Oil is plentiful, but the market manipulation is holding up gasoline prices AGAIN

[Le Jacquelope]

Supply and demand my ass.
Fucktards are manipulating the supply AGAIN.

How low does gasoline demand have to go for this to end?

http://news.yahoo.com/s/time/20090529/wl_time/08599190144600

Oil Is Plentiful, Demand Weak. Why Are Gas Prices Going Up?
By VIVIENNE WALT / PARIS Vivienne Walt / Paris Fri May 29, 7:05 am ET

Storage tankers across the globe may be brimming with oil that no one is buying because of the global economic downturn, but the traditional laws of supply and demand don't always apply to oil prices. Drivers have faced rising prices at the gas pump in recent months, as investors and oil-producing countries hoard supplies in anticipation of a global economic recovery later this year.

The 12 member countries of the OPEC cartel voted in Vienna on Thursday to maintain output at current levels rather than increase supplies in order to bring some relief to consumers, particularly in the gas-guzzling West. The OPEC oil ministers, whose countries account for about 40% of the world's entire crude-oil supply, also renewed their commitment to stick to their agreed quotas, rather than ship extra oil, as they began doing last April when several members ignored their agreed output limits. OPEC leaders, many of whose economies are heavily dependent on oil exports, have struggled to stabilize prices at a level that suits their own economic needs amid falling demand and rising supplies. Prices had rocketed to a record level of $147 a barrel last July before plummeting to $30 just five months later and beginning a new climb. (See pictures of South Africa's oil-from-coal refinery.)

Oil analysts believe OPEC's decisions on Thursday could help push oil prices even higher; oil futures on the New York Mercantile Exchange have risen 36% in just two months, to about $63.46 a barrel on Thursday. And that appears to be on track to achieve targets set by OPEC leaders. Saudi Oil Minister Ali al-Naimi - OPEC's key power player - said Wednesday that oil prices ought to rise to between $75 and $80 a barrel by the end of the year. "Demand is picking up, especially in Asia," he told reporters puffing alongside him as he jogged through the streets of Vienna. "The price rise is a function of optimism that better things are coming in the future."

The economic recovery Naimi so optimistically predicts would certainly be vital to oil-producing countries, whose own economies would be imperiled by a drawn-out recession. Oil demand in rich countries has crashed since the onset of the economic crisis last year, and is now at its lowest level since about 1981, according to the Paris-based International Energy Agency. U.S. oil inventories - the stored surplus - this month reached their highest level since the 1980s. And about 2.6 billion barrels are currently stored in commercial tankers around the world. "There is some risk we will run out of storage space in the next four to six weeks," says Simon Wardell, director of global oil at IHS Global Insight, an energy-forecasting company in London. To oil-rich countries that possibility evokes grim memories of 1998, when the Asian economic crisis sent demand plummeting, driving world oil prices down to $10 a barrel. "If we run out of storage it could prompt a collapse in the price," says Wardell. Oil producers might then choose to dramatically cut output in order to run down the surplus. (See pictures from Azerbaijan's oil boom.)

Despite such dangers, investors and oil producers are betting that global demand will roar back, apparently hoping that the recession has already hit bottom. Over the past two months, investors have plowed billions of dollars into oil futures. If the U.S. and other major industrial economies rebound, oil supplies could be depleted because the recession has prompted producer nations to freeze hundreds of projects to open new oil wells or upgrade existing ones. In the oil-rich Niger Delta, a major Nigerian government offensive against rebels has seriously disrupted production for several weeks. Venezuela's Oil Minister Rafael Ramirez said in Vienna that his country could not afford to invest in major new oil exploration unless prices rise further. "We need a level of at least $70 [a barrel] to recuperate investment," he said on Thursday. Muhammad-Ali Zainy, senior energy analyst at the Center for Global Energy Studies in London, says oil demand could increase quickly once the recession ends, especially as China has begun to build up its strategic oil reserves. "We think the price is going to go up gradually," says Zainy.

For those feeling the pain at the gas pumps, however, there is one piece of good news. Oil is unlikely to hit $147 a barrel again - at least not during the coming decades. The U.S. Energy Information Administration said on Wednesday that oil prices would likely rise to $110 a barrel by 2015 and $130 a barrel by 2030. By that time the world oil markets might once again follow the normal rules of economics.

