Posted on 05/18/2008 12:14:41 PM PDT by BulletBobCo
Drivers will likely need to become comfortable with gas at $4 a gallon, as oil experts say an era of historic pain at the pump will endure well beyond the Memorial Day weekend, when prices traditionally peak.
You might trade in that GMC Yukon for a Honda Civic, skip the highway for the bike lane and redefine that time-honored tradition of the road trip. Americans are already reordering their Memorial Day weekends, with AAA predicting a decrease in travel for the first time since 2002.
But those changes might not be enough to immediately pull down a gasoline market that follows the whims of the world economy. Newfound wealth fills pockets of the globe once known for overwhelming poverty, and for the first time prices are responding to their thirst for fuel as much as demand in America.
The new world order for petroleum markets has some analysts predicting far higher prices ahead. Gasoline in the U.S. could reach $7 a gallon because more drivers in India and China will hit the road even as American oil consumption retreats, the Canadian Imperial Bank of Commerce predicts.
"Millions of new households will suddenly have straws to start sucking at the world's rapidly shrinking oil reserves," wrote CIBC analyst Jeff Rubin.
The forces behind the oil boom include the emergence of China and India as economic powers, exhausted fields controlled by nationalized companies, and market speculation that could be pushing prices higher than supply and demand can justify. While industry insiders dispute how much each of these factors contributes to oil prices, many expect the high prices to last for years.
"It's not going to be a one-year blip and go away like the Internet bubble," said Joseph Dancy, who manages the LSGI Venture Fund in Texas.
(Excerpt) Read more at chicagotribune.com ...
You're not alone. This whole "China & India" platitude strikes me as pretty flimsy.
Thanks for your input / facts ..........your knowledge in this arena is something I for one have learned a lot from.
Grateful for the education you provide Thackney.
I’ll go read the links !
Stay Safe !
I'm glad they didn't; their solution would be something on the order of price controls, rationing, long gas lines and 45 mph speed limits. Oh, and don't forget punitive taxes on the big, nasty oil companies. More drilling in the US, offshore and Alaska?? Forget about it.
It can be done gradually. Leave the rate unchanged instead of cutting at the next Fed meeting. Thereafter, cut a quarter point. This will spur homeowners to refinance, people who hold gold and other commodities can take their profit, and the dollar will begin to strengthen.
Today in my little town in Northern Ca it is $4.99 per gallon.
If only the legislature would take a little time to learn about our energy production before passing more legislation regarding it.
I like your plan. It’s a shame a serious, big time lack of cojones will prevent it.
President Obama would propose just that, folks my age and older would just dig out old magazine and newspaper accounts of long lines and threatened rationing from the 1970's, and we'd kick the Rats out of government for at least a couple of decades.
We can only hope that American people won’t be so brainwashed by environmentalism and socialism that they’ll ignore how screwed up our economy is in favor of “our children’s future” and fairness.
Frankly, considering what I’m hearing from people who fancy themselves smarter than me, I’m not holding my breath. However, a vocal minority can bring change too.
Liberal RAT response = totally ignoring facts (which they’ve been doing for who knows how long) or dismissing it as lies by Big Oil companies.
Sorry, but I don’t think people have the same intelligence and values that you had back in the 70s.
Several Broker/Dealers have told me that 30 to 40% of today's cost of a barrel of oil is because of what these traders use as stories/reasons to INFLATE what the TRUE cost of oil should be.
I would love for Rush or Hannity or Levin to talk about it on their shows.
Perhaps not, but they probably still can recognize it when their government suddenly tries to take something away from them, rather than by doing it gradually. Barry O is stupid enough to make the mistake of trying to introduce socialism way faster that Hillary had planned.
Ever wonder why Diesel, a lower distillate than gasoline, cost more than gasoline? Gasoline is about $3.99 and Diesel is $4.85 in the NYC area? It used to be the other way around. Why has this happened? The New York Times Automobiles section, which is distributed in the NY area and probably not part of the national editions, explains that the reason why Diesel is so costly is because Bill Clinton mandated through Executive Order that the sulfur content in Diesel fuel be removed. The sulfur went down and the price went up. Ah, clean air! The same is true for gasoline which through Executive or EPA orders have been formulated to cost more. All Bush has to do, if he has the onions, is order that the fuels be delivered unformulated until the war is over...remember we are at war???
P.S. Suburban’s can easily be converted to run compresed natural gas in additon to or as alternative to gasoline. GM has conversion kits available through certain vendors. Do an internet search on CNG for more details. CNG is available at about $2.75 a gallon her in NYC. With a “mileagemaker”, a small pump that can be installed on a home’s natural gas line to compress the gas into your CNG tanks overnight. This is SOP in Canada and Brazil. Also compressed gas burns cleaner than gasoline. Also propane, a derivative of the petroleum refining process and found at any garden center or Home Depot can be added to Diesel engines to make them burn cleaner, get more hp, and better mpg. Both gases do so without effecting the world’s food supply. Of course, this is too rational for Peliossi and the Democrats.
Whoever told you there is price inflation in the cost of gasoline and oil based on commodity traders is completely wrong...totally wrong... and terribly ignorant. In the pits where this stuff is sold there are people who get orders from people who want to buy oil and opposing them are people who want to sell oil. The spot price is the price for immediate delivery. Meaning that if I offer West Texas Crude at 120.00 a barrel I have to deliver the standard contract amount for crude at that price immediately to the seller just as he has to immediately tender the $120.00 for each barrel. There is also a futures market for delivery of crude a number of days, weeks, or months in advance and there you don’t have to exchange physicals for quite some time so you don’t have to give the entire amount of money. In futures you put up a relatively small amount of cash (10%) as “good faith” money to secure your intentions. If you don’t close out the contract prior to its expiration date then you have to pony up and deliver either the cash or the physical commodity. In the futures market it is possible to speculate, however, this is not possible in the spot market where you have to deliver immediately! So no one is hording oil or marking it up secretly in order to inflate the price. There is just too much competition both in the pit at the exchange and off the floor, it is possible to trade physical commodities such as oil and gasoline on a party to party basis without having to go to the exchange, but no one in his right mind is going to buy a physical commodity (remember you have to pay for warehousing the stuff) at a price above the market set in the spot market pit. If you wanted to speculate you’d go to the futures market where you can get a bigger bang for your bucks than attempting to corner the spot market. Remember that the Hunt brothers, whose father made quite a bit of money in the oil game, went broke trying to make a corner on the silver market. If someone was trying a corner on the spot oil market they would’ve been hoisted by their own petard long ago and exposed as well. The price at the pumps bears out the fact that the price of oil is directly tied to the price in the pits. If people stop buying the stuff then the price is going to come down. Nobody in their right mind is going to incur the cost of holding this stuff off of the market...it just doesn’t pay. But remember this is different from leaving the stuff in the ground...I mean after you’ve incurred the cost of pumping it out then you’ve got to move the product to market ASAP. There is just too much to go wrong....like a lighted match for instance.
I’ve heard Rush discuss the oil CRISIS/WAR and he basically parrots what Bush says: open ANWR the Gulf, etc and increase our refining power.
That is not enohg as you have pointed out.
And not talking about the billions that OPEC gets daily is an outrage. Those billions are fueling war and terror.
This can't possibly be right, because supply and demand always work, as many have pointed out to me, noting also that I was probably the most stupid poster on this forum.
China's and India's economies are growing at a fast clip. China's growing at 3 times our growth and India is growing more than twice as fast. Couple that fact with the decline of the dollar and decreased domestic production and prices can go nowhere but up.
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