures on the ICE futures exchange in London – called “ICE Futures.”

A glance at the price for Brent and WTI futures prices since January 2006 indicates the remarkable correlation between skyrocketing oil prices and the unregulated trade in ICE oil futures in US markets. Keep in mind that ICE Futures in London is owned and controlled by a USA company based in Atlanta Georgia.

In January 2006 when the CFTC allowed the ICE Futures the gaping exception, oil prices were trading in the range of $59-60 a barrel. Today some two years later we see prices tapping $120 and trend upwards. This is not an OPEC problem, it is a US Government regulatory problem of malign neglect.

By not requiring the ICE to file daily reports of large trades of energy commodities, it is not able to detect and deter price manipulation.



[edit on 25-6-2008 by Azurus]



posted on Jun, 25 2008 @ 10:55 AM
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reply to post by Azurus
 

No, just because you hear that more speculators are buying oil, doesn't make you want to go out and drive cross country trips. The news that more people are buying oil won't cause truck drivers to drive 100 miles out of their way to use more diesel. Demand is only coupled to price. Increasing prices will lower demand. That's what doesn't make sense about this whole bit of racket. If prices are rising simply because of speculation, they why isn't demand falling due to rising prices?

This is simple ecomomics. Just because you change the name of the commodity doesn't mean the rules are any different. Would hearing that market speculators were buying contracts of wheat make you run out and eat more bread than normal? No, if anything it would make you look for cheaper alternatives for dinner.

Again, speculators are simply reacting to what some people have been soap box preaching about for years. Supply can not meet demand. Why else would Saudi Arabia be making new promises to deliver extra oil? Are the speculators going to take this extra 200,000 barrels of oil a day and sit on it without selling it? Of course not. The extra oil is in the market. The problem is that this extra oil doesn't account for the falling supply from other countries.



Saudi Arabia’s decision to pump more oil than it has in nearly 30 years risks being completely negated by the sharp drop in output caused by attacks on production facilities in Nigeria.

Nigeria now pumps less than 1.5m barrels a day, its lowest level in 25 years, rather than the 2.5m b/d it has the ability to produce

This is what the main stream media isn't reporting on. Their talking heads simply state "Saudia Arabia to increase supply by 200,000 barrels a day". They seem to leave out the fact that Nigeria is down over 1,000,000 barrels a day in it's output. Nigeria isn't the only country that has issues keeping pruduction at full tilt. Mexico, Russia, the U.K. are all slipping in their production supplies.

Wouldn't it be a no brainer that if demand stays the same or keeps increasing (Look at auto sales in China) and supply is flat and declining that prices will continue to rise? It's only obvious. The people investing millions in oil aren't fools. They've been watching all of this take place and are simply buying shares now because a rise in prices is a sure thing.



posted on Jun, 25 2008 @ 11:02 AM
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reply to post by dbates
 


I see your point fully, although when I meant "demand", I mean that because there are no regulations involving purchasing futures, it provides an easy way for private interest groups to raise the price of the commodity indirectly. By manipulating the market, it justifies the price raise at the wholesale level by the suppliers.

For example, if a new public company entered the market, and many many investors picked it up at once, it would make the stock skyrocket in value. It seems like it would be the same way with commodities, but maybe I'm missing something.

In otherwords, not demand from the consumer (ex. Truck Trivers), but demand from the investors.

I'm also not sure that other countries are feeling this price surge around the world as we are, and if they are, I haven't heard about it. Saudi Arabia gas is still around 18 cents a gallon.

[edit on 25-6-2008 by Azurus]



posted on Jun, 25 2008 @ 11:05 AM
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Neither the congress, (for people in america), nor any other form of goverment control is going to bring the prices down. Why ?
The current rates are vaguely "upped" by speculation. But if you check out the demand/production ratio for oil, the answer is clear. We are not producing enough to keep up with consumer demand. Add to that the fact that Oil companies grossly double oil reserve estimates, and have done for many years. This situation is logical, easy to explain, and i'm afraid, it's here to stay.
This is why the only steps OPEP has taken to "help out", is to request a increase in production. Because thats the only way out.
It won't happen though.



posted on Jun, 25 2008 @ 11:14 AM
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Originally posted by Azurus
For example, if a new public company entered the market, and many many investors picked it up at once, it would make the stock skyrocket in value.

