Oil surges to $66 a barrel ... Reported on Drudge

Drudge ^ | 08/11/2005 | Unknown

[RightWhale]

most of our representatives have personal investments in the energy, oil and gas sectors.

They should not have personal interests in any of the laws they debate. That is one of the basics. They can probably weasel out of that requirement so long as they do nothing to control the price of oil and gas and gasoline. But, the market must be regulated to be free [Ref Hieronymus}, that is, it cannot be a democracy. The least regulation necessary would be favored if it is effective. OTOH, the Cartel does regulate the price of crude to a degree, or did before the rise to the present level, which may be beyond their control from now on.

[Hilltop]

From each according to their..........to each according to their............

Gee, kinda reads like the Communist Manifesto.

[CJ Wolf]

I think the price of oil doubling will eat into our military budget. Direct cost of war goes up, impacting our economy in taxes, as well as our ability to project our forces where they need to be.

[oceanview]

what do you call giving tax cuts to companies making record profits? if you have to give tax cuts and incentives to someone in the energy sector, better it be targeted to startup companies who are actually going to do some new things. to be fair, there is some of that in the energy bill, but not enough.

[mississippi red-neck]

Don't worry about me sonny I'm retired and I already got mine and It wasn't from the government either.

Which one of the corporate welfare teats are you sucking on.

You don't have to answer when the bubble pops you'll be running around bleating like the rest of the sheep.

[Perdogg]

Just think what would happen now if a port were to be hit by Al Qaeda. Makes you think.

[Eagles Talon IV]

It is emotion driven in the sense it causes price rises based on speculation. Speculation that the hurricane season will be worse then ever, terrorism will impede supply, etc. The fact is that there is NO shortage at all of crude. The problem is in the capacity to refine. You are partially correct in saying that it is a demand issue but the fact is rather then the other side of the equation being supply, it is refining capacity along with the not inconsequential emotional/speculative factor.

[ContemptofCourt]

I saw an interview with the CEO of SW Airlines a few weeks ago and the moderator ask him how, in the face of these oil prices can his airline continue to be so very successful qtr after qtr. His answer was interesting. He said his company had hedged the purchase of the needed Aviation fuel based on oil priced at $28.00 bbl and they were covered all the way out to 2015.

Not quite:

http://www.usatoday.com/travel/columnist/grossman/2005-07-15-grossman_x.htm

So how long can Southwest enjoy 2003 oil prices? The airline is locked in at $32 a barrel for 65% of its fuel needs in 2006, $31 a barrel for 45% of its needs in 2007, $33 a barrel for 30% of it needs in 2008, and 25% of its fuel needs at $35 a barrel in 2009. So basically, it has a few years left to enjoy that wise decision.

[Alberta's Child]

. . . your "the military is using all the oil" theory is all wet.

Yeah, but that wasn't the basis of my theory. What I suggested was that a major factor in the dramatic increase in oil prices was excessive demand for military operations. I'm speculating that the fuel used to run hundreds or even thousands of sorties every day is enormous -- and influences the price of oil simply because it is demand that the market hasn't necessarily been prepared to meet.

[Eagles Talon IV]

Thanks for the correction, It seems I conveniently forgot to listen to the % of needs hedged and was looking for the best possible scenario, so I mentally mfg it.

[Wristpin]

Before this latest go round in Iraq, we kept 45,000 troops in Suadi, Kuwait, Turkey and on 1/2 carrier battle groups in the Persian gulf. Enforcing the No-Fly Zone took 30,000 sorties over the skies of Iraq annually. Any calculation of increased oil consumption by the military has to consider that decades old baseline.

As far as impacting military operating funds, the Bosnia, Kosovo and Iraq Operations were always taken out of hide by the DoD during the Clinton years. I don't believe that is the case any longer.

[blantz]

"Demand has been growing faster for oil due to the emergence of China, India, SUV gas mileage, etc."

The SUV story is getting old. Nobody will argue that a SUV gets as good of mileage as a Honda Civic but at the same time most SUVs on the road get twice the gas mileage of any car manufactured in the 60's.

[ContemptofCourt]

Only reason I knew that was because I was impressed with SouthWest's gains, and looked into the stock. Had they not hedged their fuel position, they would have had a losing quarter.

The problem now for SW is that their hedged position decreases from here, and it is going to get tougher for them to turn a profit. Love the company, but took a flier on the stock.

Bottom line is that the rising cost of oil is going to start impacting the economy very soon. The economy has done a hell of a job thus far fighting it off, but the edge of the cliff is looming.

[notigar]

But if we are paying what they are asking, how could what they are asking possibly be "artificially inflated"?

[Eagles Talon IV]

As it begins to impact the economy, slowing it, demand for crude drops along with the price. It may happenm slowly or it may happen quickly if their is a panix sell off in the NYMEX pits. Evfentually the markets will regulate themselves.

[Fitzcarraldo]

$66.50

[Fitzcarraldo]

demand for crude drops along with the price.

China will just take up the slack and the price will do no better than level off, IMO.

[joesnuffy]

run the spend thrift middle class right out of business

Large unserviceable debts

No savings

Equity in a hugely overinflated house

[Bulwark]

Don't kid yourself, many entities would be more than happy to build refineries but lawyers and environmentalists have created a culture where that is a near impossibility in the US.

And the biggest obstalces to building new refineries are the oil companies themselves. You can't force them to build them when they have ZERO interest in doing so themselves.

[Eagles Talon IV]

It cannot continue because China needs the oil for production of goods and services of which we are the biggest buyer. If our economy slows, our buying slows and China's demand takes a hit. Face it, if we go into an economic tailspin the rest of the world follows. Who will buy the crude then and what will happen to the price?