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Re: Oil / Gas price. Supply and demand.
Old 09-22-2006, 04:18 PM   #41
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Re: Oil / Gas price. Supply and demand.

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Originally Posted by Sam
Oil supplies -- constrained by underinvestment in recent decades when crude prices were lower -- have grown more slowly than demand, leading to a thin margin of spare pumping capacity and higher prices.
Yes, there's no question that underinvestment led to relatively small increases in supply.* *And there's no question that demand has grown.* *But, AFAIK, we never got to the point when supply couldn't meet demand.

When demand exceeds supply, you get a vertical supply curve, and prices can move directly with demand.* *The oil supply curve is not vertical, but excess capacity got thin enough that maybe we got close to vertical behavior for a while.* *Perhaps during the initial surge of new demand from China.

I've seen estimates that the increase in physical demand could account for increases of 30-60% in oil prices.* *We obviously saw much higher increases than that.
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Re: Oil / Gas price. Supply and demand.
Old 09-22-2006, 04:52 PM   #42
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Re: Oil / Gas price. Supply and demand.

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Originally Posted by wab
When demand exceeds supply, you get a vertical supply curve, and prices can move directly with demand.* *
Agreed, except the vertical supply curve (ie., perfectly inelastic supply curve) is generally not the result of demand exceeding supply.* It's the result of the supply being constrained, at least in the relevant time period.

From your Wikipedia reference:

"It is sometimes the case that the supply curve is vertical: that is the quantity supplied is fixed, no matter what the market price. For example, the amount of land in the world can be considered fixed. In this case, no matter how much someone would be willing to pay for a piece of land, the extra cannot be created. Also, even if no one wanted all the land, it still would exist. If land is considered in this way, then it warrants a vertical supply curve, giving it zero elasticity (i.e., no matter how large the change in price, the quantity supplied will not change)

I believe that the reason the supply curve for oil becomes near-vertical (highly inelastic) is because of the time it takes to increase supply.* In the short run, the supply of oil is inelastic.* In the medium- long run it will be more elastic as expensive supplies are tapped justified by very high prices.* In the long run, price will be infinite because we're going to run out!* That will be an interesting day!

But, again, I agree.* As the slope of the supply curve increases, the marginal change in equibrium price per unit of incremental demand increase accelerates.* The steeper the curve, the more that even small increases in incremental demand will cause large price increases in order to reach equilibrium.

Damn!* No wonder I've been paying so much for gas!* This is sucky.*

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Re: Oil / Gas price. Supply and demand.
Old 09-22-2006, 05:21 PM   #43
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Re: Oil / Gas price. Supply and demand.

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Originally Posted by wab
And there's no question that demand has grown.* *But, AFAIK, we never got to the point when supply couldn't meet demand.
I hope that point will never be reached.* But when that point is reached, the last thing I would worry about is price.* I can see the strongest, most powerful countries destroying all others who show the slightest interest in using/buying oil.

For all products, there must always be some inventory.* When the inventory remains constant, then supply and demand are even.* Shrinking inventory indicates an imbalance, and normally results in higher price.

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Re: Oil / Gas price. Supply and demand.
Old 09-22-2006, 07:00 PM   #44
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Re: Oil / Gas price. Supply and demand.

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I hope that point will never be reached.* But when that point is reached, the last thing I would worry about is price.* I can see the strongest, most powerful countries destroying all others who show the slightest interest in using/buying oil.
Huh? When demand exceeds supply, that just means the price gets bid up until demand drops and the producers invest more in production. It doesn't mean the world has run out of oil and we have to kill to get it.
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Re: Oil / Gas price. Supply and demand.
Old 09-22-2006, 07:39 PM   #45
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Re: Oil / Gas price. Supply and demand.

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Originally Posted by wab
Huh?* When demand exceeds supply, that just means the price gets bid up until demand drops and the producers invest more in production.* *It doesn't mean the world has run out of oil and we have to kill to get it.
How sweet!

Ha
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Re: Oil / Gas price. Supply and demand.
Old 09-22-2006, 07:44 PM   #46
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Re: Oil / Gas price. Supply and demand.

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How sweet!
And getting sweeter every day!