Only for a bit. When actual earnings reports come out then the price would drop off dramatically if the company wasn't going to make money. You can't prop up the price of a company's shares forever simply by speculating.

The earnings reports come out for oil commodities when oil refineries buy the oil at this price and customers keep buying their product. While it's true that we can't quit buying gasoline, we can cut back on what we use. Recently in the news several airlines have stated that they're cutting back on the number of flights, and people can quit recreational driving or simply making wiser decisions to not "run to the store" because they'll be dirving by there in two days anyway.

The risk for speculators is that if demand falls off, refineries may not want to buy their futures at a price above what they paid for them. If so then they'll lose their shirts. In the meanwhile the market is still saying (via demand) that oil is at a good price. The only reasonable explination for continued long-term high prices is that demand is greater than supply.


EDIT: $10 gasoline is the sticking point in my opinion. People will keep making adjustments until it hits double digits. Then.....it hits the fan.

[edit on 25-6-2008 by dbates]



posted on Jun, 25 2008 @ 11:19 AM
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reply to post by dbates
 


I'm guessing China's increased demand is a causitive factor. The Asian/Pacific energy needs have increased exponentially in this area of the world and acknowledged that the higher demand should warrent investigation into alternative and biofuels.

Asian Pacific Energy Pact



[edit on 25-6-2008 by Azurus]



posted on Jun, 25 2008 @ 11:28 AM
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"EDIT: $10 gasoline is the sticking point in my opinion. People will keep making adjustments until it hits double digits. Then.....it hits the fan."



Consider this.........
1-80% of Americans live Paycheck to paycheck.
2-The same 80% have and avg $9K CC debt.
3-Right now their getting by with gas price by charging it.
4-When the CC company's fold, the SHTF.........
5-When heating oil is $6 this winter, the SHTF.......
6-When people are fighting in food lines in Milwakee in June,
wait unitl October.........

Please comment on any of these............



posted on Jun, 25 2008 @ 12:11 PM
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Originally posted by Bunch
reply to post by dbates
 


But it seems to me that you are ignoring the fact that it is speculation what is driving the price of oil this high. Many analyst agree that if speculators were to be banned from the oil futures market the price of the gallon would drop back to what the fundamentals of the maket dictates which is arouns 2 dollars a gallon.

So they are basically saying thats speculators are doubling the price which is clear to me that this is whats going on. In my opinion speculators are a pest and they need to be regulated because they move from section to section of the indexes and cause all kinds of troubles for the economy.

They had a hand in the dot.com bubble, they had a hand in the housing bubble, they are creating a bubble in the oil market and since they know that their days are numbered there they are already moving to the food sectors of the market and undoubtedly creating chaos there as well.

I dont have a problem with people making money at all, but when it is a the expense of bracking the backs of others then I have a problem with that. This has gone really out of hand and its time for the laws to adjust to the times we are living.

[edit on 23-6-2008 by Bunch]
what you are is the truth this exactlly how they are driving every thing up. is there no more law of supply and demand. just like the supossed corn shortage the is only because farmers are growing it for ethanol thinking that this will be the next fuel not thinking that this just drives up food prices. then there goes the speculators again it is a really bad revolving cycle. all speculations on the market needs to be banned all together and let the market determine the price of the trades.



posted on Jun, 25 2008 @ 09:05 PM
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Originally posted by Bunch
reply to post by dbates
 


But it seems to me that you are ignoring the fact that it is speculation what is driving the price of oil this high. Many analyst agree that if speculators were to be banned from the oil futures market the price of the gallon would drop back to what the fundamentals of the maket dictates which is arouns 2 dollars a gallon.

So they are basically saying thats speculators are doubling the price which is clear to me that this is whats going on. In my opinion speculators are a pest and they need to be regulated because they move from section to section of the indexes and cause all kinds of troubles for the economy.

They had a hand in the dot.com bubble, they had a hand in the housing bubble, they are creating a bubble in the oil market and since they know that their days are numbered there they are already moving to the food sectors of the market and undoubtedly creating chaos there as well.

