About Oil Prices

Toddacanda asked:


Like before 2005 when Katrina hit there were hurricanes in the Gulf that had little or no impact on oil prices but now in a post-Katrina world just the threat of a major hurricane in the Gulf makes the oil prices go up like crazy!

Rhonda

robert f asked:


The national, average, oil, price this summer will probably be at least $4.00 per gallon. Do you the presidential candidate’s have any solutions? Time magazine said gas prices will continue to increase until the price becomes so high that investors start invested in alternative forms of energy. After that, gas prices will decrease…
$7.00 per gallon of gas? Wow. If the price of gas is $7.00 per gallon then how I am supposed to afford anything?

Don

Muna wa Wanjiru asked:


Everyone likes to be warm during the winter months. For this purpose there are many items that can be used. Currently the most used commodity is that of fuel. The current heating oil prices are there of are based on the how the world needs oil.

This supply and demand creates the current heating oil prices. Sometimes these prices rise very sharply. To compensate for this, consumers will need to find alternatives to using fuel. Some of the alternatives are electricity, fossil fuel and offshore oil drilling.

Even with these alternatives the current heating oil process can rise quickly. The countries that produce and mange the oil distribution will have the knowledge of what to do to stabilize these prices.

So how can we cope with these current heating oil prices? There is no easy answer. This is because we use the fuel oil for everything. Therefore when these prices rise we feel it. The best that can be done is to find other sources of oil. While this is still very expensive solar energy is a clean and good source of pure energy.

There are many other small ways that we can reduce the massive heating bills we face during winter. These however should be looked into before the weather turns cold. While they are not the best means to stave off the current heating oil prices for winter they can do they share in the retaining of heat in the house or business premises.

Even though the current heating oil prices are always fluctuating due to seasonal changes experts in the oil price field have some advice to give worried consumers. The advice has to with the increase in price that seems to occur every winter with regards as to how the current heating oil prices change. These experts inform us the reason for this price hike is temporary as the oil companies are trying to cope with the high demands made on them.

The experts state the reason for the price hike being the increase in demand. As the demand is more than the produced amount of oil required the oil company needs to increase their production volume.

For this demand the oil companies will ask for a higher price payment. The governments of those importing countries will then pass that price increase onto the customer. This is how the current heating oil process change and we the consumer are caught between these price fluctuations.

If we can be patient these prices will become stabilized once more. The trend to increase the current heating oil prices will decline and we will just need to pay the normal amount of money on our bills.

Craig

McGoo asked:


In early May, the average price $ per gallon in the U.S. was under $3 per gallon. Right now, with oil back at that previous level, gasoline is still hovering around $4 per gallon. Tell me that Exxon Mobile is not gouging us.
Go Broncos…Theoretically, yes that is the way it is SUPPOSED to happen but if that were the case, then why does the price at the pump go up seemingly immediately when the price of oil goes up at the end of the trading day in Saudi Arabia?
Rocker & nj2pa…national average still lists 3.89/gal. Diesel fuel has declined 60 cents a gallon here in Michigan over the past 2 weeks yet unleaded actually went up 2 cents per gallon within the past two weeks. We are at 3.88 along the West coast of Michigan. Traverse City South to Muskegon.

Calvin

Mick Madigan asked:


Who in their right mind would consider a Coal-To-Liquid Technology(CTL) investment when we have plenty of oil supplies? You should. Because we dont.

Yes, oil prices are high. But crude production has peaked. Output in all major fields is fixed, or is declining. New oil fields are smaller and harder to get at, and extraction techniques are getting more difficult and expensive. Energy demand around the world is rocketting. Oil prices are rising steeply. Increasing political unrest means uncertain supplies, and the markets hate uncertainty.

That suggests oil substitute fuels like liquid coal will be needed soon. The obvious oil substitutes-liquid natural gas, oil sands, biofuels, fuel cells, renewable sources and nuclear power can’t meeting total demand at a reasonable cost for the next decade at least.

What is likely to be the solution? Large supplies of coal. Combined with a long-used proven technology which can convert coal into a clean pumpable liquid with low burnoff emissions- CTL. Both are now readily available at competitive costs.

There are vast available coal deposits in the USA, China, India ,Canada, and Australia, allowing enough liquid coal for scores, maybe hundreds of years, even if demand accelerates.

Note that the Middle East has declining oil and virtually no coal.

Once oil prices rise above $35 a barrel, coal-to-liquid technology providing liquid coal at $20-$30/barrel begins looking very attractive as an oil alternative. Presently oil prices remain above $60, show no sign of descending and could peak at $100-$150 a barrel - IF available from anywhere. This would potentially lead to gasoline at $8/gallon at US pumps and widespread recession.

Other technologies such as coal gasification and gas-to-liquids (GTL) are currently cheaper than coal liquefaction and so some companies afraid of a downturn in oil prices and seeking the best current investment returns may be tempted by those instead.