[img width=750 height=562]http://www.wtrg.com/daily/clspot.gif[/img]
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Re: Oil / Gas price. Supply and demand.
Old 09-22-2006, 07:53 PM   #47
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Re: Oil / Gas price. Supply and demand.

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Originally Posted by wab
And getting sweeter every day!

[img width=750 height=562]http://www.wtrg.com/daily/clspot.gif[/img]
There's "lies, damn lies, and statistics"! Why not give that chart a wider window?

ha
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Re: Oil / Gas price. Supply and demand.
Old 09-22-2006, 08:04 PM   #48
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Re: Oil / Gas price. Supply and demand.

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Originally Posted by HaHa
Why not give that chart a wider window?
[img width=750 height=530]http://img462.imageshack.us/img462/3640/oil30ot4.gif[/img]

Better?*
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Re: Oil / Gas price. Supply and demand.
Old 09-24-2006, 12:25 AM   #49
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Re: Oil / Gas price. Supply and demand.

Quote:
Originally Posted by wab
[img width=750 height=530]http://img462.imageshack.us/img462/3640/oil30ot4.gif[/img]

Better?*
I'm hoping it doesn't go any lower than $50. Americans are finally demanding better mpg, and real money is being spent to develop domestic energy supplies and alternative fuels.... if crude goes too low, I fear that industry will simply say "whew, glad that nightmare is over with" and continue on as before....
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Re: Oil / Gas price. Supply and demand.
Old 09-24-2006, 12:32 PM   #50
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Re: Oil / Gas price. Supply and demand.

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I'm hoping it doesn't go any lower than $50.
Me, too, Marshac, for different reasons. I work for the 'pushers' of this 'drug'. My income depends on them investing in plants and equipment. Adjusted for inflation, we still have not equalled the historic highs for oil prices.

Political instability, terrorism, war and natural disasters are all good for my business. Maybe that explains why there are so many a******s in this business.

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Re: Oil / Gas price. Supply and demand.
Old 09-24-2006, 12:43 PM   #51
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Re: Oil / Gas price. Supply and demand.

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Originally Posted by Ed_The_Gypsy
Me, too, Marshac, for different reasons.* I work for the 'pushers' of this 'drug'.* My income depends on them investing in plants and equipment.* Adjusted for inflation, we still have not equalled the historic highs for oil prices.*
I've read that we're much less energy-dependent (on petroleum, anyway) than we were in the 1970s. Presumably some of that is despite the crash of prices in the 1980s, so a big drop in oil prices won't necessarily bring all research & improvements to a screeching halt.

But it'll certainly help you figure out if you're working for a lean & mean company...
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Re: Oil / Gas price. Supply and demand.
Old 09-24-2006, 12:57 PM   #52
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Re: Oil / Gas price. Supply and demand.

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Originally Posted by Nords
I've read that we're much less energy-dependent (on petroleum, anyway) than we were in the 1970s. Presumably some of that is despite the crash of prices in the 1980s, so a big drop in oil prices won't necessarily bring all research & improvements to a screeching halt.
I don't know about being less dependent, but I have read we that we are much more efficient while our demand has still risen.
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Re: Oil / Gas price. Supply and demand.
Old 09-24-2006, 01:46 PM   #53
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Re: Oil / Gas price. Supply and demand.

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Originally Posted by Leonidas
I don't know about being less dependent, but I have read we that we are much more efficient while our demand has still risen.
That, and a lot of manufacturing has been moved overseas.
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Re: Oil / Gas price. Supply and demand.
Old 09-24-2006, 02:04 PM   #54
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Re: Oil / Gas price. Supply and demand.

We may be less dependant on petroleum. However, we are more dependant on foreign oil compared to domestic than we were in the 70s.
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Re: Oil / Gas price. Supply and demand.
Old 09-24-2006, 02:06 PM   #55
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Re: Oil / Gas price. Supply and demand.

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That, and a lot of manufacturing has been moved overseas.
I can't figure out how to post the charts, but of the manufacturing and exporting economies, Japan seems to have the greatest GDP per BTU.

The US has some important disadvatages in this arena- for one thing we are very spread out geographically. Just off the top of my head, 70% of our crude goes to tranportation fuel.

Ha
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Re: Oil / Gas price. Supply and demand.
Old 09-24-2006, 07:08 PM   #56
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Re: Oil / Gas price. Supply and demand.