 

[Handley_Page]

A better case of 'alternative' energy supplies I have yet to hear.
All it needs is some guts for someone to actually DO it (at a price we can all afford, as opposed to the price the investors want).

 

[Austin8]

I think most Americans understand the need to reduce our dependence on foreign oil and provide the extra supply of oil and natural gas to lower our energy costs.

The Mineral Management Services (MMS), an agency of the Department of Interior, estimates that the OCS (Outer Continental Shelf) contains enough natural gas to heat 100 million homes for 60 years or enough oil to replace current Persian Gulf imports for 59 years. Unfortunately the federal government has held back 80% of the country's OCS from oil and gas exploration and production. But despite these findings, there are those from radical environmental groups that oppose critical access to domestic oil and natural gas, claiming they are protecting the environment.

The facts tell us however, that offshore rigs and platforms can be beneficial to marine wildlife. Once there, the platform's substructure acts as an "artificial reef," providing hard surfaces for encrusting organisms such as spiny oysters, barnacles, sponges, and corals.

These creatures are the basis of the food chain in what becomes a new marine ecosystem for numerous types of fish, sharks, sea turtles, spiny lobsters, and sea urchins, so, the rigs create two factors for marine life: Shelter and food. Many local Gulf coast scuba divers enjoy underwater visits to Gulf platforms to sight-see tropical fish and organisms normally associated with natural reef systems located in the Caribbean and far away places. Local divers call these trips "Rig Diving" because the word rig is commonly used in place of platform.

The areas of the Gulf Coast that have access to the platforms have seen increased business due to the popularity of “rig” diving, that means the platforms are not only beneficial to the environment but also good for local economies, attracting new tourist to Gulf Coast towns.

Also new technologies make platforms safer from oil leaks, automatic well-head cut-off valves keep oil under the seabed if the rig or platform breaks away. Investigations showed that there was no significant environmental damage from the offshore platforms despite two Category 5 hurricanes last year in the Gulf.

Actually, the only oil spills after the hurricanes came from beached oil tankers damaged from the storms and not from the platform pipes themselves. Also, all proposed drilling areas would have platforms very far from the field of vision from coastal beaches as not to have any impact people enjoying their “day at the beach.”

Allowing greater access to the outer continental shelf for new oil and natural gas exploration is a win-win for Americans; less dependence on dangerous foreign dictators holding us hostage with oil prices, and creating beneficial artificial reefs for marine wildlife.

 

[loganforester]

I'm just curious when people bitch about the price of oil(gasoline) if they've looked at the price of bottled water lately? It's another naturally occurring liquid that is extracted from the ground and has less refining requirements than oil does. By comparison I'm thrilled to have my vehicle powered by gas instead of overprice bottled water.

The price of oil has been artificially depressed since it was first being used because of it's importance to industry. If their was proper controls on the industry(and we weren't raping the countries that were selling it to us) the cost of oil would be far higher. Think about it.

 

[TxRad]

Supply and demand.

This 16000 foot gas well I'm currently on will cost approximately 3 million dollars to drill and get into production. At $4.40 per thousand cubic feet, which is the latest price, how long will it be before it shows a profit? You do the math. 6-7 dollars a thousand is the make or break even point. That's why 80% of drilling rigs are stacked in this country right now.

You say you're talking about oil? Well, onshore drilling is pretty much done except for a few spots that we're not allowed to drill. Off shore is another story but just think of how much more it costs to drill out there in water over three hundred feet. You people must think drilling a well is free.

An old saying in the oil fields: If you want to make a small fortune, start with a big one.

Fifty dollars a barrel oil is cheap. $2.20 a gallon gas is cheap compared to what the rest of the world pays. Welcome to the future.

 

[JAMESBJOHNSON]

The price of crude is linked to the price of gold. Dollars are too worthless anymore, so go watch the price of gold soar and note what the price of oil does.

 

[Handley_Page]

Supply and demand.

This 16000 foot gas well I'm currently on will cost approximately 3 million dollars to drill and get into production. At $4.40 per thousand cubic feet, which is the latest price, how long will it be before it shows a profit? You do the maths. 6-7 dollars a thousand is the make or break even point. That's why 80% of drilling rigs are stacked in this country right now.

