[Wyody]

I need somebody really informed and really smart to explain something to me:

1. The Saudis called a summit to investigate why our gas prices are so high.
They found out/realized that it's not because of something the oil producing nations have done. As a matter of fact, they have plenty of gas and are perfectly willing to pump more if they have to ... but there is no case of "supply and demand" going on at their end.

2. The GOP is all smiles about blocking a windfall-profits tax on the major Oil Companies of the U.S. and that deal with the U.S.

While I understand that the WP tax hasn't worked in the past, I also believe the ages-old story about how there is tanker after tanker out on international waters just full of oil - but kept there so as not to be counted as part of our "inventory".
If I understand correctly, this price increase is due to ... investors?
Somebody please tell me - I am too out of touch to understand. I remember the Hunt Brothers and the Silver Market scam. I remember Reagan and the "Trickle-Down" theory. I'm not new to scams ... but how do you bilk an entire nation into paying over $4 a gallon for travel-gas??
Whazzup wi' 'dis??

[T.S.]

Wyody said:

If I understand correctly, this price increase is due to ... investors?

That is part of the problem. Much of the money that was being invested in crappy subprime mortgages is now being invested in oil futures instead.

The decline of the dollar is another issue since oil is only sold in US dollars.

It would be interesting to see a historical Gold to Oil/Gas price chart. That would show how much the declining dollar/inflation is screwing everybody.

[Wyody]

Now, T.S., you make me want to bring my game up.
While I spent many years in Oil Exploration, I never paid much attention to the oil market. I just knew I was making pretty good money and was able to live nearly full-time in the wilderness of various Rocky Mountain areas. For me to even get a Sunday paper from somewhere was a rarity for quite some time. I'd wind up in a Denver or Houston motel room for a few days a couple of times a year ... and that was my contact with "the world".
But when oil exploration came to a screeching halt (thanks, Reagan); and I went into minerals exploration, everything depended on precious metals trading ... the Gold, Silver and Copper markets, primarily. Then, I was always paying attention because when the price of Gold dipped, I ended up staying home for long periods of time until it came back up to ... if I recall .. the magic number in the late 80's, early 90's was $265 pr/oz.
I watched what happened when we went off to war - even though I was done with exploration; the Gold price nearly doubled right off the bat and I know it was still rising for a couple of years. Now, I don't know what it's doing ... but I write this, T.S., simply to ask: Is the falsely pumped-up price for Gold related to the hollow-ness of the U.S. dollar? And are you saying that this is, most simply, the domino-effect of improperly staged (or unnecessary) war?
Pardon if I'm tying things in incorrectly ... just trying to reason on the Gold/Oil calculation.

[McGowdog]

[Panterro]

Question?

Who has the highest gas prices on the planet?

Who Has the lowest gas prices on the planet?

What does the Military pay for gas?

Ok, now the biggy.. WHY?

I can answer the military one.. The military pays .75 cents a gallon. Why, because they are self sufficient on gas.

I read that Valenzuela on pays .16 cents a gallon. While London pays near $12 bucks a gallon.

[McGowdog]

I heard that Saudi Arabia is paying about 16 cents per. That's pretty cheap.

Who ever Saudi Arabia's greatest threat is, that's who would logically pay the most. I would venture to guess Israel, but I really don't know.

Way way back in the long long long ago, like after WWII, our gov't went to Saudi and said, "Keep us in cheap energy and we'll protect you."

So you can figure out what's what from there.

[Threeper]

McGowdog said:

I heard that Saudi Arabia is paying about 16 cents per. That's pretty cheap.

Who ever Saudi Arabia's greatest threat is, that's who would logically pay the most. I would venture to guess Israel, but I really don't know.

Way way back in the long long long ago, like after WWII, our gov't went to Saudi and said, "Keep us in cheap energy and we'll protect you."

So you can figure out what's what from there.

Then we need to stop protecting them because it isn't cheap !!

