Democrats and high gas prices

XabbaRus · 07-09-08, 10:23 AM

The price isn't really due to supply, more to speculation.

At the supply meets demand, exceeds it in fact. I doubt if the Saudis bump production up again it will have any affect.

My theory is that all these banks that used to lend each other money and stick it in property have now been sticking it in oil and the price is going up.

August · 07-09-08, 10:25 AM

Quote:

Originally Posted by XabbaRus

The price isn't really due to supply, more to speculation.

At the supply meets demand, exceeds it in fact. I doubt if the Saudis bump production up again it will have any affect.

My theory is that all these banks that used to lend each other money and stick it in property have now been sticking it in oil and the price is going up.

You might be right XabbaRus.

Tchocky · 07-09-08, 10:38 AM

Hmm, speculation doesn't look too likely.

If the price is artificially above the logical point where quantity demanded meets quantity supplied, then we'd see excess supply. In other words, people holding onto oil in order to sell it later - which is, in essence, speculation. Believing that the hold value of oil exceeds it's immediate sale value. Therefore we'd be seeing lots of oil-holding, inventories rising sharply. But that has not been observed.

The unfortunate truth is that oil production has been relatively flat for the last 3-5 years, whereas demand has skyrocketed. This has happened for all raw materials, due to increased economic appetites in places other than the developed, price-sensitive West. Iron ore is not traded on an exchange, so there is no easy place for speculation to occur like ther is in crude oil. However, over the past year the price of iron ore has jumped 75-95% due to increased demand. This is similiar to what has been happening with oil. Excess capacity has declined rather sharply in oil-producing countries, Saudi Arabia in particular had over-estimated their reserves. This increases the risk premium on oil production, given that there is a smaller margin of safety and a lot of oil is produced in politically unstable countries.

Not to forget the unfortunate slide of the US dollar in the last several years. A major part of the oil price rise can be attributed to this, given that US dollars are the agreed upon pricing currency for crude, although this looks to be changing, albeit slowly.

SUBMAN1 · 07-09-08, 10:42 AM

Hardly. Global demand has increased about 1.9% per year. That doesn't equate to the price of $147 a barrel as it stands now, sliding dollar or not!

This is market manipulation. Some people need to be prosecuted.

-S

AVGWarhawk · 07-09-08, 11:15 AM

Quote:

Originally Posted by SUBMAN1

Hardly. Global demand has increased about 1.9% per year. That doesn't equate to the price of $147 a barrel as it stands now, sliding dollar or not!

This is market manipulation. Some people need to be prosecuted.

-S

This thought gets my vote.

Enigma · 07-09-08, 03:24 PM

Tsk. Tell me about it. With the Dems in the White House for the past 8 years and gas prices being what they are due to policies of all description. They should be thrown out on their arses.

Oh. Wait.....

August · 07-09-08, 10:43 AM

I'd think that at least part of the price increases for iron ore has to be due to increased fuel costs for recovery and transportation.

Tchocky · 07-09-08, 10:48 AM

True, the awkward thing about oil and energy prices is the knock-on effects they have on just about everything.

SUBMAN1 · 07-09-08, 10:49 AM

Quote:

Originally Posted by August

I'd think that at least part of the price increases for iron ore has to be due to increased fuel costs for recovery and transportation.

Actually no. Demand in China and other manufaturing countries upped this price. Oil was not consummed in the same massive demand, so it can't be traced here.

-S

August · 07-09-08, 10:58 AM

Quote:

Originally Posted by SUBMAN1

Quote:

Originally Posted by August

I'd think that at least part of the price increases for iron ore has to be due to increased fuel costs for recovery and transportation.

Actually no. Demand in China and other manufaturing countries upped this price. Oil was not consummed in the same massive demand, so it can't be traced here.

-S

Huh?

It stands to reason that if your fuel costs rise that will be reflected in the price of your product, in this case iron ore. It doesn't just arrive at the processing plant on it's own you know...