:

But how long with your gas supply at this well last?.
Does the company need a short or longer time before making a profit ?

Let us not forget the manipulations of the Oil Majors; they ain't interested in the price going down - are they ? (the shareholders might have an answer ).

 

[Le Jacquelope]

I think most Americans understand the need to reduce our dependence on foreign oil and provide the extra supply of oil and natural gas to lower our energy costs.

The Mineral Management Services (MMS), an agency of the Department of Interior, estimates that the OCS (Outer Continental Shelf) contains enough natural gas to heat 100 million homes for 60 years or enough oil to replace current Persian Gulf imports for 59 years. Unfortunately the federal government has held back 80% of the country's OCS from oil and gas exploration and production. But despite these findings, there are those from radical environmental groups that oppose critical access to domestic oil and natural gas, claiming they are protecting the environment.

The facts tell us however, that offshore rigs and platforms can be beneficial to marine wildlife. Once there, the platform's substructure acts as an "artificial reef," providing hard surfaces for encrusting organisms such as spiny oysters, barnacles, sponges, and corals.

These creatures are the basis of the food chain in what becomes a new marine ecosystem for numerous types of fish, sharks, sea turtles, spiny lobsters, and sea urchins, so, the rigs create two factors for marine life: Shelter and food. Many local Gulf coast scuba divers enjoy underwater visits to Gulf platforms to sight-see tropical fish and organisms normally associated with natural reef systems located in the Caribbean and far away places. Local divers call these trips "Rig Diving" because the word rig is commonly used in place of platform.

The areas of the Gulf Coast that have access to the platforms have seen increased business due to the popularity of “rig” diving, that means the platforms are not only beneficial to the environment but also good for local economies, attracting new tourist to Gulf Coast towns.

Also new technologies make platforms safer from oil leaks, automatic well-head cut-off valves keep oil under the seabed if the rig or platform breaks away. Investigations showed that there was no significant environmental damage from the offshore platforms despite two Category 5 hurricanes last year in the Gulf.

Actually, the only oil spills after the hurricanes came from beached oil tankers damaged from the storms and not from the platform pipes themselves. Also, all proposed drilling areas would have platforms very far from the field of vision from coastal beaches as not to have any impact people enjoying their “day at the beach.”

Allowing greater access to the outer continental shelf for new oil and natural gas exploration is a win-win for Americans; less dependence on dangerous foreign dictators holding us hostage with oil prices, and creating beneficial artificial reefs for marine wildlife.

Just one question... what happens when we run out of our domestic offshore oil?

 

[TxRad]

But how long with your gas supply at this well last?.
Does the company need a short or longer time before making a profit ?

Let us not forget the manipulations of the Oil Majors; they ain't interested in the price going down - are they ? (the shareholders might have an answer ).

Until the well is completed and tested, there is no way to tell how much it will produce or for how long. Then the state sets a maximum you can produce base on some formula that they call field rules. Sort of a way to equalize the usage among competitors.

Short or long time is a good question. What would you want if you had 3 million dollars tied up in a dry hole or possible a marginal hole. What would you want if you had a well that open flowed 40 million cubic feet of gas a day but the state will only allow you 2.5 million.

As for the majors and oil, which price are you referring to, the price of gasoline or the price of crude. In the 80's the break even point of drilling for crude was $25 a barrel, now it's more like $50. In the Arab states, it cost them about 2 dollars a barrel loaded on a boat. We drilled all the wells and set up the refineries, then they took them over and use them to sell to us. Go figure.

If you want to see injustice, go look into royalties paid to landowners and mineral rights holders and the tax the federal government put on them back in the 90's. The government gets more of the moeny than the guys that own the land and mineral rights. The little guy gets shafted again.

LaJoke, you need to complain about something that means something to someone besides you trying to stir things up. Try and make a difference instead of just noise. The US has the second or third lowest gasoline prices in the world and always has.

 

[Handley_Page]

Just one question... what happens when we run out of our domestic offshore oil?

In 59 years, I would hope that other sources of energy would be well in place. Not that it's going to bother me personally. I don't expect to live that long.

