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$5 Gas By Summer Is Seen as Iranian Situation Festers
NY Sun ^ | Ap 24 06 | Dan Dorfman

Posted on 04/24/2006 8:41:25 AM PDT by churchillbuff

Mr. Gaines, chief executive officer of Houston-based Dune Energy and a former top institutional energy analyst, told The New York Sun that those factors could include the current shortage of gasoline inventories, a really hot summer, supply disruptions arising from troubles in Iran and Nigeria, or another serious hurricane in the Gulf, 13% of whose production is offline.

These factors, he says, also could easily produce $90 to $100 oil, as well, versus Friday's close of $75.17.

Equally significant are the implications for interest rates. The gushing oil price, says money manager Leonard Mohr of Los Angeles-based MCR Associates, re-enforces his conviction that the Fed, contrary to overwhelming Wall Street expectations, is in no position to call it quits on future interest rate increases, given the inflationary ramifications of the burgeoning price of oil.

(Excerpt) Read more at nysun.com ...


TOPICS: Business/Economy; Foreign Affairs; Government
KEYWORDS: gasprices; speculators
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To: waverna

Yea, we've had such disruptions.... lets see.. IRAQ came ONLINE as a possible supllier to the US.. which it was not before because of the Sanctions... Yea, whole lots of uncertainty... NOT.

What is going on is simple bubble nonsense... hedge funds et all are now in existance with a mandate just to buy oil futures.. well guess what? There are only so many of them... so what happens? THey have to spend their money on oil, no matter how rediculous the price is... its their mandate... so they are basically trading futures contracts with one another because there is more greed than good sense... I buy it from hedge fund A for $60.. they sell it to hedge fund B a week later for $65... who sells it back to fund A for $70 a week later.. its a CLASSIC BUBBLE....

It has NOTHING, NOTHING to do with supplies, or demand or even refinery capacity. Combine this with the reality that the futures market can be manipulated very easily and that controls and enforcement of such actions are even less likely there there are for the regular stock market... and you can pretty much see what's going on.

There is no shortage of supply, in fact Saudi Arabia has flat out said they have been producing more than they can sell on a daily basis.... Demand, worldwide has actually fallen some, not increased.. and the price is still going up by leaps and bounds... its called SPECULATIVE BUBBLE folks... same thing that was going on in tech stocks in 99.


61 posted on 04/24/2006 9:38:56 AM PDT by HamiltonJay
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To: 4U2OUI
Oh yeah.

Like the 'Rats and progressives are going to do all that when they regain power...

What are you smoking, dude?

62 posted on 04/24/2006 9:39:30 AM PDT by Publius6961 (Multiculturalism is the white flag of a dying country)
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To: zarf
How are those SUV's doin? Hope ya'll enjoying your fill ups!
Mine doesn't get used much these days...

I love my Ford Escort!
I just get my 10 gallons ever 10 days and keep my mouth shut... (75-mile daily commute)

63 posted on 04/24/2006 9:41:59 AM PDT by Publius6961 (Multiculturalism is the white flag of a dying country)
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To: Publius6961

See the post below yours... Its not some grand conspiracy, its simply greed and manipulation. There is no omnipotent godlike creature breakign old signed contracts, just flat out manipulation of current ones.

Again, demand is down, supplies are up and price continues to skyrocket.... pure and simple manipulation. Fact is simple that supplier is still making a nice profit on that oil being sold at 35 bbl, because his costs haven't increasted at all, his supplies haven't decreased... he can deliver it easily at 35bbl because there has been nothing to truly affect the cost of extracting crude from the earth, and there is no shortage... Saudi Arabia is actually producing more daily than it can sell by its own admission.


64 posted on 04/24/2006 9:42:15 AM PDT by HamiltonJay
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To: Bloody Sam Roberts

How profitable are these oil companies?


