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Oil at $200/Barrel


monsoon

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The last time Russia attacked Georgia, oil prices continued to fall. I think at this point the economy has far more weight on oil than a small conflict. It would take Iran to do something like blockade the straight of Hormuz (though the US, Britain and the Arab gulf states said there would be zero tolerance for it, so they would likey be reopened rapidly, with military force if necessary) or otherwise work with other countries to cut production.

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There's also rumors in the talk radio scene that if oil hits somewhere around 70 dollars a barrel, Russia will get very nervous and start something with Georgia or the Ukraine in order to get a spike in prices.

What talk radio is this? Rush Limbaugh? I don't think the Russians at that concerned.

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  • 1 month later...

Is it me, or are gas prices headed back to where they were when Bush came into office? If they are... makes me wonder... any connection?

The only connection there is is Bush's bad handling of the economy and deregulation. As much influence as politicians have, no one person in the entire world has the power to change the price of such a widely-traded commodity.

Supply & demand does play some part in this, but its only 1 piece of the puzzle. The futures market is a very complex place. Speculators see China and others purchasing more barrels of oil and as a result, they predict that demand is going up. Because of this prediction, investors rush out to buy oil futures to make a quick bit of cash, which in turn sends oil prices up as the available futures for purchase rapidly shrinks. Speculators see the purchase of oil by Americans go down and then predict that demand will fall, sending investors rushing to dump their oil futures and taking what they can get for them, resulting in a large amount of unpurchased oil futures, sending oil prices down.

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Oil price drops are usually a barometer of the economy, and in this case it could be pointing to a trend of deflation. It's one thing to have gas prices go down and comsumption go up, but its another to have gas prices go down and consumption still fall.

Deflation is B-A-D. Now some people might way that if prices for all goods comes down to the average wage of the individual it might be a good thing, but this is not the case. Its much much better to have wages meet the demand of prices then prices meet the demand of wages. Deflation was the engine that kick started the Depression.

Hold onto your butts, this could be bumpy.

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I agree. I think the big drop in gas prices will go a long way in helping the economy because people will have more money to spend and it helps people who are struggling making house payments. Gas is $1.81 regular in Greensboro, the lowest Iv'e seen in years. It may have been 8 years since the last time gas was this low. If it were to drop another dollar, which I highly doubt, we would be seeing gas prices of the 1980s. In 1986, premium gas was about 86 cents a gallon. I remember that, I was 8 years old at the time. When the first Gulf war happened in 1991, gas jumped to $1.24 per gallon and in those days, that was high.

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  • 2 weeks later...

The CEO of Gulf Oil is saying the price could be at 20 bucks a barrel and around a buck a gallon early next year. I'd be glad if it did, but sounds awful low to me.

It would be nice to see gas prices back down to the 1 dollar range. But if it does happen it would be a short reprieve before big oil puts the screws to the people again and jack the prices back up to an arm and a leg a gallon.

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The CEO of Gulf Oil is saying the price could be at 20 bucks a barrel and around a buck a gallon early next year. I'd be glad if it did, but sounds awful low to me.

Considering what a blow this would be to innovation for alternative fuels, I can't see how this would be a good thing. The only good thing that would come out of a price this low is that countries like Venezuela and Saudi Arabia would be losing their major funding which would obviously assist in curbing terrorism. Expensive oil is what has made Russia so daring, but as the price of oil drops these countries are finding themselves in a difficult situation.

There needs to be some middle ground. The infrastructure is really taking a beating here in the US and the only way I see to improve it while spurring innovation and keeping countries like Venezuela at bay is to introduce a high gas tax that would help pay for infrastructure improvements. This would keep the price of gas high even though the price of oil coming in is relatively low.

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^

There isn't anything that says you can't continue to move forward with alternative fuels AND keep gas prices low. Most people, according to recent polls, don't trust that gas prices are going to stay this way. Also, with a large number of people hurting financially right now, the majority of politicians wouldn't dare bring up the gas tax, as it would be like bringing back the draft, political suicide. Gas prices have proven to be a very touchy subject. I'd rather not see more people forced into poverty and bankruptcy because the government wants to tax gas to death in fear that alternative fuels are threatened. I know that I've shifted the money I've been spending on gas (about $600/month) into spending in stores because gas went down, in turn helping keep stores afloat. If and when gas prices go back up, I'll just as quickly yank that money back out and back into spending on gas, so the retailers will loose.

The low gas prices have indeed put pressure on Russia, Venezuela, Iran and others. Russia reportedly needs oil/barrel to be $50 to break even, while Venezuela and Iran need it to be around $90. A couple political analysts had said at one point that the lower oil goes, the more internal pressure builds on these countries and even went as far as to say that it could very well spur an overthrow of Chavez, who has seen his power steadily eroding as opposition makes further gains. Iran was already a big mess before all this and now their economy is really hurting, with job losses steadily increasing and revenue sharply falling, making it difficult for them to fund their nuclear program. Saudi Arabia needs it to be around $65 to balance, but they have such large reserves of cash that they can withstand shortfalls for quite a while.

If anyone hasn't seen, oil fell briefly into the $30s today.

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Indeed. While there certainly are societal and geopolitical advantages to high oil prices, the American people need any relief they can get. Millions are hanging by a thread financially, and if energy prices rebound to where they were over the last couple years the resulting wave of poverty will outweigh any benefit.

In my opinion the best way to spur innovation is to give alternative energy the same subsidies the oil companies have enjoyed for decades. Make these technologies competitive without kicking the working class while it's down.

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Considering what a blow this would be to innovation for alternative fuels, I can't see how this would be a good thing. The only good thing that would come out of a price this low is that countries like Venezuela and Saudi Arabia would be losing their major funding which would obviously assist in curbing terrorism. Expensive oil is what has made Russia so daring, but as the price of oil drops these countries are finding themselves in a difficult situation.

There needs to be some middle ground. The infrastructure is really taking a beating here in the US and the only way I see to improve it while spurring innovation and keeping countries like Venezuela at bay is to introduce a high gas tax that would help pay for infrastructure improvements. This would keep the price of gas high even though the price of oil coming in is relatively low.

In the long run a gas tax it would be a good thing. But vote seeking politicians would be cutting their throats career wise so it would never happen.

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  • 2 months later...
  • 2 years later...

It looks like we may be on the lookout for extremely high prices per barrel of oil again. An interesting chart I found that makes for good counter argument for those complaining about the price at the pump though:

post-1-0-65648800-1301149374_thumb.jpg

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