[Corlyx]

There are a confluence of factors influencing oil prices on the global markets. I'm not an expert but here's what I understand of the situation:

Oil is a global commodity which is traded around the world in U.S. dollars regardless of where it is produced or sold. The value of the U.S. dollar has declined significantly since the collapse of the credit markets due to the housing boom of the past several years. As a fiat currency, the value of the U.S. dollar floats against other world currencies like the Euro and Yen and as a result of it's lower value, oil is cheaper for foreign investors. This makes oil an attractive investment and more people buy into that market. Domestic investors seeking to protect themselves against inflation in the U.S. economy are also attracted to oil because it has retained its value against the dollar. After the collapse of the housing bubble, speculators sought other lucrative investments that would protect them against rising inflation so they bought into the oil futures market. Oil is seen as a "safe" investment because it is a global commodity used around the world and in ever increasing demand in part due to the expanding Asian economies. With significantly higher numbers of investors, there is more competition over the oil, driving the price up higher and higher. Since the beginning of this year, oil prices have risen around 40%. As more and more speculators enter the market in this way, oil price fluctuations are more sensitive to often insignificant world events. Every little news story now impacts the price of oil and the more the media talks about it, the worse the effect it seems to have. The price is now far flung from fundamental supply and demand economics but because it's a resource that is so essential to almost every national economy, we can't escape paying the price for it. It's not only about driving our cars, it's about every product we buy and almost everything we do. Shipping costs increases are passed on ultimately to the consumer in some form or another. When profit margins are threatened by an increasing cost to manufacturers, distributors, and services, they pass those costs on to the consumer. You pay more. At the same time people can't afford it; wages are stagnant, people are maxed out on debts and credit, and unemployment is up.

Oil isn't the only commodity that has seen these drastic increases in price. Basic food commodities like rice, corn, and grain have risen as well driven in part from heavy investment in bio-fuels (ethanol) production. This has weakened the global economy overall because food prices are so high and the poorest of the poor in the developing world now can't afford to eat.

This seems to me like a major ethical crisis. The United States is one of the largest food exporters to the world and now we are growing corn so we can fill up our gas tanks raising the price to absurd levels while the world starves because they can't afford to buy food.

[Corlyx]

Also, there's all this talk recently in the media about offshore drilling for "our own oil." While that sounds like a good idea to many Americans, it's really nothing but a politician's solution to make it seem like they are doing something for their voters. In reality, if the ban on offshore drilling were lifted, it would take more than a decade of exploration and capital investment to determine profitable drilling locations assuming there are any. Furthermore because of the United States free market economy, this oil would be traded on the global market instead of being directly used here in America. America today uses more than 21 million barrels of oil per day (which is a quarter of the entire world market) and based on current economic policies, that number will only increase higher by the time new production capacity comes online and reaches peak production over a decade from now. Even then, it would take a hugely significant find to even put a tiny dent in this number. Even ANWR at maximum production would supply somewhere around 3% of current U.S. oil demand a decade from now. How is 3% going to lower your gas bill? The bottom line is it isn't. Supporting this policy is not going to lower your gas bill tomorrow, next month, next year, or twenty years from now.

There seems to be this idea amongst many Americans that we are sitting on huge amounts of untapped reserves of oil that will save us from this debacle and it simply isn't true. All you need to do to understand this is take a look at the history of American oil production. In the past, the United States indeed possessed a large amount of oil reserves but after decades upon decades of rampant resource exploitation, oil reserves in America today are producing less and less oil every day, every year. Oil production in America peaked in the early 1970s and rapidly went into decline. This resulted in the oil price shocks of the 1970s. If you take the time to look at a concept called Hubbert's Peak, you will better understand that you can't simply rely on reserve numbers when dealing with oil economics. It's about getting oil cheaply, and the more you pump out of the ground, the harder it is to get to what's left in the ground. There are limits to how much you can pump out of the ground at a time and those numbers change over time.

Are we not much better off cutting back on this dependence? I think that better gains are to be had by scaling back on our use of oil through improved efficiency measures and developing other alternatives.