I dont have a problem with people making money at all, but when it is a the expense of bracking the backs of others then I have a problem with that. This has gone really out of hand and its time for the laws to adjust to the times we are living.

[edit on 23-6-2008 by Bunch]


hear hear! But it is kind of hard to do that when the rest of the people involved enjoy reaping the profits.



posted on Jun, 27 2008 @ 11:44 AM
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posted on Jun, 28 2008 @ 10:03 PM
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I have heard both sides of this story (demand vs speculation) from many so called experts, and I admit to being a little confused. However, I would say that it is not likely that congress will follow through for two reasons..1) They are up to their eyeballs in oil/energy speculation themselves. 2) They would incur the wrath of many Americans who have a great deal of their pensions, 401ks, and ETFs, in these fossil fuel trades (and would stand to loose a great deal of money). It is simply "chest pounding" and nothing more.



posted on Jun, 29 2008 @ 10:58 AM
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Originally posted by LDragonFire
Do you all really think we will ever see $2 a gas ever again?


Very probably not but the point you refuse to acknowledge is that it wont have anything to do with a shortage of oil in the ground or means/capitol to extract it. Oil could in theory go to far below $2 a gallon but since that is not nearly as profitable to nearly as many in the oil/refining/shipping industry they will do their best to shut up about it while speculators continue to do whatever they want.


Only if we discover much more than we already have, or if China and India suddenly stop using the black stuff.


We have more oil than we know what to do with and the world's known economical oil reserves are much larger now than they were back in the 50 and 60's despite us having used a good percentage of the then 'known' reserves. Please stop blaming China and India when even to this day there are NO physical oil shortages on the market and that current problems are mainly being driven by massive international capitol funds playing the futures markets.

Stellar



posted on Jun, 29 2008 @ 01:42 PM
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Originally posted by dbates
Why do people balk at rising oil prices when supply is flat, and demand is increasing?


Because despite the fact that supply is fact quite flat it has NEVER failed to meet demand over the years in which these rapid price rises have occurred.


The same people don't think twice about news reports of high corn prices due to crop shortages.


Oh they do but at least they know that they can stop eating out, buy cheaper food or generally eat less if they absolutely have to! The same is not true for driving as it's far harder to get around and you can't exactly stop going to work to cut back on spending...


Do we disengage our brain when we talk about oil?


I have been thinking the same thing and i must admit that it sure seems to be the case for a good few otherwise intelligent seeming people.



It seems some people do. Can Congress tell OPEC what prices to sell their oil at? I somehow doubt it.


OPEC do not set prices and have not begin to do so for decades. The US congress can send OPEC to hell and destroy whatever price regime they might wish to set by simply developing the massive US reserves. IF the US government would invest just a fraction of the pentagon budget in such projects it could not only create jobs in the local oil industry but also all those jobs that would become available as people gain more spending money due to it's citizens now being able to save money on the fundamentals.


If the U.S. refuses to buy oil at $130 a barrel, then someone else will probably buy it.


But the US does not buy oil at that price and now that the US strategic reserve have been filled to capacity ( and there are expansion plans in the offing) it's for the most party private industry and speculators that are investing in stockpiling the physical resource. The problem is not that there are not buyers for oil at 130 USD per barrel but that you simply wont be able to buy it for much less however much you want it or scream and shout about it.

The thing that people fail to understand is that you don't have to speculate on the ENTIRE volume of 80 million barrels a day but just the 'optional' margin that the world market can in theory do without if some middle class folk all over the world stop driving around. Shouldn't we really try to establish how big that margin is and who has both the interest and the funds to keep up the lead in such a speculative attack?

Stellar



posted on Jun, 29 2008 @ 01:45 PM
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reply to post by StellarX
 



bravo , excellent reply Stellar , I have Starred you


Stellar i need your opinion on this Thread :

www.abovetopsecret.com...

[edit on 29-6-2008 by manson_322]



posted on Jun, 29 2008 @ 06:33 PM
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Originally posted by Azurus
I'm guessing China's increased demand is a causitive factor.


Such things can and are predicted and can never be causative factors when massive supplies of a given commodity is in evidence; China's increasing demand has long been predicted and in terms of causation the upheavals in the ME and the invasion and occupation of Iraq are far more noteworthy.


