High gas prices result in finger pointing

Dispatcher · 06-22-2008, 06:29 AM

Now that the price of gas has passed the dreaded $4 a gallon mark, there is a lot of finger pointing going on by all sides.
People blame the oil companies, the oil companies blame OPEC, OPEC blames the speculators, and the speculators blame supply and demand.
The Republicans say it's the Democrats fault because they won't let oil companies drill in Alaska and off the Atlantic coast and the Democrats blame the Republicans for not doing more to promote alternative fuels.
The sad fact is that they are all right. It is all of these things that keep the price of oil so high. And even though demand here in the U.S. is dropping somewhat, demand in countries like China and India is increasing and will continue to do so.
In my humble opinion, there is not one simple solution that will cause gas prices to fall. All options have to be on the table. Everything we buy is tied to the price of fuel.
And sacrifices will have to be made, whether that means not owning an SUV or having our view of the Ocean marred by wind turbines or drilling in sensitive areas or whatever it takes. And we need to stop giving oil companies huge tax breaks. They already have an incentive to drill and refine....it's called profit.
The high price of energy is a long term problem that needs long term solutions. And the buck has to stop somewhere.

WickedLou9 · 06-22-2008, 09:04 AM

I think it's actually speculators in quite large part. We are well supplied by almost any measure. Our US oil refineries are operating at about 88% capacity. the price of oil goes up on news, not on supply problems. Terrorists attacked a refinery in Nigeria last week... no real effect to the world market but prices went up 2 dollars a barrel almost instantly. There is no market cause for that. THis is really just my opinion obviously, but speculators have created another bubble here. They are betting that With China and India industrializing and driving more cars that demand will outstrip supply and cause shortages and price spikes... self fulfilling prophecy I guess. Everyone thinks that the price is going to go up so they buy.... causing the price to go up.

C4Casey · 06-22-2008, 11:29 AM

Totally agree. If the pice of oil were more supply and demand based, I'm sure the price would be much lower than it currently is.

At the same time, we haven't built a new refinery in this country in over 30 years. Just the cost of operating and maintaing old, obsolete equipment drives gas prices up. And then there are tons of regulations, taxes, and enviromental laws which also help increase the price of gas.

Rouger2 · 06-22-2008, 01:01 PM

Originally Posted by WickedLou9

I think it's actually speculators in quite large part. We are well supplied by almost any measure. Our US oil refineries are operating at about 88% capacity. the price of oil goes up on news, not on supply problems. Terrorists attacked a refinery in Nigeria last week... no real effect to the world market but prices went up 2 dollars a barrel almost instantly. There is no market cause for that. THis is really just my opinion obviously, but speculators have created another bubble here. They are betting that With China and India industrializing and driving more cars that demand will outstrip supply and cause shortages and price spikes... self fulfilling prophecy I guess. Everyone thinks that the price is going to go up so they buy.... causing the price to go up.

At a congressional hearing, the other day, an expert on this oil speculation who used to be a high mucky mucky in the government field involved said that the US congress has let speculators move oil futures out of american regulated market and into foreign mostly unregulated markets including west texas crude. Policies that helped Enron do what it did are still in place. Has congress done anything about this, not that I have heard, at the hearing they were all upset, but what will they do? Will they now just forget about doing anything because it is no longer in the news. Senator Drogans sounded real informed and smart on this I hope he does something but I don't really trust any of them.

WickedLou9 · 06-22-2008, 01:48 PM

Originally Posted by C4Casey

Totally agree. If the pice of oil were more supply and demand based, I'm sure the price would be much lower than it currently is.

At the same time, we haven't built a new refinery in this country in over 30 years. Just the cost of operating and maintaing old, obsolete equipment drives gas prices up. And then there are tons of regulations, taxes, and enviromental laws which also help increase the price of gas.

thats true, but we have been adding capacity to the existing refineries. Our total refining capacity goes up a little bit every year. It's not enough but we have grown quite a bit since the 70's in terms of capacity

Dispatcher · 06-22-2008, 01:49 PM

Originally Posted by WickedLou9

I think it's actually speculators in quite large part. We are well supplied by almost any measure. Our US oil refineries are operating at about 88% capacity. the price of oil goes up on news, not on supply problems. Terrorists attacked a refinery in Nigeria last week... no real effect to the world market but prices went up 2 dollars a barrel almost instantly. There is no market cause for that. THis is really just my opinion obviously, but speculators have created another bubble here. They are betting that With China and India industrializing and driving more cars that demand will outstrip supply and cause shortages and price spikes... self fulfilling prophecy I guess. Everyone thinks that the price is going to go up so they buy.... causing the price to go up.

I agree that is one of the biggest problems. One solution that has been talked about is making speculators actually take delivery of some of the oil they buy. That, I think, would put a stop to it. They don't actually want the oil, they just buy it low and sell it high and make a fast buck.

Stylerod · 06-22-2008, 02:49 PM

Speculators base their numbers on how they feel oil supplies will be in the future, right? If that is the case then if we allow more offshore drilling (on NPR the other day I heard them say that we might have 122 billion barrels of oil off the shores of the US. More than Iraq and more than Kuwait) wouldn't they see that as a promising future and lower prices?

Dispatcher · 06-22-2008, 10:02 PM

Originally Posted by Stylerod

Speculators base their numbers on how they feel oil supplies will be in the future, right? If that is the case then if we allow more offshore drilling (on NPR the other day I heard them say that we might have 122 billion barrels of oil off the shores of the US. More than Iraq and more than Kuwait) wouldn't they see that as a promising future and lower prices?

In theory you are correct. But offshore drilling is a big IF right now, and everyone in Washington who could actually do something is passing the buck and dragging their collective feet.