Help with a conversation about gas prices

LibertiORDeth

LibertiORDeth

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I was talkig to someone about the gas prices, and he claims that the reason the prices quadrupled in the last few years is because the countries who have the oil are taking the profits, and he said that when gas was at 1$ a gallon the profits were probably 2%, so following his logic, I said that he claims that they now get over 300% more profit, and he said yes. So can someone give me statistics to help in this, and to explain how this is caused mostly by devaluation of the dollar?
 
Go to Google News and search for something like "OPEC OIL DOLLAR". You'll get thousands of articles about OPEC wanting to switch pricing oil from dollars to a basket of currencies, specifically because of the weakness of the U.S. dollar. On a nominal basis, yes, they are getting more and more dollars but what are those dollars really worth?
 
lukeownzu said:
I was talkig to someone about the gas prices, and he claims that the reason the prices quadrupled in the last few years is because the countries who have the oil are taking the profits, and he said that when gas was at 1$ a gallon the profits were probably 2%, so following his logic, I said that he claims that they now get over 300% more profit, and he said yes. So can someone give me statistics to help in this, and to explain how this is caused mostly by devaluation of the dollar?
Click to expand...

First, tell him he's an idiot.
Second, he says taking profits led to higher prices...
Sooo he's saying the profits came before the higher prices.

I'm pretty sure the higher prices came first. So that kills his argument.

Then just tell him where the higher prices came from... high demand and low supply, Fed inflation, the war, etc.

Also remind him that they are actually getting the profits because Americans are willfully buying their oil.
 
The high oil prices appear to be the result of speculation in the oil markets (and the US dollar devaluation). Oil companies don't set the price, the open markets do. My understanding is the merchantile exchange was created just for that purpose, for companies producing (pumping) oil or refining oil, as a common place to buy and sell. The price of oil (about 50%) is used in determining the wholesale price that gasoline is sold for. Therefore, as oil rises, gasoline rises.

Now add the speculators (traders). These so-called investors don't produce nor refine any oil. They only trade in the merchantile exchanges as a hedge against inflation. In doing so, they create a virtual demand (that doesn't really exist), and in doing so, drive the prices up. When the prices go up, we pay at the pump!!

The global demand has gone up over the years, but these spikes in prices have nothing to do with demand. Even in the U.S., demand has been falling as people have cut back on their driving. The current oil prices have nothing to do with supply and demand. If Saudi Arabia were to pump even more oil, it would just have to be stored as there wouldn't be any buyers for it, today.

That's why we need to get speculators out of these markets. Open markets is good, but this kind of crap is just costing us bank for no good reason.


http://www.nymex.com/index.aspx

http://en.wikipedia.org/wiki/Speculators


FF
 
Also mention that while the gas companies make roughly 11% profit, the government is taxing 20%, so they're getting almost twice as much "profit" without even having to do anything.
 
fr33domfightr said:
That's why we need to get speculators out of these markets.
Click to expand...

Speculators are necessary and they can't be eliminated without some draconian interventional measures. If a speculator is wrong and oil is worth far less than he is betting, he will lose his capital and no longer be much of a factor.
 
and it's the World Banc who sets oil prices and they want
high prices in order to bankrupt the $ and wipe out the
middle class by! ...Both with gas prices, as well as, rise in
prices of all other goods shipped.

can anybody say NWO?
 
fr33domfightr said:
The high oil prices appear to be the result of speculation in the oil markets (and the US dollar devaluation). Oil companies don't set the price, the open markets do. My understanding is the merchantile exchange was created just for that purpose, for companies producing (pumping) oil or refining oil, as a common place to buy and sell. The price of oil (about 50%) is used in determining the wholesale price that gasoline is sold for. Therefore, as oil rises, gasoline rises.

Now add the speculators (traders). These so-called investors don't produce nor refine any oil. They only trade in the merchantile exchanges as a hedge against inflation. In doing so, they create a virtual demand (that doesn't really exist), and in doing so, drive the prices up. When the prices go up, we pay at the pump!!

The global demand has gone up over the years, but these spikes in prices have nothing to do with demand. Even in the U.S., demand has been falling as people have cut back on their driving. The current oil prices have nothing to do with supply and demand. If Saudi Arabia were to pump even more oil, it would just have to be stored as there wouldn't be any buyers for it, today.

