Oil prices ... a bad dream or ...
Oil prices keep slipping, just when everyone thought that they would continue to rise to $100 per barrel. So what happened? Or what is going to happen?
The American Left will tell you that this is all part of the vast right wing conspiracy (the same folks that forced the Clintons to commit perjury multiple times) purposely driving the prices down for the election so that Republicans can be elected again. The Left also believe that the oil companies are hand in hand with the Booshies in a vast plot to screw every last dollar out of the pockets of the honest, hard-working Democrat. Uh huh. They point to the VAST profits made by the oil companies in the last price run-up as evidence that the plot exists....
Some truths:
(1) PRICE CONTROL. The oil companies do not control the price of oil -- that is a market price that is dictated by supply and demand, tempered (or irritated) by speculation. If the oil companies controlled all the means of production, that is, if they owned the oil wells and everything else upstream, then it would be a fair complaint. But they don't -- the wells are owned by parties WHO DO NOT HAVE THE BEST INTERESTS OF THE US (or Europe or any other non-OPEC country)at heart or in their plans.
The oil producers -- the people from whom the oil companies buy their raw materials -- want to extract the maximum amount of money from their declining resources. They understand that too great a price shock, and demand will decline and users will be forced to seek alternative sources. That is NOT what they want. They are like heroin dealers: a well hooked client is the best client.
A caveat: some producers are also oil companies -- take CITGO for example. That is Venezuela and in this case, the government is behind the whole operation, from the ground to your gas tank. You would be a complete idiot to assume that they are part of any right wing conspiracy, no matter how vast or tiny. They want to continue to sell their product (think heroin) to the US to mess us up as badly as they can. They continue to interfere with local domestic politics to humiliate the Boosh government and Americans as much as possible. Lukoil -- that is the Russians. And the same applies. In both cases, they DO control the prices and want to jack them up as far as the market will bear. To that end they are loudly calling for OPEC production decreases to support the price: it is easy to prance around telling the world that the US president is the devil when your pockets are lined with easy petrodollars. Not so easy when your country is bankrupt. Think about spending too much on buying votes with useless social programs and then not being able to fund them: then you BLAME the Americans for the failures caused by their unkind desire to pay less for their oil (which you try to keep them hooked on). Either way, on the surface, you can make the US look bad ... provided nobody tells the great unwashed, Lenin's useful idiots, that they may be their own worst enemies. And by that time the petro-government's leaders will have stashed enough graft away in foreign climes to live comfortably for ever.
(2) OIL COMPANY PROFITS. By anyone's measure, it is unconscionable when the rest of the world is feeling the pinch. But when it is not understood, it makes them look complicit. Folks, oil companies take a margin, say 5% of the base material cost to them and pass the mark-up on to you. The trouble is that there is a lag involved that works only one way -- against you. You see, if the oil that they bought for $50 per barrel is suddenly worth $75 per barrel, they will charge you the same 5% on $75 -- and that is relatively a lot more money than the 5% at $50. Something like 50% more. So your $5 billion profit goes to $7.5 billion. AND, this is the windfall, they also pocket the extra $25 per barrel ... they charge you the current high price for something that they paid a lot less for. That is where sudden spikes in profit come from. They are in business to make money, not provide a service to the people. If they were public minded, they would only charge more for the gasoline as the more expensive oil comes on stream. But instead, it is overnight. You cannot prove a conspiracy or a plot here, because there isn't one. Any fool can calculate what gas WILL cost given a new high spot price for oil, and that is what you pay. Everyone in the business understands this without having to be told it. If CITGO or Lukoil was really interested in our welfare, they'd act differently and pass increased costs along only the new product went downstream. But as we have seen, they cannot be part of any conspiracy and they are just as interested in making cash as Exxon.
When oil prices drop, due to decreasing tensions in the Middle East and other speculative market forces, the price of gas only drops as slowly as the oil companies can manage based on current spot prices. AND, the cheap oil for which we were gouged earlier has been processed and sold. So the oil companies are concerned about keeping their margin only.
(3) SPECULATION. The world is full of energy traders have a great deal of influence on the current price of oil. When the traders perceive that there might be a risk to the supply of oil, they buy futures contracts and other contracts for forward delivery to bet that prices will be higher before they have to take delivery: they will then sell the contracts back to the market which consists of oil companies and other end-users (countries such as China, etc.). Some energy companies also have refining capacity, and only sell the product on to final distributors or large scale end users (airlines, industry, etc.).
