Good story.

There's a term from the high-tech world; vaporware. I don't really need to connect the dots do I?

Probably around $5/bbl worth is from the dollar dropping a bit, but the rest is just speculation. I dunno why the author didn't mention this, but the STEO table browser has month by month data on oil supply and demand going back to 1994 or something. I think one out of the last five quarters have had a large gap between supply/demand. At least the 2008 price increase was preceded by something like 8 straight quarters of demand being greater than supply.

Let's see the dollar is off 20 + % so that 'quite' a bit, 120 to 148, $ to Euro.

Coming from 90 $ oil thats 18 bucks Oil is at ??

__________________
KLK, MCSE

1990 500SL

I was always taught to respect my elders.
I don't have to respect too many people anymore.

OPEC has a target price for oil (someplace around $80-100, as I recall from the last time I heard a number). I assume the is about where it will end up in the short term when it calms down. I do expect it to continue to trend upwards over the long term as demand increases and the dollar gets weaker; and I don't expect either of those factors to change soon.

The dollar was at ~78 when oil was at ~$75/bbl, and it's at ~74 now, so most of the increase is due to speculation.

Edit- Damn cats?

As I understand it there are two forms off speculators.

The tradition speculator looks at an activity and says, "I believe they will succeed and I am willing stake my money upon their success or they say I believe they are going to fail and I will stake my money on their failure."

The classical economists I read (when it comes to liberal arts, outside of the physical sciences, I prefer using the teachings from pre-1950) this form off speculation leads to market discipline and ultimately lower prices.

The second form of speculation, which has greatly increased with computerized trading and world-wide, instant communication looks at the short-term, quasi-random fluctuations of prices and guesses what the price will be at some time in the future. This is similar to watching the wind blow the leaves and guessing whether there will be more leaves pointing left or right at any moment.

This form of speculation tends to increase market volatility and tends to destabilize markets. Markets, traditionally, have either prohibited or greatly curtailed this form of speculation.

So when comments are made on speculators or speculation it is necessary to define what one means.

When I say speculators are good for the market I refer to the first. When the gentlemen above criticizes speculators I think he is referring to the second.

It's so hard to have a discussion if we can't understand each other.

-----------

Furthermore I have also read the articles that state that the oil price is only marginally due to the weakness of the $$.

Obviously any comparison of prices has to have 2 dates; what the price was once and what it is now. It is very easy, particularly with prices that have fluctuations to pick any two points and use them to argue whatever one wants.

People who work with numerical data as a profession (I'm talking about engineers, folks that build bridges and design struts to hold wings onto aircraft - where if they make a mistake people die) know how to work with data to find the truth it contains and not use it as a means of deception to win whatever argument one wants.

These people will clearly observe that between 1970 and today (as an example) the profound decline of the dollar.

Regardless of all of the causes of this immediate gas price increase the larger story is the dollar's decline. It means the money one has been putting away for retirement for the past 40 years, even if well invested is worth a fraction of what one thought it would be when they started saving.

Lets see the $ is up huge and Oil is down ??

Coincidence ??

Note the dollar is up 4 handles, 400ish pips in just over 24 hours.
That is a move that mormally takes weeks.

PS made me happy, I didn't do as well as I could of/should of but I had a good day.

__________________
KLK, MCSE

1990 500SL

I was always taught to respect my elders.
I don't have to respect too many people anymore.

Yes; a stronger dollar with reduce the cost of imported goods, including oil. I assume the price of other international commodities will also drop, as will the market index funds.

One problem with supply and demand in the US is that more supply is coming in than can make it to a market.

Oil stored in Cushing, OK, is the supply and the tanks there are almost full. But because of the way the pipelines are set up oil can go into storage faster than it can go out to a refinery.

So if you look at the figures of how much oil is in storage, which is the current practice, you will not get the full picture. How much oil is being refined is the true supply.

And please note that refinery capacity has doubled in the US over the last 20 years. The bottleneck is in the pipeline system.

The only solution is to expand the capacity of existing pipelines. Then you run into the problem of every city along the existing route thinking they can stop the project until they are paid off and in fact this is true.

It is all very complicated, but I love it when people blame the EPA for the lack of oil refining in the US. The biggest problems I have ever encountered came from small town governments that would not allow expansion of a pipeline.

Very interesting. Thanks for sharing.

Bubble popped.

__________________
2016 Corvette Stingray 2LT
1969 280SE
2023 Ram 1500
2007 Tiara 3200

I've got a 1/4 tank left, how long should I wait before going to the pump....

__________________
1982 300GD Carmine Red (DB3535) Cabriolet Parting Out
1990 300SEL Smoke Silver (Parting out)
1991 350SDL Blackberry Metallic (481)

"The thing is Bob, its not that I'm lazy...its that I just don't care."

Maybe for the moment--it would be nice for some of the forecasts to come real--like gas going back to 3.00 by july-I wouldn't count on it though.

my understanding is OK has its own refineries and pipelines and is independent fromthe rest of us--perhaps like america is supposed to be while at the same time ramping up on decreasing the use in vehicles newer efficent tech-material vehicles are made with--We're never gonna stop using plastics.

As always, energy production/distribution comes down to economics. If the price is high enough for long enough the required infrastructure will be built regardless of local obstacles. Unfortunately, energy prices are still very volatile, discouraging long term investment. The current situation is a good example, oil just fell below $100 again so most people expect to see cheaper fuel by summer. There needs to be some stability in this market.