Gas price question

[tommymac]

Was listening to the radio today and they were saying these rising prices are all due to the speculators and there hasnt been any actual decrease in oil output. So now that were paying alot more for this allegedly more scarce oil who is getting rich off of this aside from the oil companies?

[goof2]

There has been a reduction in oil output due to the problems in Libya, though nobody really knows how much the supply has been reduced so far.

http://www.reuters.com/article/2011/...7260SL20110307

There is also a certain degree of unrest in some other oil producing countries that could lead to further disruption in supply.

Some other factors are in place as well. The value of the dollar has been dropping recently which raises the price of all commodities for us. Then there is the nascent "recovery" that we are being told is happening which, if true, should also increase demand for oil while at the same time the world supply is stagnant or dropping.

Part of the price increase is due to speculators and part is due to factors outside their control. Regardless, I believe their speculation is sensible.

[Papa_Complex]

Correction: Saudi Arabia stated that they would ramp up production, to offset any reductions from Libya. In other words, no reduction in supply.

[tommymac]

Originally Posted by goof2

There has been a reduction in oil output due to the problems in Libya, though nobody really knows how much the supply has been reduced so far.

http://www.reuters.com/article/2011/...7260SL20110307

There is also a certain degree of unrest in some other oil producing countries that could lead to further disruption in supply.

Some other factors are in place as well. The value of the dollar has been dropping recently which raises the price of all commodities for us. Then there is the nascent "recovery" that we are being told is happening which, if true, should also increase demand for oil while at the same time the world supply is stagnant or dropping.

Part of the price increase is due to speculators and part is due to factors outside their control. Regardless, I believe their speculation is sensible.

Good info but that didnt answer my question as to whos getting this extra money were shelling out.

From what I had heard on the radio last week none o flibyas oil comes here, it all goes to europe and supposedly saudi arabia was bumping up output. Granted I am sure a lot has changed since last week, and who knows whats going to happen with these other countries.

[EpyonXero]

Originally Posted by Papa_Complex

Correction: Saudi Arabia stated that they would ramp up production, to offset any reductions from Libya. In other words, no reduction in supply.

However, the quality of the oil that Lybia produces is much better than the type that comes from Saudia Arabia and takes less work to refine. So even if SA is able to make up the difference, the price will still go up.

[Papa_Complex]

People who play the commodities market are the ones who benefit. They can also steer the price. For example one investor, in England, was alone responsible for oil hitting the US$100.00 per barrel mark for the first time. Why? Because he specifically paid that amount, because HE WANTED to be able to say, that he was the first person to pay it.

[goof2]

Originally Posted by tommymac

Good info but that didnt answer my question as to whos getting this extra money were shelling out.

From what I had heard on the radio last week none o flibyas oil comes here, it all goes to europe and supposedly saudi arabia was bumping up output. Granted I am sure a lot has changed since last week, and who knows whats going to happen with these other countries.

Libya's oil primarily goes to Europe, but if that supply diminishes the Europeans have to look elsewhere to make up that shortfall. Those purchases from other places create a ripple effect throughout the oil market. Saudi Arabia has said they would increase their production, but will not say by how much since it may aggravate other OPEC countries. At this point nobody really knows how much additional oil SA is producing.

As for the extra money most of it will be going to oil companies, or in the case of state owned companies like most in the Middle East it goes to the "state", otherwise known as the royal families or the people in power.

[tommymac]

I just want to know who to curse/direct my anger at when I am filling up

[goof2]

Originally Posted by Papa_Complex

People who play the commodities market are the ones who benefit. They can also steer the price. For example one investor, in England, was alone responsible for oil hitting the US$100.00 per barrel mark for the first time. Why? Because he specifically paid that amount, because HE WANTED to be able to say, that he was the first person to pay it.

The people who play the commodities markets right are the ones who benefit. The oil prices you see quoted are not what someone is paying to buy a barrel of oil immediately. The prices typically reflect a one month futures contract. That is why they call them speculators. They are buying oil for next month and speculating on what will be a good price. If they do it well they pay less than what the spot price ends up being next month. If they do it poorly they pay more.

They can also only steer the price to the point others are willing to follow. As prices have continued to rise the guy you mentioned from England looks pretty smart and may make some money. If prices hadn't risen, or end up falling he looks pretty dumb and looses some money.

[goof2]

Originally Posted by tommymac

I just want to know who to curse/direct my anger at when I am filling up

Unlike most other goods, with oil the people who stand to make money from the price increases aren't necessarily the same people affecting the price increases. Obviously with the OPEC countries that direct relationship exists, but in this case Saudi Arabia for example is acting contrary to making the most money.