When there is price overshoot such as the recent run-up, that is, where prices were driven by speculation to a point that had no basis in supply reality, there exists the potential for a collapse. Now, did the Booshies purposely drive the prices up (to help their friends the oil companies) just so that they could manipulate the market so that prices could crash in front of the election? That is what the Lefties would have you believe: yup, the government has control of Iranian meddling in Iraq, Al Qaeda helped up drive up the prices because they wanted Boosh to look good come election time, and Hugo Chavez and Putin just knew that life would be easier with Boosh fully empowered with GOP control over both houses of Congress. And if you believe those ideas, you need a enema through your nostrils, because we KNOW what you have inside your cranium.
(4) THE REAL CONSPIRACY. Of course, there is a lot to more to say about this ... but the basics are as described above. Would I like to charge a windfall tax to the oil companies? Yup, because you can be SURE that they were doing their level best to boost the price of oil. They are clearly not working in the best interests of our country or anyone else's -- except the oil suppliers: Arab states, Venezuela, Russia, Nigeria ... just listing them, you get the impression of the vilest odor ever. That is, America's richest companies are in practice enemies of the state. But at least some of the shareholders are also American -- it is only where we look at CITGO and Lukoil, etc., that we really see nothing but negatives for the US. We should boycott them as a nation: we don't want your oil. Ultimately, we need to break the oil habit for the sake of national security and seize the oil companies research assets for alternative sources of energy. They claim to be "energy companies" ... but the truth is far from that: they are coporate beings dedicated to the American enslavement to whatver source of energy that they can hook us on and profit from.
They EMPHATICALLY do not want to see us develop nuclear energy to wean us from non-renewable energy in their control. They are the same companies that bought out the Red Line in Los Angeles and replaced electric trams with "modern, clean and efficient [diesel] buses." A tip of the hat to their co-conspirator, GM. They also want to avoid windfarms (except where they own the patents to the technology), hydro power, tidal power and any other form of clean renewable energy. Oil sands are GOOD because they still control the basics. Coal is good, because that will devolve into the oil cabal. Electric cars powered by atomic fission are bad -- do you think that it is a co-incidence that American auto companies are so far behind in bringing that technology to market?
The American Left will tell you that this is all part of the vast right wing conspiracy (the same folks that forced the Clintons to commit perjury multiple times) purposely driving the prices down for the election so that Republicans can be elected again. The Left also believe that the oil companies are hand in hand with the Booshies in a vast plot to screw every last dollar out of the pockets of the honest, hard-working Democrat. Uh huh. They point to the VAST profits made by the oil companies in the last price run-up as evidence that the plot exists....
Some truths:
(1) PRICE CONTROL. The oil companies do not control the price of oil -- that is a market price that is dictated by supply and demand, tempered (or irritated) by speculation. If the oil companies controlled all the means of production, that is, if they owned the oil wells and everything else upstream, then it would be a fair complaint. But they don't -- the wells are owned by parties WHO DO NOT HAVE THE BEST INTERESTS OF THE US (or Europe or any other non-OPEC country)at heart or in their plans.
The oil producers -- the people from whom the oil companies buy their raw materials -- want to extract the maximum amount of money from their declining resources. They understand that too great a price shock, and demand will decline and users will be forced to seek alternative sources. That is NOT what they want. They are like heroin dealers: a well hooked client is the best client.
A caveat: some producers are also oil companies -- take CITGO for example. That is Venezuela and in this case, the government is behind the whole operation, from the ground to your gas tank. You would be a complete idiot to assume that they are part of any right wing conspiracy, no matter how vast or tiny. They want to continue to sell their product (think heroin) to the US to mess us up as badly as they can. They continue to interfere with local domestic politics to humiliate the Boosh government and Americans as much as possible. Lukoil -- that is the Russians. And the same applies. In both cases, they DO control the prices and want to jack them up as far as the market will bear. To that end they are loudly calling for OPEC production decreases to support the price: it is easy to prance around telling the world that the US president is the devil when your pockets are lined with easy petrodollars. Not so easy when your country is bankrupt. Think about spending too much on buying votes with useless social programs and then not being able to fund them: then you BLAME the Americans for the failures caused by their unkind desire to pay less for their oil (which you try to keep them hooked on). Either way, on the surface, you can make the US look bad ... provided nobody tells the great unwashed, Lenin's useful idiots, that they may be their own worst enemies. And by that time the petro-government's leaders will have stashed enough graft away in foreign climes to live comfortably for ever.
