What Happened to Greedy Oil Companies and Speculators?

[HBarlow]

Several months ago some were ranting about the evil greedy oil companies and evil greedy crude oil speculators who were driving the price up. Some of the same haters could not, would not, accept the fact that the high prices at the pump were caused by the price of raw crude oil at the well head.

Now that American and world economies have weakened, demand for petroleum products have declined, and the price of crude has dropped, the prices of gasoline and diesel fuel at the pump have returned to a more affordable level.

Is that because the evil greedy oil companies have decided to give up their profits and operate as charities . . . or because Wall Street speculators in the future price of oil have decided to drive the prices down and loose money instead of making a profit?

Could it be that the high price of gas and diesel was caused by simple supply and demand as many of us knew and several of us tried to explain?

 

[BigPapa]

I'll hand it to you Harvey, you're a for real, sure-shootin' Texan. You just love a good scrap.



Do you really want to go here?



If the price of fuel/gas is as dependent as you say on the price of a barrel of crude, then why is it that a year ago crude was @ $10/barrel higher than today and gas was . 10 cents cheaper and diesel was . 40 cents cheaper than today?



Scott

 

[HBarlow]

Same answer as then.

Supply and demand. There are many variables that effect the price of diesel at the pump. The demand for home heating oil in the northeastern states is now on the increase as winter is just around the corner and those folks are having their heating oil tanks filled.

Instead of looking for another silly reason to convince yourself the temporary high price was due to greedy big oil and speculators, why don't you explain why the greedy oil companies and speculators decided to start losing money?

 

[EBung]

Tell me why then at $70 a barrel OPEC had a EMERGENCY meeting with reducing production by 2. 5 million barrels a day as the only topic? Yeah demand is down sure but if you dont think they reduce production to create shortage you are out of your mind. The speculators pulled their money out of oil and that also made the price drop. OPEC has their finger on the volume knob and can do whatever they want. They're not greedy at all they just like buildin islands wherever they think is a good spot in the oceanEver heard of Dubai?

 

[JDiepstra]

Same answer as then.



Supply and demand. There are many variables that effect the price of diesel at the pump. The demand for home heating oil in the northeastern states is now on the increase as winter is just around the corner and those folks are having their heating oil tanks filled.



Instead of looking for another silly reason to convince yourself the temporary high price was due to greedy big oil and speculators, why don't you explain why the greedy oil companies and speculators decided to start losing money?

Came on now, you know it is possible that there is more than 1 reason the price is down. In case you haven't noticed, the ENTIRE market is down right now. If you weren't aware of this I would stop what you are doing and open one of your retirement account statements now cause you may have to change your standard of living!



OPEC has made multiple cuts to the supply of oil, in a self-admitted attmept to keep the profits up.



No, the speculators are not losing money on purpose, but, when you SPECULATE, sometimes you lose money! I would imagine most of the big time speculators got out while the getting was good, and the small change guys who were just trying to play along, got screwed, again.



Also, the price of oil is now less than half it was at its peak. When oil was $60 a barrel a year and a half ago I was paying 2 something a gallon. Now it is not far from that and I am paying $3. 60.



I enjoy your posts HB and agree with you most of the time, but this time I am saying that you are not looking at the entire picture.

 

[BarryG]

Could it be that the speculators dont have the cash (due to tightened credit, iirc speculators are highly leveraged) to do much specualting on oil and that is the very reason that it is down. (in addition to lighter demand though that may be a wash with less output).

 

[Gary - K7GLD]

Energy demand is down a bit over 4% - yet crude oil prices have dropped an out of proportion 57%! Virtually EVERY major financial analyst has placed much of the past inflated crude oil costs at the feet of crude oil speculators - INCLUDING some working for the very financial institutions being bailed out by use of taxpayer $$$.



How do YOU feel about your own tax dollars being used against you, by bailed-out financial institutions who use part of that money to speculate in oil thru the commodities market, driving up the cost YOU the taxpayer pay for fuel at the pump?



NOW, as the speculators have seen the handwriting on the wall, and abandoned crude oil as a stable investment hedge, and despite the mere 4% drop on that sacred "demand", the price of crude oil has dropped well over 50%.



And some are still so dug into the mantra of "supply and demand", and "Righteousness of uncontrolled Capitalism without a conscience", they STILL refuse to see or admit the obvious!



Debate with the die-hard supporters of the above is as pointless as trying to teach a pig to fly!



Even now, a story from today's financials has posted THIS:



Oil prices fall as INVESTORS eye weak demand: Financial News - Yahoo! Finance



Notice the minimal comment related to supply and demand - focusing instead on the REAL underlying cause of (both past, and present) energy price manipulations - SPECULATORS!



