In light of all of this I would like to know two things. #1, what has caused a seven fold incres in prices? And no, I am not stupid or ignorant, it is a legitimate question. and #2, when will the obviously overinflated price of oil drop?
It's not overinflated--it's finally up to normal.
I posted the above on another thread earlier today. One must also remember that when oil was $12 a bbl it was artificially low due to an overly strong dollar and economic problems in Asia.
2) The Democrats/environmental wackos unwillingness to support USA drilling for oil
3) President Bush's (and the Republican senate and congress's) unwillingness to put a full court press on GENUINE ENERGY POLICY/REFORM.
Energy and the lack thereof is a direct threat to our national security, he should present an executive order to drill in Anwar and everywhere else we have proven oil reserves. He should also provide for new refineries and nuclear power plants in order to limit our dependence on oil being sold by people who hate our country, who openly support our enemies and who want to see us converted, enslaved to Islam or dead.
Why worry? Because this energy crisis is killing us as a nation and hurting millions of middle class and poor Americans and it is only going to get worse. Sure the rich and the speculators are not impacted, but EVERYONE ELSE in America is.
If you expect oil prices to collapse any time soon, you are sadly mistaken. Some pin the blame on a supposed "Iraq war premium," but that would have faded out by now. It's all suppy and demand, and the Asian countries are behind the surging demand.
Incidentally, I don't really mind the high gasoline prices, though I probably have to use more than most folks who post here due to my job. The reason is that I know that the high prices are keeping that oil coming here instead of to China or some other place.
spot market deals with options.
First ask what caused the drop to $10 /bbl in 1999, by far the lowest price in history, in real $?
The Asian economic slump. Oil is a volitile commodity, where supply and demand are fairly nicely balanced world-wide. A sharp drop or rise in demand creates a "glut" or "shortage" that causes a big price reaction.
As the world economy recovered, (Bush Tax Cuts didn't hurt, either), demand went up, and the jitters of the lat 4 years have meant that people also want to have their stocks fuller than usual.
World wide production actually continues to increase, setting new all-time records 8 of the last 11 years (including the last 4).
Oil will continue to fluctuate, but without actually cutting production sharply, "speculators" can't keep a price up (or down) forever -- see the Hunt Brothers and Silver in the 1980s.
Calm the jitters and keep increasing production, and we'll be fine.
Have you ever noticed the value of gold? What do you suppose causes it to change? When you figure that out you'll understand oil's price.
Oil prices will NOT come down. They need to be high to make further exploration profitable.
It is important that the oil companies are confident the prices stay high. They don't want to start drilling and refining and then find out the prices drop.
Hard pill to swallow, but necessary.