Posted on 12/20/2014 8:06:02 PM PST by NKP_Vet
Yeah, me too. But back then, $.25 would buy what costs about $2.25 today.
Think back to what a loaf of bread or a pound of hamburger cost back then.
Also, think back to what a three-minute coast-to-coast telephone call cost back then.
And of course - back then - the richest man in the world couldn't have an iPhone, or an MRI.
So how much more glut do we have than we had a year ago? So much that the price drops 50%? Really?
Its traded on an open market among persons that buy it. That's not really an open market. I mean... you're not out there buying barrels of oil are you? I'm not. I mean you and I might buy 100 barrels as an investment. You and I can't move the market.... but the real traders can move the market. And in oil and gas, a lot of the real traders are governments.
They tell you there is a glut of oil and so the price drops 50%. They also tell you that North Korea hacked into Sony. Do you really believe both of those? Do you really believe either of those?
Remember what happened?
Um, we paid less for gas?
I’m frustrated that enough of the financial wizards that write columns like this didn’t see the OPEC response to fracking from a LONG WAYS OFF. Even I did. This is not the same set of circumstances as 2008, so it is foolish to adjust one’s crystal ball by economic markers like the fall of crude price.
Sure I have, but it's not possible to do that with a market as big, and with as many moving parts as the oil business. There are way too many large players involved, and some of them are even governments. Wars get started over stuff like this.
No, the price has fallen because of increased supply - nothing more. Now, you can call that 'price fixing' on the part of the players involved, and perhaps it is, just not in the common understanding of the term.
Who says it won't? As long as the price per barrel justifies it, it'll go on.
Yep. If there's profit to be made, it will be made.
There are geo-political factors affecting supply and demand, but it’s still supply and demand moving the market.
Which will create an environment for startups...
OPEC is cutting their price because the market demands it.
...and how have they been able to get all these market participants to come together, and keep it a secret from a government that would love to catch then at it?
In other words, What can the Saudis achieve other than an interruption of fracking?
It's called a price war. The Saudis want to push the price so low that it kills the fracking boom in the U.S. If they can do that, then sales (if not the price) of their product will rise in America again. If they can keep the price low, (they think) they can keep all those petrodollars flowing in their direction.
Thing is, they're so rich, they can afford the hit to their bottom line. They're willing to take it, too, if they can kill their competition.
This is one of the few instances when you want government to engage in taxing.
Any person advocating government intervention in markets should explain why this time would be different than any other... Why their good ideas and good intentions would survive the political process in any recognizable form...why the predictable and inevitable unintended consequences wouldn't swamp whatever benefit might survive.
For purposes of government intervention, markets are best understood as a means of communication. Intervention is best understood as an attempt to shoot the messenger.
Oil markets (as are all markets) are a huge machine with many moving parts and bells and whistles. Its rare to impossible to point at any one factor and say, this is what is controlling the machine.
At best, one can say that one particular factor outweighs the others at some particular point in time.
So, no, it's not always about demand...and, no, it's not always about supply. Especially not in a season where a cartel has effectively lost the ability for control price.
Demand is not increasing as fast as the recent past. Supply is growing by leaps and bounds. The OPEC swing producer cannot adjust production enough to stop the tide.
You started well, but wound up agreeing with me, and contradicting yourself in your last paragraph.
The increased supply of crude oil (due to fracking and the steady output of other nations) is most definitely responsible for the falling price at the pump.
The law of Supply & Demand remains in force.
Contradicting myself? How?
Seriously? Go back and re-read your entire post.
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