TxRad:
Thanks for that information. I wonder if they do/did that in the North Sea. . . . .

 

[trysail]

TxRad-

I heard a great quotation the other day that applies to all efforts to deal in logic, facts or conduct a rational discussion with LeJoke:

"Never kick a skunk."


I can't figure out whether the fellow gets his inspiration from The Daily Worker or Abbie Hoffman or Ted Kacyzinski or Karl Marx or Mao Zedung (TseTung) or David Koresh or some bizarre combination of every crackpot e'er known to man. It's the weirdest concoction of contradictary, confused, convoluted hash of random word associations I've ever run across.

 

[Katyusha]

Allowing greater access to the outer continental shelf for new oil and natural gas exploration is a win-win for Americans; less dependence on dangerous foreign dictators holding us hostage with oil prices, and creating beneficial artificial reefs for marine wildlife.

Austin, the issue I have with expanding our own drilling operations is that it's nothing more than a band-aid. We have a notoriously short memory here and a terrible history of thinking a band-aid is The Permanent Solution to whatever problem we've temporarily fixed, not to mention this country is unusually averse to real and permanent change compared to a lot of the rest of the world. If wee drill for oil in the outer continental shelf, if we open up the Arctic National Wildlife Refuge, if we do whatever it takes to make it so our fossil fuel supply will last us, at low prices, for more than the next ten years, people will forget there was ever a problem.

In other words, when the band-aid becomes The Solution, people will start wondering why we're still throwing money at alternative energy projects, which means they'll start pressuring Congress to cut funding for such projects and we'll end up back to square one. Make the current crisis go away with a temporary solution and people will forget. Until the next crisis. Except when the next crisis arises we may truly be SOL.

"Sound energy policy only flies with the general population when there's a crisis." I have no idea who said that but I've heard it, and it's true.

 

[Le Jacquelope]

In 59 years, I would hope that other sources of energy would be well in place. Not that it's going to bother me personally. I don't expect to live that long.

TxRad:
Thanks for that information. I wonder if they do/did that in the North Sea. . . . .

Wow. So you don't care about future problems for our country as long as you're dead by then... wow. That explains a lot of mentalities I see around here.

 

[Austin8]

Kat

Thanks for a well written thought provoking post.

However to answer Le Jac's question and to expound on my post as well.

IMO our oil reserves are sustainable. To save space I offer this link for those intrested enough to perhaps read it. Again this is yet another global issue with no clear-cut answers.

Tx. thanks for your post from one ol' roughneck to another I've stacked my share of rigs on dry holes, and watched grown men cry at the sight of saltwater gushers.

Now if we could only find a way to sell that stuff!

http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=38645

 

[JAMESBJOHNSON]

I'm certain and confident I could end the oil, green, and financial crisis in a day simply by improving our standard of living and how we use space for what we do. The cost of gasoline would fall to whatever amount of taxes are imbedded in the present price.

The fucking Arabs would mail you coupons to get you to use gasoline.

 

[Austin8]

JB

Now how cool would that be!
Any B-day plans?

 

[JAMESBJOHNSON]

One of my admirers sent me a large can of home-made peanut butter cookies, so I plant to sit here, eat them, and watch my ass swell as big as STELLA'S mouth. The bitch reminds me of Joe E. Brown.

http://4.bp.blogspot.com/_60WoYLP7uBU/SagqT1bujxI/AAAAAAAAANA/wFN_wbgdIEQ/s320/Joe+E+Brown+1a.jpg

 

[JackLuis]

Wow. I had never heard that oil came from anything but dead dinosaurs. If this is real science and not smoke blowing then maybe the manipulation is not from the production field where it is difficult to 'fudge' the numbers but in the Traders who inflate the price with speculation and in the complex refining/distribution process where the output of finished goods occurs?


We know from recent events that the price of gas is manipulated in a manner to improve Oil Companies profits, so it is not the roughnecks who are skimming the profits.

So if we follow the money, where are the profiteers?

 

[Le Jacquelope]

Kat

Thanks for a well written thought provoking post.

However to answer Le Jac's question and to expound on my post as well.

IMO our oil reserves are sustainable. To save space I offer this link for those intrested enough to perhaps read it. Again this is yet another global issue with no clear-cut answers.

