Oil Sinks Below $68

money.cnn.com ^ | September 6 2006: 2:50 PM EDT | staff

[kellynla]

Looks like you and many others will hit the two buck a gallon prediction by Thanksgiving...

[GreenAccord]

You know, I'm ticked that Rove did not orchestrate this price drop more in tune with the November elections. I mean, if he is the manipulator the DUmmies claim him to be, why did this price correction take place at such a meaningless time?

[Onelifetogive]

Hide the sharp objects at the DNC Headquarters!

Why? I'm gonna mail them a box of scissors, ice-picks and straight-razors.....

[Protagoras]

Affecting inflation.

The price of a commodity does not affect inflation, it reflects it.

"Inflation is everywhere and always a monetary phenomenon".....Milton Friedman

[No Blue States]

At least with each passing day now a strong gulf cane is less likely...even if were not out of the woods yet..

We commute to work from the burbs and the nearly $3 was eating our lunch.

I never thought $2.41 would be something so good to see.
Anything lower would be better of course.

[ArrogantBustard]

There was a custom in ancient Rome of giving a disgraced enemy the gift of a finely wrought knife in an ornate presentation box ... with the expectation that he would use it on himself.

[EQAndyBuzz]

I think the speculators realized that Iran was blowing smoke up everyones butts to raise the price. Probably doing it to hurt Bush.

That find by chevron in the gulf really put the nail in the RATS coffin. Oil will be 60 a barrel by the end of next week and 50 a barrel by the election.

1.75 a gallon gas? Bush's fault!

[Obadiah]

LOL

[mysterio]

We need an alternative so that it doesn't go above $30 on speculation. Also so we don't have to send tons of money to third world dictators if we don't want to.

[mysterio]

Eventually, it wouldn't cost more. If people actually had a choice, the two forms of energy would actually have to compete with each other for business.


Now come on, Protagoras, the tone of your post made it sound as if you don't want the market to produce an alternative and that you don't want oil to have a competitor. That would be inconsistant with your free market background.

[Protagoras]

I have said in the past that I welcome all innovations and discoveries.

Unless the alternative energy was less than $30, it would be useless.

Cheap energy would allow people to spend money on other things, but I have never been able to figure out why people think they are somehow entitled to inexpensive energy so they can buy plasma TVs.

[SAJ]

$2.33 and $2.36 down here in S. County, Tesson Ferry at Lindbergh

[Patrick1]

BUSH!!!!!!!!!!!

[Protagoras]

Further, if oil rose to $100 per bbl and stayed there and an already known source were used that cost $90, do you think the world would be better off? If so, how?

You seem obsessed with lower gas and oil prices, as if you could somehow "get even" with it. It's oil, not a person.

[RightWhale]

It can overshoot. Happens all the time.

[dirtboy]

I think the spot market got tight enough that speculators realized they could play bad news to the max. I don't think it was an organized conspiracy like when the Hunts tried to corner the silver market, just opportunism.

[mysterio]

The alternative would only have to be cheaper than oil right now, with the potential to be made more cheaply in the future. Then oil would have someone to compete with, and that benefits everyone. My $30 figure was a rough guess at what the final equilibrium price might be if oil actually had to compete with an alternative.

So I guess your fortune teller graphic is in order. :)

[mysterio]

Further, if oil rose to $100 per bbl and stayed there and an already known source were used that cost $90, do you think the world would be better off? If so, how?

Of course. Oil would have to drop the price to 90, or lose business to the competitor. Once oil hit 90, the competitor would have to innovate to produce more cheaply and undercut oil for market share. Right now, there's really no where else for the average consumer to go, the demand for energy goes to oil.

You seem obsessed with lower gas and oil prices, as if you could somehow "get even" with it. It's oil, not a person.

Try being at a spot in your career where your energy bills more than doubling actually means something. And those higher bills mean you can't buy a more efficient car or move closer to work.

Don't worry, I'm working my way out of it. But yes, it's safe to say I'm pissed that the high bills have been pulling away money I could have been saving or using to move or any other reason. And I'm pissed, because I can't just quit buying the product. I'd take my business elsewhere in any other situation or I'd cancel the service.

[SAJ]

Sorry, mate. No sale. Mr. Bush had effectively nothing to do with either the price spike nor the beginning of the price decline. Why such large numbers of people believe the president, any president, has some mystical control over short-term energy prices is simply beyond me. It's laughable.

The one magic number to watch is, and has been for years, the worldwide daily excess production capacity, in bbl-equivalents. When this figure gets under 1MM bbl/day, as it did in January of this year, prices go nuts to the upside. When (if!) it gets above 6MM bbl/day prices will crash to the teens. It's moved up to about 1.72MM bbl/day -- still a pretty thin cushion, but is rising slowly.

Not trading CL right now, looking at buying RBOB/selling #2 oil a little later. If I **were** trading crude, I'd be selling rallies right now, not buying dips.

[Protagoras]

My $30 figure was a rough guess at what the final equilibrium price might be if oil actually had to compete with an alternative.

Nothing personal, but I don't think you have thought your scenario through.

Right now, there simply is nothing to compete with oil as an energy source. And a rise in the price of oil would only bring more oil recovery technology.

The break-though you dream of would have to be something completely new. And the higher price of energy would not bring it at a lower price than currently available, so no price benefit would accrue.