Any idea of a way out of this or at least what causes it? If prices will continue go up like that we here in the US and people in other countries will become considerably poorer... Much worse, many economies will go down creating trouble around the world.

I am not a conspiracy theory guy, but something tells me that I am wrong on that one. What is it? Is it the election stuff related issue or what?

Any ideas?

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Evgeny:

Any idea of a way out of this

out of what?  this is a natural trend and will continue.  I am puzzled, actually, at what took so long.

Evgeny:

 

or at least what causes it?

 

most recently - demand from emerging markets.  In the US, gas prices are not even on pace with oil prices, so we are STILL underpaying for our gasoline.   We are also not decreasing demand to the point at which free market reaches balance.  When charging more decreases profits, the price is fair/balanced.  According to some polling and studies, we are not even close to that yet.

Evgeny:

 

If prices will continue go up like that we here in the US and people in other countries will become considerably poorer... Much worse, many economies will go down creating trouble around the world.

I disagree, the rise in demand for energy signals quiet the opposite, and prices can only keep rising as long as demand rises. Capitalism self-adjusts if a tipping point is reached, prices will stabilize at that level.  "considerably poorer" people won't afford expensive energy.  That's not in the interests of those who profit from expensive energy. 

Evgeny:

I am not a conspiracy theory guy, but something tells me that I am wrong on that one. What is it? Is it the election stuff related issue or what?

As the percentage of world demand represented by the US decreases, so does our influence over the costs.  If we ever had it to begin with.  Which I doubt.

Evgeny:

Any ideas?

energy efficiency/alternative energy.  Preferably, by choice - as a national goal similar to man on the moon.   In the worst, more painful case - by necessity. 

as far as personal advice (i am not into biking to work), investing a few grand into Conoco Philips, or Chevron, would have offset your increased gasoline spending for the past 3 years  

 

 

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"Я это понимаю на рациональном уровне, но не могу принять на эмоциональном" --Бизнесмен Борис Березовский

Egor:

Evgeny:

 

or at least what causes it?

 

most recently - demand from emerging markets.  In the US, gas prices are not even on pace with oil prices, so we are STILL underpaying for our gasoline.   We are also not decreasing demand to the point at which free market reaches balance.  When charging more decreases profits, the price is fair/balanced.  According to some polling and studies, we are not even close to that yet.

Most recently it's speculation, all types of funds investing into oil betting on the rise in price, fueling the rise of prices.  Can't blame China and India in all this.

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Yeah, one of my least favorite things to watch on CNBC is some pundits arguing about what percentage of the rise speculators are responsible for

First of all, no one knows where speculators end and "non-speculators" begin.  You can call anyone a speculator, who buys oil futures because the damand is growing faster than the supply  

If speculators are defined as people who will abandon oil, or short it when certain tops are reached, you can say the same thing about anything that's traded.  But you are not really saying anything.  As recently as monday, oil was dropping like a rock.  And look where it is now.  The world demands more oil today than yesterday.  More tomorrow than today.  More every year for the next 30.  Simple as that

Interestingly, turns out oil is very affordable still.. Growth in world demand is accelerating.  Even in the US, even w the dollar falling, and everyone bitching. Other economies are actually growing in their energy purchasing power.  

 

 

 

 

 

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"Я это понимаю на рациональном уровне, но не могу принять на эмоциональном" --Бизнесмен Борис Березовский

варяга меч кормит! мухаха) точнее почтальона - почта, а ещё точнее, коня - ноги, альтернативу вижу как наяву, толстые и слабые миллионы американских ножек войдут в фазу жизни)

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music of meah

This is arson – someone is arsing around!

Screw emerging markets, supply and demand, and other “natural” explanations. I go for speculation! I want to be a speculator too, it’s natural!

Commodities Futures Market is underregulated because it has not been very profitable to invest there until recently. But there is a run on it right now with IT-bubble long burst and subprime loans whooptydo taking the stool from under financial market investments. Yet that section of the general investment market has been falling behind in the past decade, hence left without oversight afforded to more-profitable sections. Who would invest in wood and oranges ten or five years ago, even in oil? Corn, sugar cane, coffee – that stuff was for security-oriented municipal retirement funds. Not anymore!

I say cheap energy should be our domestic priority just like access to energy is our priority overseas. So much depends on it, including where I am going to spend my weekends. So lets have a public debate on it, throw some light on the issue and I am sure we will find someone doing illegal things and politicians will be happy to bring those people down for us.

If you do not open some program for awhile, once you get to it you may find that it needs updating. Same story with future commodities market, we need to update its regulations to bring them to par with those of other sections of the general investment market. Parellel to it, let’s bring public attention to the deals on the market, enforce something obscure but important law, make a couple of heads roll… I think that will bring the price down. Everyone will benefit!

 

 

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Jedem Das Seine.

Egor, can this be a bubble? My opinion is oil right now is overpriced. Market is testing its limits before it settles at equilibrium. I'd say $100 per barrel is where it should be.

As for investing in ConocoPhillips or Chevron which mimic each other there were times from 1980-1982 when they were 40% down. I'd be hesitating investing in either company right now. Oil&Gas integrated is 4% down from beginning of the year. Interesting thing is going on in Coal industry. Very quietly the coal industry is 71% up in 2008. Not everybody know you can make synthetic gasoline from coal. And amount of coal we have can provide us with gas for centuries. 

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To me it's funny how people still believe in "capitalism will adjust" mantra..... while history shows that everytime capitalism had to adjust it was done using planned economy and government intervention

 One missed reason for gas prices hike is weak US dollar.