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I'm hoping it doesn't go any lower than $50. Americans are finally demanding better mpg, and real money is being spent to develop domestic energy supplies and alternative fuels.... if crude goes too low, I fear that industry will simply say "whew, glad that nightmare is over with" and continue on as before....
Yes, that's probably already happening. Perhaps a stiff tax on gas, with the tax revenue funding alt energy research. Looks like Prop 87 here in California is something along those lines. We'll see what happens.
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Re: Oil / Gas price. Supply and demand.
Old 09-24-2006, 08:47 PM   #57
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Re: Oil / Gas price. Supply and demand.

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Originally Posted by HaHa
The US has some important disadvatages in this arena- for one thing we are very spread out geographically. Just off the top of my head, 70% of our crude goes to tranportation fuel.
Well, I thought 70% was high, but looked it up at the DOE website and found that it is actually more than 91%. That's just crude. Expressed as a percentage of total petroluem consumption it is about 66%. Transportation only accounts for 28% of all energy consumption (which includes "coal, natural gas, petroleum, nuclear electric power, conventional hydroelectric power, wood, waste, alcohol fuels, geothermal, solar, wind, coal coke net imports, electricity net imports, electricity retail sales, and electrical system energy losses").

Quote:
Originally Posted by HaHa
I can't figure out how to post the charts, but of the manufacturing and exporting economies, Japan seems to have the greatest GDP per BTU.
How about this one?



It looks like we're the most productive nation. And more energy efficient than Canada, which is only slightly less wasteful than Ukraine, Russia and Saudi Arabia.
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Re: Oil / Gas price. Supply and demand.
Old 09-24-2006, 11:03 PM   #58
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Re: Oil / Gas price. Supply and demand.

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It looks like we're the most productive nation. And more energy efficient than Canada, which is only slightly less wasteful than Ukraine, Russia and Saudi Arabia.
Nice chart. We may be most productive, but we are in the goats' corner when it comes to energy efficiency. Energy efficiency is a tricky concept. Countries like Switzerland and Austria are quite high but they don't make much of anything that would use much energy, and they are geographically small. I don't know much about the Hong Kong economy- I donít suppose it has much in the way of heavy industry either, and it is obviously geographically small. Banking and real estate and tourism don't burn a lot of BTUs. Italy is similar, very efficient but not very industrial. Japan and Germany look excellent; they make stuff, good stuff, and they make it with an efficient use of BTUs. Plus it gets cold in those 2 countries, so they have to deal with that also.

What is with the Philippines? Would someone who is familiar with life over there comment on the very high energy efficiency?

Ha
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Re: Oil / Gas price. Supply and demand.
Old 09-24-2006, 11:40 PM   #59
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Re: Oil / Gas price. Supply and demand.

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What is with the Philippines? Would someone who is familiar with life over there comment on the very high energy efficiency?
Again I can't help wonder about the study methodology. Maybe the guy who owns the PI generator charges people a lot of money to use it, so they try not to.

When you can't afford electricity you're probably very highly energy efficient.
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Re: Oil / Gas price. Supply and demand.
Old 12-06-2006, 06:58 PM   #60
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Re: Oil / Gas price. Supply and demand.

Also, I am having trouble deciphering the original question. The Philippines (I live there) is at the bottom of the list for productivity. A great deal of work is done manually because of low availability of capital to buy machines and use more BTU's

Also, our electricity here is second only to Japan for the highest cost in the world, so the average American would have a real problem getting used to moving from the cheapest to the most expensive.

IMO the US's biggest problem is the government's insistence on oil as virtually the only energy solution. The average alternative energy article in the news media parrots facts from 20 or 30 years ago ... solar is not cost-effective, wind isn't efficient enough ... geothermal is too hard to harness, etc., etc. great strides have been made in alternative technologies but the oil companies still by massive amounts of TV time to brag about how they are searching for new places to drill ... and the past few administrations (both parties folks, I'm nor bashing Red or Blue) have effectively done nothing to promote anything except oil, oil and more oil.

Since the Philippines still tends to slavishly copy everything US we're doing a terrible job here in pushing out alternative sources, but with about 5 times the solar power budget of the Northern US and huge opportunities in geothermal perhaps someday soon ....
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