65 posted on 04/24/2006 9:44:01 AM PDT by Alberta's Child (Can money pay for all the days I lived awake but half asleep?)
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To: pabianice
... by a public wild-eyed with rage over $6 gasoline, meaning a likely McCain presidency and a Dem Congress 2008-2010. All bets will then be off.

You're on a roll, Jack... Don't stop now.
Tell us at that point how the Dem congress and McCain will solve ethe problem...

Perpetual motion is only a reality with their mouths.

66 posted on 04/24/2006 9:44:09 AM PDT by Publius6961 (Multiculturalism is the white flag of a dying country)
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To: churchillbuff
. . . given the inflationary ramifications of the burgeoning price of oil.

The author of this article is totally incorrect on this key point. Contrary to "conventional wisdom," high oil prices are actually counter-inflationary in many respects.

67 posted on 04/24/2006 9:46:10 AM PDT by Alberta's Child (Can money pay for all the days I lived awake but half asleep?)
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To: HamiltonJay

Yes, there are elements of a 'bubble' in this oil market, spurred by tension in the Middle East, Katrina disruptions, Iranian uncertainty and increased demand from India and China. This all makes the future very uncertain.

The hysteria element to this or any price spike will be short-lived. Don't trade in the SUV for a Prius just yet.


68 posted on 04/24/2006 9:51:00 AM PDT by waverna
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To: Alberta's Child
Quite frankly, I'm content to have people in Washington leave us alone. Now if only we can get them to reduce their legislative sessions to two weeks in every calendar year . . .

LOL!!! Thee and me!!
69 posted on 04/24/2006 9:54:28 AM PDT by DustyMoment (FloriDUH - proud inventors of pregnant/hanging chads and judicide!!)
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To: Alberta's Child
How profitable are these oil companies?

Hard to say acurately without doing some research.
But I can say that they are profitable enough to reward their top officers with some very sizable bonuses. We all have seen those numbers.
Now, I don't begrudge anyone from getting what they can, when they can. Whether it be Drew Bledsoe getting $14 million to play football or ExxonMobil Corporation retiring Chief Executive Officer Lee Raymond getting a retirement package worth nearly $400 million...but at some point it does become a little obscene.

70 posted on 04/24/2006 9:59:41 AM PDT by Bloody Sam Roberts (I can't complain...but sometimes I still do.)
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To: Bloody Sam Roberts
I'll give you a general idea of just how profitable these companies are. ExxonMobil, which has been lambasted in Washington and in the media for its "obscene" profits, earned a "record" profit last year of about $10 billion.

For one thing, these "record profits" in the oil industry are "records" primarily because these companies are much larger than they used to be. ExxonMobil, BP/Amoco, Texaco/Chevron, etc. are all the result of major corporate mergers involving two huge oil companies merging to create a single company.

It should also be noted that ExxonMobil's "record" $10 billion profits in 2005 resulted from about $100 billion in gross revenue -- which means the company showed a return on investment of about 10%. This is hardly an obscene profit margin in any sense of the word, and is dwarfed by the enormous profit margins in many other industries. In fact, people who know the energy business actually laugh out loud at the suggestion that buying stock in a company like ExxonMobil is a good investment in a booming energy market. To an investor in the energy sector, buying stock in a company that generates a 10% return on investment at the absolute historic peak of its profitability -- and generates calls for all kinds of government regulation, Congressional hearings, etc. in the process -- is the equivalent of putting your money in a savings account at your local bank.

71 posted on 04/24/2006 10:07:05 AM PDT by Alberta's Child (Can money pay for all the days I lived awake but half asleep?)
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To: waverna
What exactly is being done to 'manipulate' the world price of crude? Is someone, somehow knowing what the 'real' future price will be, agreeing to pay much more than that in order to somehow fool everyone? The tankers that are supposedly floating around the seas of the world have no effect on the future prices, they are there now, not then. Any insecurity about the future of oil supply will cause a rise in future price speculation. You can thank Iran for that uncertainty.