SUBMAN1 · 07-09-08, 11:04 AM

Quote:

Originally Posted by August

Huh?

It stands to reason that if your fuel costs rise that will be reflected in the price of your product, in this case iron ore. It doesn't just arrive at the processing plant on it's own you know...

Well, I have more data on that than you - proprietary data so I can't share. I'm sure it affects the situation a little bit, but not the massive rises that we have. Let me see if I can find some public graphs on that. The point being, when you are the originating source for the product, transportation has minimal effect, though it will always have some effect.

-S

PS. You might find some here - http://www.metal-pages.com/charts/

PPS. Futures on metals for example are headed back down by the way. Copper for example should lose 33% of its value in the next year.

07-09-08, 10:23 AM	#1
XabbaRus Navy Seal Join Date: Sep 2001 Posts: 5,330 Downloads: 5 Uploads: 0	The price isn't really due to supply, more to speculation. At the supply meets demand, exceeds it in fact. I doubt if the Saudis bump production up again it will have any affect. My theory is that all these banks that used to lend each other money and stick it in property have now been sticking it in oil and the price is going up. __________________

07-09-08, 10:38 AM	#3
Tchocky Navy Seal Join Date: Jul 2004 Posts: 5,874 Downloads: 6 Uploads: 0	Hmm, speculation doesn't look too likely. If the price is artificially above the logical point where quantity demanded meets quantity supplied, then we'd see excess supply. In other words, people holding onto oil in order to sell it later - which is, in essence, speculation. Believing that the hold value of oil exceeds it's immediate sale value. Therefore we'd be seeing lots of oil-holding, inventories rising sharply. But that has not been observed. The unfortunate truth is that oil production has been relatively flat for the last 3-5 years, whereas demand has skyrocketed. This has happened for all raw materials, due to increased economic appetites in places other than the developed, price-sensitive West. Iron ore is not traded on an exchange, so there is no easy place for speculation to occur like ther is in crude oil. However, over the past year the price of iron ore has jumped 75-95% due to increased demand. This is similiar to what has been happening with oil. Excess capacity has declined rather sharply in oil-producing countries, Saudi Arabia in particular had over-estimated their reserves. This increases the risk premium on oil production, given that there is a smaller margin of safety and a lot of oil is produced in politically unstable countries. Not to forget the unfortunate slide of the US dollar in the last several years. A major part of the oil price rise can be attributed to this, given that US dollars are the agreed upon pricing currency for crude, although this looks to be changing, albeit slowly. __________________ [SIGPIC][/SIGPIC]

07-09-08, 10:42 AM	#4
SUBMAN1 Rear Admiral Join Date: Apr 2005 Posts: 11,866 Downloads: 0 Uploads: 0	Hardly. Global demand has increased about 1.9% per year. That doesn't equate to the price of $147 a barrel as it stands now, sliding dollar or not! This is market manipulation. Some people need to be prosecuted. -S __________________

07-09-08, 03:24 PM	#6
Enigma The Old Man Join Date: May 2005 Location: At comms depth, obviously. Posts: 1,476 Downloads: 7 Uploads: 0	Tsk. Tell me about it. With the Dems in the White House for the past 8 years and gas prices being what they are due to policies of all description. They should be thrown out on their arses. Oh. Wait..... __________________ "Patriotism is supporting your country all the time, and your government when it deserves it." -Mark Twain

07-09-08, 10:43 AM	#7
August Wayfaring Stranger Join Date: Apr 2005 Location: Massachusetts Posts: 23,206 Downloads: 0 Uploads: 0	I'd think that at least part of the price increases for iron ore has to be due to increased fuel costs for recovery and transportation. __________________ Flanked by life and the funeral pyre. Putting on a show for you to see.

07-09-08, 10:48 AM	#8
Tchocky Navy Seal Join Date: Jul 2004 Posts: 5,874 Downloads: 6 Uploads: 0	True, the awkward thing about oil and energy prices is the knock-on effects they have on just about everything. __________________ [SIGPIC][/SIGPIC]