Here's a pivotal quote:

"Oil is currently being driven by the present financial crisis and not by OPEC cuts," said its research report. "As oil prices are being pressured by the credit squeeze and a lack of liquidity, they may stay largely detached from supply factors for several weeks to come. As a result, OPEC is currently struggling with factors beyond its control. "

Fuel demand rises and falls in relatively slow and easily predicted cycles - but SPECULATORS create uncontrolled and unpredictable fluctuations in fuel costs to the consumer that is based purely on personal profit and greed - with precious little regard for the end effect upon our nation and the world - and a large part of what we are seeing in today's world economy is directly related to the uncontrolled and runaway increases in energy costs!



Now, naturally, some of the "Runaway Capitalism" supporters here, will quickly dismiss and disregard the above news article as "slanted and flawed" - and from a "disreputable source" - just as they have with all other reports that challenge their flawed ideology...



NO, I don't intend any further involvement in this thread - past experience has shown that challenging the thinking of some like the originator of this thread immediately degrades into personal abuse - and I always remember the old saying:



"Never wrestle with a pig - you'll BOTH get dirty - but only the PIG enjoys it!"



.

 

[JDiepstra]

Energy demand is down a bit over 4% - yet crude oil prices have dropped an out of proportion 57%! Virtually EVERY major financial analyst has placed much of the past inflated crude oil costs at the feet of crude oil speculators - INCLUDING some working for the very financial institutions being bailed out by use of taxpayer $$$.



How do YOU feel about your own tax dollars being used against you, by bailed-out financial institutions who use part of that money to speculate in oil thru the commodities market, driving up the cost YOU the taxpayer pay for fuel at the pump?



NOW, as the speculators have seen the handwriting on the wall, and abandoned crude oil as a stable investment hedge, and despite the mere 4% drop on that sacred "demand", the price of crude oil has dropped well over 50%.



And some are still so dug into the mantra of "supply and demand", and "Righteousness of uncontrolled Capitalism without a conscience", they STILL refuse to see or admit the obvious!



Debate with the die-hard supporters of the above is as pointless as trying to teach a pig to fly!



Even now, a story from today's financials has posted THIS:



Oil prices fall as INVESTORS eye weak demand: Financial News - Yahoo! Finance



Notice the minimal comment related to supply and demand - focusing instead on the REAL underlying cause of (both past, and present) energy price manipulations - SPECULATORS!



Here's a pivotal quote:







Fuel demand rises and falls in relatively slow and easily predicted cycles - but SPECULATORS create uncontrolled and unpredictable fluctuations in fuel costs to the consumer that is based purely on personal profit and greed - with precious little regard for the end effect upon our nation and the world - and a large part of what we are seeing in today's world economy is directly related to the uncontrolled and runaway increases in energy costs!



Now, naturally, some of the "Runaway Capitalism" supporters here, will quickly dismiss and disregard the above news article as "slanted and flawed" - and from a "disreputable source" - just as they have with all other reports that challenge their flawed ideology...



NO, I don't intend any further involvement in this thread - past experience has shown that challenging the thinking of some like the originator of this thread immediately degrades into personal abuse - and I always remember the old saying:



"Never wrestle with a pig - you'll BOTH get dirty - but only the PIG enjoys it!"



.

I always appreciate a post from Gary.

 

[BigPapa]

NO, I don't intend any further involvement in this thread - past experience has shown that challenging the thinking of some like the originator of this thread immediately degrades into personal abuse - and I always remember the old saying:



"Never wrestle with a pig - you'll BOTH get dirty - but only the PIG enjoys it!"



.

Come on, hit him again Gary... ... . :-laf



Scott

 

[GHarman]

IMHO, I dont believe that the "speculators" are out of the market at all! Its called shorting! They make money going up and going down. They can also loose it quite readily.

How about Gold? It's value is an inverse prime indicator of market conditions. It is down also. A situation that is contrary to a normal reaction to a financial meltdown. It is a manipulated market and the simplified supply/demand scenerio is not applicable.

I believe that this situation we are in is alot more complicated than we like to admit. Greg

 

[EBung]

I just hope Wall Street finally gets a clue and quits trying to make a buck from doing absolutely nothing except BSing. I was just bummed none of them jumped to their death like in the 20s, but hey the crash aint over yet.

 

[Vaughn MacKenzie]

IMO speculation has as much or more effect on oil prices than actual demand.

 

[HBarlow]

Gary, as usual you find sources that report opinions and slanted explanations that agree with your low opinion of capitalism and America. I have chased down your sources before, when you even cite them, and found them to be either completely bogus or as trustworthy as ABC, CBS, CNN, NBC, MSNBC. I don't accept your numbers or claims because I know you are not objective and seek only to prove your life-long labor union "we hate big business" point of view.

As I began this thread: "Can anyone tell me why oil companies (and speculators) are now willing to lose money by selling gasoline and diesel at a loss?

