It's official: The Oil Boom Is Over

The Russians were saying something like $230 for oil. The Saudis were saying $70. I don't trust any of those guys. Would someone point me to the data that shows the complete inventory picture for oil & gas & alternative sources? I don't think it exists outside of high priced sources. Luckily we can all watch the price though which incorporates all the present supply-demand. But that doesn't say anything about tomorrow (unless you believe in technical analysis, heads-and-shoulders, double bottoms, resistance mumbo-jumbo).

I'll get off my soap box now :).
 
lsbcal said:
If you see a prediction that makes you feel uncomfortable because of your recency bias, then just maybe you should take it seriously. It wasn't that long ago that predictions of $80 oil seemed way out there. Now some of us are having a hard time believing in sub-$100 oil. I haven't seen any good data that would convince me of any particular price for oil. All the news seems to be filled with what's going to budge it up or down -- those Nigerian guys (especially the ones with the web scams) must be having a good laugh at us.

I recall that during the dot-com craze some analyst said that Cisco was going to have a few problems, something about inventories I think. This was met with howls of disbelief. Too many were convince the momentum would last forever. The analysis was sort of missing in much of that era. Seems there are parallels with commodities today.

Perhaps stocks will end the year overall on the plus side. It happened in 1987 despite the crash.
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don't believe what you hear in the media

why would a money manager reveal what he thinks of an asset if he owns it or is currently trading it. grounds for a lawsuit against him

with Cisco the whole time the talking heads on TV were saying Cisco is going back up, they were selling the shares to retail investors who believed them
 
I read that the price of oil contributes to 70% of the price of gasoline at the pump. So an 11% decrease in the price of oil leads to about a 7% decrease in the price at the pump. Hmmmm, let's see if my gas station around the corner drops from $4.11 to $3.82. It has alredy dropped down to $4.07 8)
 
CitricAcid said:
I read that the price of oil contributes to 70% of the price of gasoline at the pump. So an 11% decrease in the price of oil leads to about a 7% decrease in the price at the pump. Hmmmm, let's see if my gas station around the corner drops from $4.11 to $3.82. It has alredy dropped down to $4.07 8)
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Selling gasoline and diesel is no different than selling vegetables. The price will be as high as they can get without losing too much business to the next seller. It's basic supply vs demand. Econ 101 stuff - maybe the first week.

Crude oil sets a cost floor that makes all the stations have a base price about the same. They have to figure out where they are on the supply/demand curve.

Different crudes have different gasoline yields and require different refinery equipment/configurations to process efficiently. No crude is like any other and no refinery is like any other. Different stations get crude from different refineries but none of us can really tell the difference in the gasoline without some fairly expensive lab equipment.

I've gotten a kick out of watching diesel prices. Diesel is cheaper to make than gasoline and it used to sell for about 10 - 15 cents/gallon less at the pump. Not now since our friendly EPA mandated ultra low sulfur diesel (<15 ppm at the pump) starting in 2006. For a refinery to make this grade, they would have had to invest $300 - 500 million dollars in 2003. That was a pretty trying time for refiners and many chose not to invest at that time.

The ones that did are now making a fortune (windfall profits?) at the expense of those that didn't. ULSD sells for about 75 cents more per gallon. Most of the refineries that didn't put in the equipment are rushing to get it installed and these will all probably come on line in 2010. I expect the ULSD premium to slowly disappear between then and now. The late adapters will never make the big profits the early adapters did but it's now required to stay in business. Another unintended consequence from our benevolent but immensely stupid Federal government.
 
CitricAcid said:
I read that the price of oil contributes to 70% of the price of gasoline at the pump. So an 11% decrease in the price of oil leads to about a 7% decrease in the price at the pump. Hmmmm, let's see if my gas station around the corner drops from $4.11 to $3.82. It has alredy dropped down to $4.07 8)
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A few of the stations that briefly breached $4 here are back down to $3.999.
 
Its just a tempering action.

A couple of years ago, prices shot up over $2 and everyone freaked out and sold their SUV's and paid way over sticker for hybrids or a POS 3rd car that was good on gas. Then it dropped back under $2 and we felt like we were getting a bargain on gas.

Last year the price shot up over $3 and everyone freaked out and sold their SUV's and paid way over sticker for hybrids or started driving that POS 3rd car again. Then it dropped back under $3 and we felt like we were getting a bargain on gas.

This year...well...substitute $4 for $3 in the last paragraph.

Guess whats going to happen next summer? ::) ;)
 
I've been looking for a chart showing the price of oil in Euro's or Yen. Anybody seen such a thing? My guess is that the last few year rise won't look nearly as steep.
 
I ask this question out of general ignorance on all things related to oil supply and prices. Are the high prices causing consumption to drop significantly nation wide? World wide? I'm not sure if there is enough hard data on this yet. Just wondering how this might play into the dropping prices.
 
If I have this much power over the oil market, maybe I should start rolling out my plans for world domination...
 
cute fuzzy bunny said:
When I saw car companies offering the 3 year $2.99 gas cards bundled with their cars I figured a whole lot of actuaries spent a whole lot of time determining that 2.99 would be the average or higher than the average price of a gallon of gas for the next 3 years.
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Would the gas card or the vehicle have MORE value after 12 months?? O0
 
ziggy29 said:
If I have this much power over the oil market, maybe I should start rolling out my plans for world domination...
Click to expand...

Please buy more USO. In fact, consider selling everything you own and pouring it all into USO. Consider the purchase to be your duty to your country. :D
 
Want2retire said:
Please buy more USO. In fact, consider selling everything you own and pouring it all into USO. Consider the purchase to be your duty to your country. :D
Click to expand...
I'm even steering tropical storms and hurricanes down into Mexico, apparently. Missing the platforms in the Gulf means lower oil.

Maybe I ought to see who can pay me more: American motorists and gulf coast residents or Mexico.
 
Ziggy, the price at the pump is still at its highest here in the Chicago area--what can you do for us? :)
 
Ziggy thank you for your service to the board.

If you get out to Hawaii, when oil drops below $100 it should cheaper :), I'll buy you dinner.
 
We'll see if I can be the straw that breaks the camel's back, as if ziggy hasn't done enough for his country. Bought in for 22 shares at $102.50, we will see what happens.
 
Ouch as of 2:00 pm--down to $100.09. A medal for Citric, too, for taking one for the team as of now.

Still waiting to see those prices at the pump fall--hope Citiric's influential in that area :)
 
Shell right near me, dropped from $4.11 to $4.07 to $3.96
 
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