Stop and think for a moment. The current price of a barrel of crude is based on the speculation that invading Iran might cause to the daily availability of crude, NOT any real problems related to the actual supply (other than the higher amounts that China and India are sucking up. In addition, the lock that the environazis have on the oil industry has prohibited: domestic drilling, prevented building new refineries for over 30 years and created over 50 seasonally-adjusted regional blends. Also, taxes on a gallon of gas drive the pump price by as much as 50 cents. So, there are a lot of manipulations of the price - the devil's in the details.
72 posted on 04/24/2006 10:07:06 AM PDT by DustyMoment (FloriDUH - proud inventors of pregnant/hanging chads and judicide!!)
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To: HamiltonJay
Again, demand is down, supplies are up and price continues to skyrocket.... pure and simple manipulation. Fact is simple that supplier is still making a nice profit on that oil being sold at 35 bbl, because his costs haven't increasted at all, his supplies haven't decreased... he can deliver it easily at 35bbl because there has been nothing to truly affect the cost of extracting crude from the earth, and there is no shortage... Saudi Arabia is actually producing more daily than it can sell by its own admission.

You seemed to miss a few things . Is most gasoline from light or heavy crude. Is light crude production increasing or decreasing. What is the price difference between light and heavy crude. Why is there a difference? Does the US have many refineries that can refine gasoline from heavy crude. Does heavy crude yield less gasoline than light crude. Is SA crude heavy or light? If given unlimited amounts of heavy crude could the US at present supply its customers with gasoline. Why is SA building new refineries when they already have plenty of supply for themselves. Did the production of light crude peak in 2004?

73 posted on 04/24/2006 10:07:24 AM PDT by jec41 (Screaming Eagle)
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To: churchillbuff

$5 a gallon gasoline would ruin the economy, plain and simple. Can you imagine paying $125 for a full tank of gas in an SUV? And then do that once a week, if lucky?

Brutal prediction. Pray he's wrong.


74 posted on 04/24/2006 10:11:34 AM PDT by Rutles4Ever
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To: JZelle

I propose we drill for oil in that guy's chins. We are sure to find another gusher.


75 posted on 04/24/2006 10:14:34 AM PDT by nhoward14 (I am an engineer. If it ain't broke, it ain't got enough features yet.)
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To: DustyMoment

Exactly. Futures prices are by definition speculations on what might happen, given current circumstances. Its not 'manipulation' in the sense of collusion by speculators. These speculations are not irrational, they may in fact become real problems in supply, given all the circumstances that you mentioned. When current conditions change the outlook, the futures prices will change.


76 posted on 04/24/2006 10:14:51 AM PDT by waverna
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To: Publius6961

Is the UK not an oil exporting country?

Rationing might ensure a Dem Congress and presidency. Even though rationing is the type of thing leftists really love.


77 posted on 04/24/2006 10:15:51 AM PDT by Sam Cree (Delicacy, precision, force)
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To: B4Ranch
Go buy some more gold....

Your Armageddon won't be here for a while, no matter how much you desire it...

"$#it for brains".

78 posted on 04/24/2006 10:30:34 AM PDT by Cold Heat
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To: capitalist229
If he has to, he will release the SPR to get pubbies through November elections

Why? There is no supply problem at present. We are fully stocked with raw crude.

The high price is a result of future worries, not the current reality.

As demand drops a bit due to the higher prices, the crude spot prices will come down. The only reason SPR would be opened up, is if refineries needed it for whatever disaster befalls us on the crude supply side.

79 posted on 04/24/2006 10:35:13 AM PDT by Cold Heat
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To: MurryMom
8 years of peace and prosperity we all enjoyed under Clinton and Gore.

Only because Clinton had his head so far up OBLs ass. Do nothing is the perfect response to terrorism.

80 posted on 04/24/2006 10:48:22 AM PDT by VeniVidiVici (Protect American jobs. Don't hire illegals.)
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