Don't any of you recognize that the price of gasoline and oil rises and falls primarily with the price of crude oil not increased profits by oil companies or by the efforts of speculators?

Of course demand is down and of course OPEC met in Vienna to agree to reduce production in order to drive up the price of crude. What would any thinking person expect them to do? The ragheads in the desert have only one source of income . . . that is crude oil. They are not in the charity business any more than oil companies or Wall Street.

Some of you have been listening to lying politicians making false claims of "taking care of the middle class" so long you have no clue how our economy works.

 

[RRees]

It surely couldn't be a coincidence.

 

[JDiepstra]

Gary, as usual you find sources that report opinions and slanted explanations that agree with your low opinion of capitalism and America. I have chased down your sources before, when you even cite them, and found them to be either completely bogus or as trustworthy as ABC, CBS, CNN, NBC, MSNBC. I don't accept your numbers or claims because I know you are not objective and seek only to prove your life-long labor union "we hate big business" point of view.



As I began this thread: "Can anyone tell me why oil companies (and speculators) are now willing to lose money by selling gasoline and diesel at a loss?

Don't any of you recognize that the price of gasoline and oil rises and falls primarily with the price of crude oil not increased profits by oil companies or by the efforts of speculators?



Of course demand is down and of course OPEC met in Vienna to agree to reduce production in order to drive up the price of crude. What would any thinking person expect them to do? The ragheads in the desert have only one source of income . . . that is crude oil. They are not in the charity business any more than oil companies or Wall Street.



Some of you have been listening to lying politicians making false claims of "taking care of the middle class" so long you have no clue how our economy works.

When did speculators start to sell gas or diesel, and, where are you getting info from that says they are selling it at a loss? I imagine oil companies could be making even more PROFIT now, than they were before, since the price of oil has been cut over 50%, but the cost of diesel surely has not reflected that much of a drop!

 

[EBung]

So tell oh smart one how does our economy work? How does everything YOU own get transported to where you purchase it? Magnetic propulsion? Nope an oil burner! SO the huge rise in the cost of EVERYTHING that has happened in the last year had nothing to do with the doubling of fuel cost? And so Wall Street investors (speculators) dont lose money, is that what your saying? Huh thats a new one to me. $700,000,000,000 could be could be considered a loss no? I just hope this recession lasts about another 20 years maybe that will teach people to EARN there money and not invest in smoke in mirrors which is Wall ST.

 

[GHarman]

If you are considering cost vs profit, nothing beats the math. 1 barrel of oil (40 gallons to a barrel) @ $60. 00/barrel ($64 as I write this) equals $1. 50/gallon cost of crude. Gas price on average today is $2. 50/gallon with Diesel about $3. 00/gallon. The cost of refinement, transportation, distribution and Federal, State and Local taxes is on top of the $1. 50. The profit level picture for big oil hasn't changed, as I see it. Greg

 

[JDiepstra]

If you are considering cost vs profit, nothing beats the math. 1 barrel of oil (40 gallons to a barrel) @ $60. 00/barrel ($64 as I write this) equals $1. 50/gallon cost of crude. Gas price on average today is $2. 50/gallon with Diesel about $3. 00/gallon. The cost of refinement, transportation, distribution and Federal, State and Local taxes is on top of the $1. 50. The profit level picture for big oil hasn't changed, as I see it. Greg

$3???? I'm paying $3. 60.

 

[GHarman]

$3???? I'm paying $3. 60.

We pay about the same here by the house. We call it the "Mountain Tax". I usually try to buy my diesel fuel in town at a 60 cent/gallon savings but that is a 80+ mile round trip @ 20MPG so I gotta line up errands to make the trip worthwhile. Greg

 

[HBarlow]

If you are considering cost vs profit, nothing beats the math. 1 barrel of oil (40 gallons to a barrel) @ $60. 00/barrel ($64 as I write this) equals $1. 50/gallon cost of crude. Gas price on average today is $2. 50/gallon with Diesel about $3. 00/gallon. The cost of refinement, transportation, distribution and Federal, State and Local taxes is on top of the $1. 50. The profit level picture for big oil hasn't changed, as I see it. Greg

You are precisely correct and I am pleased to say we agree. That has been my argument from day one of this extended discussion . . . that the high price of gasoline and diesel fuel has been due to the high price of crude oil as you accurately calculated and explained it above, not to excess profits by the oil companies or due to the speculators involvement in the markets.

Now that the price of the main ingredient of gasoline and diesel fuel has dropped due to a significant decline in worldwide demand for crude oil, we are able to pay a more reasonable price for refined products.

The profit structure of the oil companies was not higher during the peak price period and is probably not lower now. The oil companies make a few cents per gallon after their expenses as you laid them out in your post.