Tx. thanks for your post from one ol' roughneck to another I've stacked my share of rigs on dry holes, and watched grown men cry at the sight of saltwater gushers.

Now if we could only find a way to sell that stuff!

http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=38645

Wouldn't be useful. Domestic refineries cut production and we don't even have a solid domestic pipeline infrastructure coming out of certain oil fields. This became evident when the price of cheap local oil couldn't get out onto the market because of infrastructural issues, and we were stuck with more expensive imported oil.

I wish I had cut and pasted that article. Argh.

 

[TxRad]

There is no such thing as cheap local oil. All oil prices in this country are set by the same sweet crude price. Secondly, the only hold up on a pipeline might be with a land owner who don't want the thing on his property but most if not all of the time this is all hashed out before drilling the wells.

Speaking of pipelines. Pipelines are another major cost in oil and gas. Right of ways must be leased, cleared, surface damages paid. It's a long expensive list of things to get a pipeline in.

Dead dinosaurs have nothing to do with oil. Oil comes from the plant material, plankton and algae from 300 to 600 million years ago when most of the US was a warm inland shallow sea.

 

[ishtat]

In case anyone hasn't noticed the price of all mineral commodities has gone up recently. The rise is not unique to oil.

Why have these prices risen? I tend to blame what is euphemistically called quantitative easing or more accurately, the policy of debasing the currency with the printing press. It has nothing to do with silly conspiracy theories.

Both the USA and UK are printing vast quantities of new money. That will inevitably produce severe inflation in late 2009 and 2010. In turn inflation makes investors unwilling to buy government bonds which will (through that inflation ) lose real value. Investors are therefore looking to protect the real value of their investment portfolios and thus are buying into commodities especially as they are still a little nervous of the stock market.

The US and Europe will begin to see some very ugly price inflation next year and that will translate quickly into political opposition. Major inflation could well emerge as the big political issue in 2010 largely because it will be a problem of the current rather than the previous administrations making.

INFLATION is coming to your local stores. It will hurt. Who will you blame for starting the printing press?

 

[trysail]

The law of supply and demand has [ and always will have ] excellent explanatory power.

Fair warning to those who have been lulled to sleep and are oblivious to the current low price of natural gas:


Because large numbers of drilling rigs are being idled by low prices and the decline in natural gas demand, natural gas reserves in the U.S. are not being developed. Existing production falls fairly rapidly ( nationally, it is estimated on the order of 8% per annum ) as the result of depletion from natural decline rates ( in other words, production from a newly completed natural gas well can be expected to fall in every subsequent year; decline rates for fields/wells in the Gulf of Mexico are even higher— on the order of 15-20% per annum ).

At some point over the next 3-4 years, it is not unlikely that natural gas prices will increase dramatically as supplies decline. Domestic supplies may be augmented by deliveries of LNG ( "Liquified Natural Gas" ) sourced from places like Trinidad & Tobago, Nigeria and Qatar ( when their ginormous joint venture with Royal Dutch Shell for the offshore development of the world's largest natural gas field [ the North Field ] comes onstream ). Naturally, the ability of the U.S. to import supplies of LNG may be constrained by the near impossibility of getting approvals for construction of additional LNG receiving terminals, thanks to effective fear-mongering by misguided and ill-informed dunderheads.

By the way— FYI, natural gas prices reached a six ( 6 ) year low yesterday of $3.82/MCF ( 1 MCF= a thousand cubic feet ) on the New York Mercantile Exchange ( "NYMEX" ).

When prices rise, I don't want hear a lot of whining and complaining ( fat chance of that ); you've been warned.

( Fair Use Excerpt )

By Margot Habiby

May 29 (Bloomberg) -- The number of oil and natural gas rigs operating in the U.S. fell by one to 899 this week, as declines in gas rigs outnumbered increases in oil rigs, according to data published by Baker Hughes Inc.

Baker Hughes said natural-gas rigs fell by eight, or 1.1 percent, to 703, the lowest since Nov. 29, 2002. The count was down 56 percent from a peak of 1,606 on Sept. 12. Oil rigs rose by seven, or 3.9 percent, to 187, the first increase in six weeks. It was at 442 on Nov. 7.