(2) OIL COMPANY PROFITS. By anyone's measure, it is unconscionable when the rest of the world is feeling the pinch. But when it is not understood, it makes them look complicit. Folks, oil companies take a margin, say 5% of the base material cost to them and pass the mark-up on to you. The trouble is that there is a lag involved that works only one way -- against you. You see, if the oil that they bought for $50 per barrel is suddenly worth $75 per barrel, they will charge you the same 5% on $75 -- and that is relatively a lot more money than the 5% at $50. Something like 50% more. So your $5 billion profit goes to $7.5 billion. AND, this is the windfall, they also pocket the extra $25 per barrel ... they charge you the current high price for something that they paid a lot less for. That is where sudden spikes in profit come from. They are in business to make money, not provide a service to the people. If they were public minded, they would only charge more for the gasoline as the more expensive oil comes on stream. But instead, it is overnight. You cannot prove a conspiracy or a plot here, because there isn't one. Any fool can calculate what gas WILL cost given a new high spot price for oil, and that is what you pay. Everyone in the business understands this without having to be told it. If CITGO or Lukoil was really interested in our welfare, they'd act differently and pass increased costs along only the new product went downstream. But as we have seen, they cannot be part of any conspiracy and they are just as interested in making cash as Exxon.
When oil prices drop, due to decreasing tensions in the Middle East and other speculative market forces, the price of gas only drops as slowly as the oil companies can manage based on current spot prices. AND, the cheap oil for which we were gouged earlier has been processed and sold. So the oil companies are concerned about keeping their margin only.
(3) SPECULATION. The world is full of energy traders have a great deal of influence on the current price of oil. When the traders perceive that there might be a risk to the supply of oil, they buy futures contracts and other contracts for forward delivery to bet that prices will be higher before they have to take delivery: they will then sell the contracts back to the market which consists of oil companies and other end-users (countries such as China, etc.). Some energy companies also have refining capacity, and only sell the product on to final distributors or large scale end users (airlines, industry, etc.).
When there is price overshoot such as the recent run-up, that is, where prices were driven by speculation to a point that had no basis in supply reality, there exists the potential for a collapse. Now, did the Booshies purposely drive the prices up (to help their friends the oil companies) just so that they could manipulate the market so that prices could crash in front of the election? That is what the Lefties would have you believe: yup, the government has control of Iranian meddling in Iraq, Al Qaeda helped up drive up the prices because they wanted Boosh to look good come election time, and Hugo Chavez and Putin just knew that life would be easier with Boosh fully empowered with GOP control over both houses of Congress. And if you believe those ideas, you need a enema through your nostrils, because we KNOW what you have inside your cranium.
(4) THE REAL CONSPIRACY. Of course, there is a lot to more to say about this ... but the basics are as described above. Would I like to charge a windfall tax to the oil companies? Yup, because you can be SURE that they were doing their level best to boost the price of oil. They are clearly not working in the best interests of our country or anyone else's -- except the oil suppliers: Arab states, Venezuela, Russia, Nigeria ... just listing them, you get the impression of the vilest odor ever. That is, America's richest companies are in practice enemies of the state. But at least some of the shareholders are also American -- it is only where we look at CITGO and Lukoil, etc., that we really see nothing but negatives for the US. We should boycott them as a nation: we don't want your oil. Ultimately, we need to break the oil habit for the sake of national security and seize the oil companies research assets for alternative sources of energy. They claim to be "energy companies" ... but the truth is far from that: they are coporate beings dedicated to the American enslavement to whatver source of energy that they can hook us on and profit from.
They EMPHATICALLY do not want to see us develop nuclear energy to wean us from non-renewable energy in their control. They are the same companies that bought out the Red Line in Los Angeles and replaced electric trams with "modern, clean and efficient [diesel] buses." A tip of the hat to their co-conspirator, GM. They also want to avoid windfarms (except where they own the patents to the technology), hydro power, tidal power and any other form of clean renewable energy. Oil sands are GOOD because they still control the basics. Coal is good, because that will devolve into the oil cabal. Electric cars powered by atomic fission are bad -- do you think that it is a co-incidence that American auto companies are so far behind in bringing that technology to market?
posted by Zaphod at Sunday, October 15, 2006
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