What puzzles me is - Europe economy is in even more crap now, yet Euro keeps raising.... someone is playing against us  

 

 

Without resurecting nuclear energy , nothing will change tho ...

 
 

 

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- Независимость - это когда в 20-й раз наступаешь на одни и те же грабли, а русские уже ни при чем....

If that puzzles you Kgbman, perhaps you would reconsider your point of view that things are moved by unseen and conscious (and sometimes sinister) forces and take a step towards realizing that things can happen on their own, naturally, without conscious will pursuing some end. Things like market adjustments and cloud patterns… without you believing in the basic self-evident truth that market works we can hardly agree on anything L

 

Capitalism adjusts all the time, it’s a constant process, kinda like your body adjust to changes in light, pressure and temperature. Things that you are talking about, when governments intervene, are the type of adjustments that market is not able to make or is not making fast enough. Kinda like you downing that shot of vodka when you feel cold.

 

Experts say the right price for gas is around $40 a barrel. I heard them speak before congressional committee, oil executives, investment bankers and economists were there.

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Jedem Das Seine.

Orkster:

If that puzzles you Kgbman, perhaps you would reconsider your point of view that things are moved by unseen and conscious (and sometimes sinister) forces and take a step towards realizing that things can happen on their own, naturally, without conscious will pursuing some end. Things like market adjustments and cloud patterns… without you believing in the basic self-evident truth that market works we can hardly agree on anything L

self-evident truth is that the only things that happen on their own are the one's related to weather

I believe in market self-adjustment, when I see at least one succesfull economy with free market. US - is not that kind of economy. 

Capitalism adjusts all the time, it’s a constant process,

BS.

The only constant process in capitalizm is thirst for money.
 

kinda like your body adjust to changes in light, pressure and temperature. Things that you are talking about, when governments intervene, are the type of adjustments that market is not able to make or is not making fast enough. Kinda like you downing that shot of vodka when you feel cold.

 

That proves my point !

Experts say the right price for gas is around $40 a barrel. I heard them speak before congressional committee, oil executives, investment bankers and economists were there.

According to "free" market it's close to $150

It will drop only when no one will be able to sell at that prise. Basic rules of capitalizm.

 

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- Независимость - это когда в 20-й раз наступаешь на одни и те же грабли, а русские уже ни при чем....

At this point I can not but wonder, Kgbman, are you familiar with futures market? Excuse me, it may not be polite, but what's your education?

 

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Jedem Das Seine.

Sergey, I agree that there is a short-term bubble, and $100 could well be fair value.  And if $100 is fair now, $150 will be fair in a very short time, just based on basic market forces.  Speculators know what they are doing.  These are not the same speculators of the tech/internet bubble. Two very important factors were different then:

1)For once, speculators actually were dumb in the 90s - billions of disposable income from US middle class, who didn't even know what a P/E ratio is, but whose homes just got them free $100k in assets poured into these stocks because of the invention of internet trading - ability to trade without human brokers.  Never have so many idiots been brought into the market at such rates :)  Evidence that they caused the bubble - mutual funds, retirement funds, etc. did not drop that much when the bubble burst.  The economy took it well also (considering).  Companies that suffered had no profit to lose. Just a bunch of dumbfuck investors did lose a lot individually. 

Commodities, on the other hand, and even futures on those commodities, are still, to a higher extent traded by people who know what they are doing.  If I was wrong about this, we'd be talking about $500 oil  

2)Despite #1, speculators were STILL right in the 90s, in a sense that today's profits generated by these industries would have more than justified their investments.  But stocks are much harder to speculate on. Mixed results from companies, industry consolidation, unpredictable competitive rivalries , etc.  Very few companies actually are claiming these profits today, in comparison to how many were speculated on.  Many went under.

Oil, as a commodity for speculators, does not carry these risks.  Regardless of what happens with alternative energy, for the next few decades oil demand will grow like nothing we've ever seen before.  The worst thing that could happen for these speculators is that supply will actually, miraculously, keep up.  And in that worst case, it is STILL the best environment for commodity price growth available in questionable economic conditions.

Bottom line, speculators are a consequence of something, not the cause.  You can even erase speculators(and any other volatility) from a price chart, by looking at longterm moving averages instead of the standard view

 

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"Я это понимаю на рациональном уровне, но не могу принять на эмоциональном" --Бизнесмен Борис Березовский

_Sergey_:

As for investing in ConocoPhillips or Chevron which mimic each other there were times from 1980-1982 when they were 40% down. I'd be hesitating investing in either company right now.

 All I said was: "investing a few grand into Conoco Philips, or Chevron, would have offset your increased gasoline spending for the past 3 years"

That statement is true for an average driver.

I would not be hesitant investing in them now, especially COP.  Yeah, they can drop sometimes.  Another opportunity to buy more cheaper. 

But global oil/drilling services pure plays I think are even better investments.   Anyone servicing the drilling industry - transportation, technology, equipment manufacturing, etc.

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________________________________________
"Я это понимаю на рациональном уровне, но не могу принять на эмоциональном" --Бизнесмен Борис Березовский

Orkster:

Experts say the right price for gas is around $40 a barrel.

I disagree that there is any kind of consensus among any group of "experts" that "right price" for oil (i assume you meant oil, not gas) is $40 per barrel.

 

 

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________________________________________
"Я это понимаю на рациональном уровне, но не могу принять на эмоциональном" --Бизнесмен Борис Березовский

Orkster:

At this point I can not but wonder, Kgbman, are you familiar with futures market? Excuse me, it may not be polite, but what's your education?

 

I'll answer your question when you answer mine questions.

 

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- Независимость - это когда в 20-й раз наступаешь на одни и те же грабли, а русские уже ни при чем....