The combined oil and gas rig count rose to a 22-year high last year, peaking at 2,031 Aug. 29 and Sept. 12.

Gas for July delivery fell 12.2 cents, or 3.1 percent, to settle at $3.835 per million British thermal units on the New York Mercantile Exchange. It was up 2.4 cents, or 0.6 percent, at $3.981 before the overall rig count figure came out. Earlier, it was up as much as 3.7 percent at $4.104.

Crude oil for July delivery rose $1.23, or 1.9 percent, to $66.31 a barrel. The futures, which are up 49 percent this year, are 55 percent below the record $147.27 a barrel in July.

Rigs on land were unchanged at 840, the lowest since March 2003. Rigs in inland waters lost two to four.

Wyoming lost the most rigs, falling three to 32. Arkansas, California and Texas each lost one, bringing their totals to 43, 20 and 330, respectively. Rigs increased by two in Louisiana and North Dakota, rising to 143 and 36. Alaska and New Mexico added one rig each to six and 36. Rig counts in Colorado and Oklahoma were unchanged at 45 and 76.

Baker Hughes also reported the rig count for offshore production rose by one to 55, and the Gulf of Mexico added one rig to 54. Canadian rigs rose by 16, or 22 percent, to 90, the highest since March.

The overall U.S. rig count averaged 918 in May, down 77, or 7.7 percent, from April. It was the eighth consecutive monthly decline, though the pace of the drop has slowed since March. Gas rigs fell an average of 52, or 6.7 percent, this month to 723. Oil rigs dropped by 22, or 11 percent, to 187.

Natural gas production in the first quarter, the period for which the most recent data are available, climbed as the rig count dropped. Gas output in the lower 48 U.S. states rose 2.2 percent in March from the year earlier, the Energy Department reported today. It was down 0.5 percent from the previous month.

Baker Hughes, the world’s third-largest oilfield services provider, and its predecessor Hughes Tool Co. have issued U.S. and Canadian rig counts since 1944 and international ones on a monthly basis since 1975. The largest oilfield services companies are Schlumberger Ltd. and Halliburton Co. Baker Hughes is based in Houston.

The global monthly rig count for May will be released June 5.

 

[SimonBrooke]

In 59 years, I would hope that other sources of energy would be well in place. Not that it's going to bother me personally. I don't expect to live that long.

Well, doesn't that just say it all. Don't give a shit about your children and grandchildren. Let them starve provided you can still drive your gas-guzzler now.

Le Jaquelope, the answer to your question is just this: I'm from Scotland. We have some oil - we don't have a huge amount, but we have some. Is it better for our economy to pump it now when it's US$65 a barrel, or wait ten years till it's $650 a barrel? It isn't costing us anything while it's still in the ground, and the longer we leave it in the ground, the more it's worth. It isn't in any oil producer's interest to pump oil just now. It's in oil consumers' interest. And if you want oil now, well, the producers have got you - if you'll excuse the pun - over a barrel.

There's pretty much no conceivable development in the economy that would make oil less
valuable in the future. Even if we stop using it for transport fuel - which won't happen quickly - it's still extremely valuable for other things. Most of our modern structural plastics, including the epoxies used in carbon fibre, are oil derived. So people who have got it have a big interest in not pumping it.

Fundamentally, unless the US is prepared to invade every oil producing state in the world, the era of cheap fuel is over. Done. The heavy haulage of transport needs to be done with something else.

 

[Handley_Page]

Well, doesn't that just say it all. Don't give a shit about your children and grandchildren. Let them starve provided you can still drive your gas-guzzler now.

.

You didn't read it, did you, Simon ?

In 59 years, I would hope that other sources of energy would be well in place.

Not that it's going to bother me personally. I don't expect to live that long.


As I am over 60, I hope & trust that my kids and their kids can do something practical !
And I don't drive a gas-guzzler. Mr Brown makes sure of that !

 

[Austin8]

Every spring, after the high demand for heating oil during the winter has passed and before the high demand for gasoline during the summer driving season has started,
oil refineries cut back on production to perform regular maintenance of their facilities.

Typically, the reduction in refinery output in the US tightens the balance between supply and demand, placing slight upward pressure on gasoline and distillate (diesel fuel and heating oil) prices.