Its (still) the economy, stupid.

[MG1968]

Originally Posted by droski

of course it would. what happens when people know the price of their goods will drop in the future? they sell more now. what do you think that would do to the price today? anyone that argues a massive domestic supply of crude 5-10 years from now wouldn't affect the price today just doesn't understand market dynamics.

or is a Washington democrat politician with a vested interest in making sure that prices remain high so that GW Bush can be blamed and thus ensure a democrat is elected POTUS.

[lawgator1]

Originally Posted by droski

of course it would. what happens when people know the price of their goods will drop in the future? they sell more now. what do you think that would do to the price today? anyone that argues a massive domestic supply of crude 5-10 years from now wouldn't affect the price today just doesn't understand market dynamics.

I thought I read that the estimated reserves of U.S. oil would be roughly two years' worth for U.S. demand, total. Is that right?

Do you know what the reserves are or how much they would affect the per barrel price of oil? Seen any objective estimates on that?

[droski]

Originally Posted by lawgator1

I thought I read that the estimated reserves of U.S. oil would be roughly two years' worth for U.S. demand, total. Is that right?

Do you know what the reserves are or how much they would affect the per barrel price of oil? Seen any objective estimates on that?

depends who you listen to. some say there isn't much, others say it is as much as the sauidi's reserve. either way it certainly will have SOME effect. domestic oil because of balance of payments is worth twice what foreign oil is when it comes to the crude price. and considering there hasn't been a single US based oil spill from deep water drilling I think we can take the chance.

[BigPapaVol]

Originally Posted by lawgator1

I am not for nationalizing the oil industry, not the refineries, not anything. But, on the whole, these companies have to realize that just because others take, say, a 10 percent profit, does not mean in the eys of the Average Joe that its okay for them to take a 10 percent profit when the scale of the economical model we are talking about is just so enormous.

One can argue theory all day long about whether that is justified. I'm saying that as a political issue, as a public relations issue, people cannot understand the total raw dollar amount being justified.

In a capitalist economy you can't argue whether it's justified. Maybe in your very French thinking you can justify a mere 10% return for the oil drilling risk and all of the political risk, but in a capitalist system, that return is meager and held there artificially by gov't regulation. There is no real argument as to whether they can charge for their products. There is a debate about socializing the industry and it's a ridiculous IMO, but about market driven entrepreneurial profit there is no discussion to be had.

[droski]

if you want oil to go to $200 a barrel implement a profit windfall tax.

[Plano Vol]

Originally Posted by droski

depends who you listen to. some say there isn't much, others say it is as much as the sauidi's reserve. either way it certainly will have SOME effect. domestic oil because of balance of payments is worth twice what foreign oil is when it comes to the crude price. and considering there hasn't been a single US based oil spill from deep water drilling I think we can take the chance.

I certainly agree with the balance of payments angle and I think the extraction methods used in the States would be state of the art.

I don't like dropping $80 to fill my tank but I believe the high prices force change in consumption habits that will a greater impact on the supply/demand thing but we need to improve infrastructure.

I read today where your dear ol' BART was removing seats to allow more standing room.

[droski]

just the fact that SUV sales are down 50% tell you people are changing their consumption. the fact that the oil price continues to go up despite plenty of supply and declining demand tells me that were in an oil bubble. all we need is someone to pop it and opening up domestic drilling could do just that.

[KB5252]

Originally Posted by droski

just the fact that SUV sales are down 50% tell you people are changing their consumption. the fact that the oil price continues to go up despite plenty of supply and declining demand tells me that were in an oil bubble. all we need is someone to pop it and opening up domestic drilling could do just that.

our demand may be dropping but doesn't the added demand from India and China more than make up for that?

[BigPapaVol]

Originally Posted by KB5252

our demand may be dropping but doesn't the added demand from India and China more than make up for that?

no. their use has been leveling off as well. the demand does not justify current pricing, meaning droski is on the money.

The bubble is being driven by the massive inflow of dollars chasing contracts.

[joevol320]

i have a question. the Democrats say that if we drill our own oil, it will not be enough to bring down prices.

why then did they vote to use our emergency oil reserves? if drilling for our own oil can't bring it down, then how will a relatively small strategic reserve bring it down.

sounds like they're talking out both sides of the their as_, i mean mouths.

[joevol320]

Originally Posted by KB5252

our demand may be dropping but doesn't the added demand from India and China more than make up for that?

i read in a new article that AAA estimated that Americans drove about 40 billion less miles this year. i can't remember the exact amount but it was staggering. yet, gas hasn't gone down any.