The Asian/Pacific energy needs have increased exponentially in this area of the world and acknowledged that the higher demand should warrent investigation into alternative and biofuels.

Asian Pacific Energy Pact


All the long predicted rise in demand in SEA shows is that the despite the good planning the forces that intervened to disrupt the oil markets you can still largely get away with our corrupt practices by blaming the rising prices on the small measure that prosperity that some South east Asian economies are experiencing.

Stellar



posted on Jun, 29 2008 @ 06:43 PM
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reply to post by manson_322
 


I wish i could spare the time but frankly the thread title will ensure that nothing of much worth happens there. As for my views the US national security machinery have most certainly been responsible for the suppression and destruction of many dozens of liberation/democratic movements in the last half century or more. By using it's economic and military muscle it has killed and/or suppressed the leaders of these various movements and failing that have directly attacked these movements and countries ,by using certain wealthy factions in those countries or just devastating them by invasion or economic terrorism, leading to the death of many tens of millions directly and many hundreds of millions indirectly by practicing and supporting capitalism.

Since i will only endlessly repeat myself by trying to explain that i don't have much against the American people themselves, who are in many ways victims of the same system, i will only bother to post there if i find some extra time.

Stellar



posted on Jun, 30 2008 @ 07:30 AM
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Originally posted by StellarX
it's for the most party private industry and speculators that are investing in stockpiling the physical resource.

I have a hard time believeing that paper traders (speculators) are actually stockpiling the physical oil itself. Where are they keeping it? Are there large oil storage facilities in the Hamptons or on Wall Street?

At any rate, oil exports are slipping slowly but surely. You'd think that if this was really a bubble, that the producing countries would at least keep their supplies flat so they could profit. No, according to what I see production is sliding off despite record prices. Are we actually supposed to believe that over 30 oil exporting countries all want to lose money?


Sources:
www.eia.doe.gov...
www.eia.doe.gov...

hat tip:
www.theoildrum.com...



posted on Jun, 30 2008 @ 02:06 PM
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Listen as Rick Santelli explains how speculators can't be setting the selling price of oil. In order to do so they would actually have to take delivery of the contracts. They can speculate all they want on what the price will be in the future, but the prices on these contracts doesn't mean anything until the final date of contract. It's like the roulette wheel in Vegas. The final resting position of the ball is all that counts.

Speculators are only betting against each other.




posted on Jun, 30 2008 @ 05:21 PM
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Originally posted by dbates
I have a hard time believeing that paper traders (speculators) are actually stockpiling the physical oil itself.


And why would they have to?


Where are they keeping it? Are there large oil storage facilities in the Hamptons or on Wall Street?


I don't know and i'm still not sure why you think they will have to take physical delivery of the resource? Do you understand that contracts can be traded as easily as the commodity itself?


At any rate, oil exports are slipping slowly but surely. You'd think that if this was really a bubble, that the producing countries would at least keep their supplies flat so they could profit.


Why are you showing me oil export numbers when i am talking about oil consumption and world production? Do you understand the difference and if so why do you think these numbers would fool me?


No, according to what I see production is sliding off despite record prices.


Since it cost money to keep spare capacity around no one really likes to do it and since demand is being met there really is no reason.


Are we actually supposed to believe that over 30 oil exporting countries all want to lose money?


They are NOT losing money as the higher prices far more than makes up for the drop in volume; these really are basics and i am wondering why your having such a hard time with it.


According to the IEA, world production of total liquids in October increased by 1.4 million b/d from September resulting in total world liquids production of 86.5 million b/d, -- the all time high liquids production. Many analysts are skeptical of this number and want to await confirmation from other sources.

www.energybulletin.net...


And i know who those analyst are and i am pretty sure they were involved the graph you presented earlier. Please show me the official source that even begins to suggest that world oil production is declining. A source that could explain why there are any fundamental reasons why it should be declining, other than invasion of oil producing nations, terrorist campaigns and general lack of financial incentives to do so, i would be most surprised.

www.eia.doe.gov...

So no, the EIA does not belief that world oil supply can't keep up with demand if properly managed and not deliberately disrupted by wars of aggression against oil producing nations and regions.

Stellar

[edit on 30-6-2008 by StellarX]




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