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Old 03-31-2007, 04:43 AM   #29
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Rusty, I hear what you are saying and agree with many of the concepts. I'm not sure that the commodity aspect of this industry is the major factor at work, however.

A few years ago, AT&T was pretty much the only game in town regarding long distance telephone service. Sprint, MCI and several others jumped in and suddenly there was competition and resulting price drops. Today, I pay less than half of what I used to pay for that service and the quality of what I get is better - and the overall demand is way up. Cable TV used to be the only game in town and the price continually increased. Today, after much legal wrangling, the phone companies and satellite companies deliver TV service and the price has stabilized or come down - while the demand has gone way up.

The consolidations in the oil industry have created, IMHO, several tiers of market controlling groups. We all know about OPEC. The next tier is the large oil companies. I admit that I don't have technical data to back up my opinion but I believe that there is more cooperation than competition among them. I think that the pricing we are paying at the pump today is driven far more by market manipulation (which includes larger speculators) than by the actual demand. The demand is going to continue to increase and if the price slowly and steadily rose, I'd have no problem believing that it was driven by that increased demand. The huge jumps, both up and down in the past year since Katrina tells me that demand growth alone isn't the only thing involved and that the other factors besides growth are having a greater influence.
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Old 03-31-2007, 04:56 AM   #30
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The commodity aspect of energy is quite real. Energy is traded on commodity exchanges such as the New York Merchantile Exchange (NYMEX), both at spot prices and as futures. I linked this earlier, but see this LINK as well as the posts on page 1 of this thread.

Insofar as your allegation of price fixing by the major oil companies is concerned, this has been investigated time after time by Federal and states' Attorneys General. How many cases of conspiracy have they identified, even with the political motivation some have had to grab the headlines by putting it to "big oil"??

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Old 03-31-2007, 05:06 AM   #31
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<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">Originally posted by chasfm11:
I think that the pricing we are paying at the pump today is driven far more by market manipulation (which includes larger speculators) than by the actual demand. The demand is going to continue to increase and if the price slowly and steadily rose, I'd have no problem believing that it was driven by that increased demand. The huge jumps, both up and down in the past year since Katrina tells me that demand growth alone isn't the only thing involved and that the other factors besides growth are having a greater influence. </div></BLOCKQUOTE>
That's how the commodities marketplace works. It's not solely demand-driven, nor is it solely supply-driven. Demand dropped with the dot.com bust and worldwide recession in the late 1990s - the result was $10/bbl crude oil. Supply was disrupted as Katrina shut down Gulf of Mexico production and severely damaged or destroyed many offshore production facilities and Gulf Coast refineries - the result was $70/bbl oil. If the oil companies could control pricing, I'll guarantee you that such swings wouldn't exist.

If supply was constant and demand was growing gradually faster than supply, then the stable increase in prices you describe would occur. The fact is, though, supply (real or anticipated) is changing daily - witness the $5/bbl jump in oil prices in 7 minutes when the rumor hit the market that a British invasion of Iran to rescue their sailors was imminent.

Big oil is one player in setting prices, but it's far from being the ONLY player.

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Old 03-31-2007, 07:07 AM   #32
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I understand the economics of supply and demand and I have watched cnbc enough to expect the rise and fall of prices due to speculation and geopolitical events. What I have a problem with is the gas stations and their pricing policies, I have watched as a station will receive a shipment of gasoline and set their price on the pumps, then see a change in the geopolitical climate and the station raises their price on the gasoline that is already in their tanks.
I have seen prices rise 4 or 5 times between gasoline deliveries, and the only explanation I get from the gas station attendant is that the distributor sets the prices. They always go up fast but always come down slowly.
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Old 03-31-2007, 07:26 AM   #33
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Regular went up to $2.69 yesterday. An 8 cent jump from the day before here in Port Richey,Florida.

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Old 03-31-2007, 07:27 AM   #34
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Lets stick with supply and demand. When oil prices were high and near $70.00 a barrel, everybody except the consumer was happy. Oil companies said it is a supply and demand market and they have no control. Then prices drop below $60 a barrel, producers and oil companies get nervous and production is cut to slow supply to control the cost of oil and drive it back up over $60. So do not tell me the oil industry can not manipulate the market and the cost. When it is good for them, they can not do anything to control cossts, when profits are threatened by lower costs, they shure were able to do something to drive up the price. The only loosers here are the consumers. Our economy is quickly going down the toilet and the big companies do have a responibility to the consumer to help ease the burden. If the consumer continues to be SQUEEZED eventually it is going to negatively effect the big companies because we are the ones who support them by spending the money.
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Old 03-31-2007, 07:53 AM   #35
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I would love to take all of these posts describing the "real" reason" for escalating gas prices and have a Senior in economics analyse them. I just bet he/she would 'wet' their undies with laughter.
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Old 03-31-2007, 08:13 AM   #36
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The following is from the British newspaper, The Economist:
<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content"><span class="ev_code_RED">National oil companies</span>

Really Big Oil

WHEN activists, journalists and others speak of "Big Oil"¯, you know exactly what they mean: companies such as Exxon Mobil, Chevron, BP and Royal Dutch Shell.
.
.
Yet Big Oil is pretty small next to the industry's true giants: the national oil companies (NOCs) owned or controlled by the governments of oil-rich countries, which manage over 90% of the world's oil, depending on how you count. Of the 20 biggest oil firms, in terms of reserves of oil and gas, 16 are NOCs. Saudi Aramco, the biggest, has more than ten times the reserves that Exxon does. Those with misgivings about oil"”that its price is too high, that reserves are running out, that it damages the environment, that it is more a curse than an asset for countries that produce it"”must look to NOCs for reassurance.
.
.
.
</div></BLOCKQUOTE>

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Old 03-31-2007, 11:32 AM   #37
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From the 300,000 foot level, it all boils down to this: Worldwide, we have a growing demand for a finite, depleting resource. That means, over the long term, prices can do nothing but increase unless technically and financially viable alternate sources of energy can make up the shortfall. As a boss of mine used to say many years ago, "Boys, there ain't no magic here."

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Old 03-31-2007, 11:53 AM   #38
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If you want to see how prices compare across the nation check this linkout.
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Old 04-01-2007, 06:17 AM   #39
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How much is to much? Prices here in Ontario average over $4.50 per gallon , $4.00 per US. gallon. Last year people stopped driving when prices reached $ 7 per gallon.

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Old 04-02-2007, 08:01 AM   #40
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<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">Originally posted by Stevegeorgetown:
How much is to much? Prices here in Ontario average over $4.50 per gallon , $4.00 per US. gallon. Last year people stopped driving when prices reached $ 7 per gallon.

Steve </div></BLOCKQUOTE>I was in New Brunswick and Nova Scotia last summer (Aug. & Sept.). We paid 3.65 to 3.70 USD/gal. I checked off and on during the year and never saw it much higher. Was it really that bad in Ont.?
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Old 04-02-2007, 04:32 PM   #41
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Yes for a short time. It was after one of those terrible hurricanes I think.


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Old 04-02-2007, 04:54 PM   #42
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<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">Originally posted by Stevegeorgetown:
Yes for a short time. It was after one of those terrible hurricanes I think.


Steve </div></BLOCKQUOTE>2006 was a year of no hurricanes, contrary to the super pundits. The nasty ones were in 2005.
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