[lawgator1]

Originally Posted by BigPapaVol

In a capitalist economy you can't argue whether it's justified. Maybe in your very French thinking you can justify a mere 10% return for the oil drilling risk and all of the political risk, but in a capitalist system, that return is meager and held there artificially by gov't regulation. There is no real argument as to whether they can charge for their products. There is a debate about socializing the industry and it's a ridiculous IMO, but about market driven entrepreneurial profit there is no discussion to be had.

Originally Posted by droski

if you want oil to go to $200 a barrel implement a profit windfall tax.

I am not saying they aren't entitled to make a profit and I'm not saying that the tax should be sufficient to cripple them or cause prices to move higher simply by virtue of the amount of the tax.

But, let's say an individual oil corporation's profit margin was the same, and hypothetically at 10 %, over the last five years. Let's say that the actual dollar amount of profit went from $10 billion in first quarter of 2003 to $40 billion in first quarter of 2008 and that it was based on the fact that their profit dollar amount was magnified by the increase in the raw product they buy, transport, and then refine here.

If they paid a windfall tax of just 10 percent of that ($ 4 billion), they'd still have had their raw dollar profit go from $10 billion to $36 billion. In the meantime, if that was done across the board for all of Big Oil, the U.S. Treasury would have had the stimulus package paid for and perhaps some dollars could be bought back to boost the dollar's value in the exchange markets.

If one of the candidates proposed something along those lines, I think the outcry from the free market people and the Big Oil spokespeople would be absolutely overwhelmed by the tidal wave of support from the millions of us who are paying for those profits every day.

I know and understand your arguments against it, at least in basic terms. But one of the reasons that Obama is so popular is that the index of suspicion out there in real every day America is that the game has been rigged for awhile, that the Chaneys and Bushs -- who are both personally extremely wealthy because of their ties to this industry -- helped out in the shennanigans, and the biggest mistake that the Republicans could ever make is trying to shift blame from the companies making unheard of profits to the environmentalists.

Like it or not, that's the perception.

[KB5252]

Originally Posted by BigPapaVol

no. their use has been leveling off as well. the demand does not justify current pricing, meaning droski is on the money.

The bubble is being driven by the massive inflow of dollars chasing contracts.

Thanks for the info and possible good news if and when it does burst.

[MG1968]

Originally Posted by lawgator1

I am not saying they aren't entitled to make a profit and I'm not saying that the tax should be sufficient to cripple them or cause prices to move higher simply by virtue of the amount of the tax.

But, let's say an individual oil corporation's profit margin was the same, and hypothetically at 10 %, over the last five years. Let's say that the actual dollar amount of profit went from $10 billion in first quarter of 2003 to $40 billion in first quarter of 2008 and that it was based on the fact that their profit dollar amount was magnified by the increase in the raw product they buy, transport, and then refine here.

If they paid a windfall tax of just 10 percent of that ($ 4 billion), they'd still have had their raw dollar profit go from $10 billion to $36 billion. In the meantime, if that was done across the board for all of Big Oil, the U.S. Treasury would have had the stimulus package paid for and perhaps some dollars could be bought back to boost the dollar's value in the exchange markets.

If one of the candidates proposed something along those lines, I think the outcry from the free market people and the Big Oil spokespeople would be absolutely overwhelmed by the tidal wave of support from the millions of us who are paying for those profits every day.

I know and understand your arguments against it, at least in basic terms. But one of the reasons that Obama is so popular is that the index of suspicion out there in real every day America is that the game has been rigged for awhile, that the Chaneys and Bushs -- who are both personally extremely wealthy because of their ties to this industry -- helped out in the shennanigans, and the biggest mistake that the Republicans could ever make is trying to shift blame from the companies making unheard of profits to the environmentalists.

Like it or not, that's the perception.

what about the fact that Exxon already pays more taxes in 1 year (30 billion) than over 50% of all tax payers (27 billion)?

BMI Media Myth Crude Coverage: Media ignore OPEC’s control of oil market when covering America’s pain at the pump.

[volsforever27]

The biggest mistake the R's could make is to NOT blame the enviromentalists. As I've stated before, Obama and the rest are claiming there would be no impact on prices for 5 years if we drilled now. Guess what? When a bill was introduced to all new drilling a few years ago, guess who blocked it?

And also on LG's other point, we should tax oil companies due to perception?