That's why we need to get speculators out of these markets. Open markets is good, but this kind of crap is just costing us bank for no good reason.

FF
Click to expand...

Don't forget that a good way to eliminate the speculators is to allow us to use our own resources. So if they eliminate the government intervention they we do have a free market which eliminates specuatlion. This would also take away the effect of the falling dollar. According to most economist the falling dollar and speculators are making up over 50% of the barrel price. Of course not have trillions of unfunded debt and fed intervention would help the falling dollar more.
 
The politicians clamouring for reductions in greenhouse emissions should be jumping up and down with joy as oil prices climb.
 
lukeownzu said:
1$ a gallon the profits were probably 2%, so following his logic, I said that he claims that they now get over 300% more profit, and he said yes.
Click to expand...
Actually, last quarter oil companies profits were at about 10%, which is very reasonable. Many other industries have a higher profit margin.

The rising cost of oil can be blamed on three different things, and profit simply isn't one of them.

Some people blame it on speculation. This appears to be a bogus argument. Speculation doesn't create long term rise in prices in the amount that we have seen.

Other people blame it on supply and demand. They claim we have reached peak oil. They say supply is going down, while demand is going up. This has been debunked pretty well. Supply is not going down, and some estimates actually show that the demand is decreasing, which should result in falling oil prices.

And of course there are the people around here who blame the rising price on a devalued dollar. This argument seems to have the most validity. You can compare the price of oil over time to the price of other commodities over time (such as gold and silver) and you will see that they follow a similar trend. This is highly indicative of a devalued currency.


Of course, you should research all three of these causes yourself, because it is likely all three play a role to some extent.
 
brandonyates said:
Actually, last quarter oil companies profits were at about 10%, which is very reasonable. Many other industries have a higher profit margin.

The rising cost of oil can be blamed on three different things, and profit simply isn't one of them.

Some people blame it on speculation. This appears to be a bogus argument. Speculation doesn't create long term rise in prices in the amount that we have seen.

Other people blame it on supply and demand. They claim we have reached peak oil. They say supply is going down, while demand is going up. This has been debunked pretty well. Supply is not going down, and some estimates actually show that the demand is decreasing, which should result in falling oil prices.

And of course there are the people around here who blame the rising price on a devalued dollar. This argument seems to have the most validity. You can compare the price of oil over time to the price of other commodities over time (such as gold and silver) and you will see that they follow a similar trend. This is highly indicative of a devalued currency.


Of course, you should research all three of these causes yourself, because it is likely all three play a role to some extent.
Click to expand...

In contemplating all of these issues (and presumably considering our future responses) we have all become speculators.
 
Get rid of the Department of Energy. It generates no energy. Deregulate. Allow competition. Avoid taxing the industry. Resist temptations to price fix.
 
This is wrong, the biggest thing driving oil up is the US dollar.

Speculation and supply and demand are factors but nothing compared to the dollar.

fr33domfightr said:
The high oil prices appear to be the result of speculation in the oil markets (and the US dollar devaluation). Oil companies don't set the price, the open markets do. My understanding is the merchantile exchange was created just for that purpose, for companies producing (pumping) oil or refining oil, as a common place to buy and sell. The price of oil (about 50%) is used in determining the wholesale price that gasoline is sold for. Therefore, as oil rises, gasoline rises.

Now add the speculators (traders). These so-called investors don't produce nor refine any oil. They only trade in the merchantile exchanges as a hedge against inflation. In doing so, they create a virtual demand (that doesn't really exist), and in doing so, drive the prices up. When the prices go up, we pay at the pump!!

The global demand has gone up over the years, but these spikes in prices have nothing to do with demand. Even in the U.S., demand has been falling as people have cut back on their driving. The current oil prices have nothing to do with supply and demand. If Saudi Arabia were to pump even more oil, it would just have to be stored as there wouldn't be any buyers for it, today.

That's why we need to get speculators out of these markets. Open markets is good, but this kind of crap is just costing us bank for no good reason.


http://www.nymex.com/index.aspx

http://en.wikipedia.org/wiki/Speculators


FF
Click to expand...
 
How high would gas prices have to be to keep you from the Ron Paul convention in St. Paul??
 
 
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