The Oil Bubble II

NRO Financial ^ | November 30, 2004 | Frederick P. Leuffer

[Toddsterpatriot]

Meanwhile, on the supply end, oil production outside of OPEC has reached a record high at more than 50 million barrels a day in October, according to the IEA. Aside from the hurricane impact, production has been steadier this year than in the past. Production should rise by 600,000 barrels a day in the fourth quarter as shut-in Gulf of Mexico production returns and new fields in West Africa ramp up. In 2005, non-OPEC production should rise by 1.3 million barrels a day compared with world oil-demand growth of 1.4 million barrels a day.

As for OPEC, production has surpassed everyone’s expectations, with production higher than expected for the most unlikely members — Libya, Iran, and Nigeria. Since mid-year 2003, these three nations have increased production by 800,000 barrels a day. In the same time frame, OPEC (excluding Venezuela and Iraq) has increased production by 2.3 million barrels a day. In total, OPEC has increased output by over 4 million barrels a day to 30.3 million barrels a day.

Hey Willie, didn't you say globalism was causing oil production to fall? According to this it keeps rising. Maybe you were mistaken?

[biblewonk]

--snip--As fuel prices rose airlines reduced engine idle time when planes were not in motion, cut wind resistance by polishing aircraft exteriors on more frequent schedules, and reduced flight speeds and the amount of fuel carried.

Very interesting.

[Izzy Dunne]

Experiment: Ask ten people on the street why gas prices are higher now than last year, and you'll get "Iraq" as the answer eight times, and "Bush" as the other two.

[2 Kool 2 Be 4-Gotten]

While I basically agree with this assessment notice that every single fact mentioned buttresses the bearish argument. It's inconceivable that there aren't at least some facts that would support the other side of the argument but these are omitted. Just an observation.

[Izzy Dunne]

Yeah, you know what? Maybe there's a connection there between the price of something and people's willingness to increase efficiency !

We should hav a government study to find out more about this...

[odoso]

Has anyone noticed that we're (Avg Americans) almost to the point of acceptance when it comes to HIGH gas prices at the pumps? It was the plan all along...

Has everyone forgotten the HUGE spikes in gasoline prices at the pumps which were based on speculation of terror, weather and other falsities which never materialized? Were these "profits" that were extorted from us ever returned to us in the form of lower prices?

LOL Scam after Scam after Scam... Why do we continually tolerate the intolerable!

[KC_for_Freedom]

Today SA announced that they will up oil production again. Likely they want to kill plans to try to drill in ANWR and stiffle efforts to broadly market hybrid cars. They can do this by making oil and gas periodically cheaper. We are headed for a cheaper time.

As a full time RV'er, I get to drive again, just in time for the snow birds.

[biblewonk]

Unnecessary sarcasm alert!

[rightwingreligiousfanatic]

I've heard it said that in "real", inflation adjusted terms, we are actually paying the same or less for gas than 30-40 years ago.

It sounds reasonable to me.

Has anyone else heard that?

[SoFloFreeper]

The recent retreat in oil prices reflects only a small pinhole in the oil bubble. Fundamentally, oil prices should be in the high $20-a-barrel range today, based on supply/demand economics and current inventory levels. Eventually, the barrel price should decline to the low $20s as oil inventories continue to build.

Am I missing something here?? This guy says oil is going to drop another $20 a barrel?? C'mon...

[jeremiah]

Exactly, the $2.25 price per gallon were all about getting people used to paying around $1.90 or so without a complaint. Now when the local Costco has regular unleaded for $1.85 people go nuts. It was not that long ago, that gas was going for a buck thirty five or so. We have been fleeced, and no one coming on here will convince me that the oil companies did not plan to drive prices high, using the WOT as cover. Thanks GW, for doing nothing about this, we have been fleeced with the permission and blessing of the "Powers that Be" again.

[malakhi]

Has anyone noticed that we're (Avg Americans) almost to the point of acceptance when it comes to HIGH gas prices at the pumps?

Adjusted for inflation, gas prices are around where they've been for the past 18 years.

[malakhi]

See my #13.

[Bigh4u2]

"Thanks GW, for doing nothing about this"

Tell me again, how the president can do anything to control the stock market?

These high prices were based on a 'speculative' outcome of (possibly) predicted disasters that didn't occur.

Releasing part of the reserve into the market would have done nothing, especially since the market is 'flooded' with oil as it is.

How is the president supposed to 'control' this?

[odoso]

I have to admit, the plan is brilliant! and it's not just executed in the petroleum arena.

Not so sure it's all GW... However, it would be nice if someone or something stepped in and stopped the extortion.

[Clay Moore]

"Am I missing something here?? This guy says oil is going to drop another $20 a barrel?? C'mon..."

I believe the price spikes, more than anything else, were generated by the commodity traders. When the calls start coming due, the price will tumble.

Demand has not risen to justify the price increase. Some, yes. Almost triple, no.

[odoso]

Forgive my ignorance..., but does that mean the prior to the high prices, we've (Avg Americans) have been ripping off the oil companies?

[Obadiah]

Third-quarter gasoline demand was 9.2 million barrels a day. Demand for this one product matches the consumption of all petroleum products in China, India, and all of Eastern Europe combined.

Wow. I didn't realize that US gasoline consumption was quite this significant.

[Clay Moore]

"We have been fleeced, and no one coming on here will convince me that the oil companies did not plan to drive prices high, using the WOT as cover."

If the oil companies actually had control of oil prices, you would see stable prices and the obligatory ~4% price increase at the beginning of the year like most other industries do.

Do not try to tell me they had control when plummeted to $10 per barrel some years ago. A lot of small companies from drillers, oil service companies, and refiners went tango union as a result.