However China and the US-now the two major powerhouses of world industry-are likely to opt for liquid coal on the basis of huge cheap domestic supplies and the incentive of non reliance of volatile outside markets.

China is an fast awaking industrial giant. They need vast amounts of energy badly for electricity for factories homes and schools, have little oil but lots of coal. Trouble is, the coal is in the north, and industrial developments in the south, China is huge and the roads and railways are presently poor.

It’s hard to transport solid coal then burn it and create lots of pollution, but much easier and ultimately cheaper to pump clean liquid coal by pipeline.

The government there doesn’t argue or debate issues with the public-with collaboration with Royal Dutch Shell, they have already started to build a liquid coal plant in the Ningxia region, with three more on the way.

Also, consider the car. Demand is growing worldwide. But so are demands for cleaner more efficient vehicles. Liquid coal can be used to make both gasoline or diesel fuel. But the most ecofriendly efficient car of the near future probably WON’T be a electric-gasoline hybrid but an electric-diesel hybrid. This will have similar refinement and performance but far better overall miles per gallon, lower emissions.

Also note that China and India plan to break into the car production market and will be in a powerful position to provide cheap clean fuel-efficient cars to their own vast markets and overseas.

Extra pressure on car manufacturers (dependent on crude oil and suffering from high production costs) and already hovering on the brink of bankruptcy in the US? Or to switch production heavily towards hybrids?

Liquid coal - way to go!

Present coal plants can’t and wont use oil for a fuel- burn profile is wrong and way too expensive. However any existing coal plant that presently burns coal will be able to burn liquid coal too. Efficient, kinder to the environment, no sulfur, mercury or ash AND less smells dust and fumes.

Expect politicians to push CTL and give it an easy tax ride for the same reasons they are presently favoring biofuels like ethanol:

(1) there’s the lure of a vote winning rural job-creation side from an industry otherwise viewed as declining.

(2) Many Western voters and investors are getting worried about the security implications of depending on their energy supplies from increasingly unfriendly or unstable nations.

(3) Many environmentalists, given the right conditions (e.g. high carbon capture at CTL plants, alternatives like nuclear energy), are likely to warm to CTL because of its overall cleaner profile.

Many firms are already investing in CTL. Forget oil and other oil substitutes for the moment. Look into it now if you are interested, and look for CTL specialists like Headwaters, Syntroleum Corp, and Rentech, and particuliarly, the highly experienced South African company, Sasol.

Shirley

Daniel Yergin asked:


With eyes focused on whether and when oil breaks through the $100 barrier, it turns out that $100 a barrel is really $99.04, at least in terms of the all-time record, according to Cambridge Energy Research Associates (CERA).

CERA, an IHS company (NYSE: IHS), finds that the inflation-adjusted high of $99.04 in today’s dollars, $39.50 in 1980 dollars, was reached during the spring of 1980 when geopolitical turbulence in the Middle East, and Iran in particular, created acute uncertainty about the reliability and adequacy of oil supplies from the world’s most important oil exporting region.

“Breaking the historical high of $99.04 per barrel will be a landmark in itself,” said James Burkhard, managing director of the Global Oil Group at CERA. “It will certainly have psychological impact since it will intensify momentum for the market to hit $100 per barrel. And it will have a concrete effect since it pushes the world economy deeper into uncharted territory-the oil price range which can contribute to an economic slowdown.”

CERA’s calculation of $99.04 is based on the April 1980 nominal average posted price of $39.50 per barrel for West Texas Intermediate. This is a monthly average price since, at the time, there was no crude oil futures market to provide a daily price. Crude oil futures trading did not begin until 1983. The translation of the nominal prices into 2007 U.S. dollars is based on the U.S. Consumer Price Index using annual averages.

“There are different indexes and methods that can be used to adjust prices to inflation,” Burkhard said. “These methods can result in prices that are lower or higher than our $99.04 per barrel calculation. However, we believe that using an annual average inflation rate provides the best basis for comparison between 1980 and 2007, and that is what makes $99.04 the benchmark for today.”

$100 OIL: WHAT IT MEANS

The oil price in recent weeks has taken on the trappings of a sporting record that once seemed untouchable. Now it is broken with such regularity that what has historically been viewed as a distant prospect-$100 per barrel oil-is in sight. The world has never experienced a triple-digit oil price. The all-time inflation-adjusted high was in April 1980, when, CERA calculates, crude oil hit $99.04 per barrel in terms of 2007 US dollars. The broader significance of a $90-$100 price range is that it highlights in dramatic fashion how different the oil market environment, and indeed the world economy, is today compared with the past two decades.

Daniel Yergin, chairman of Cambridge Energy Research Associates, made the following statement with regard to the rising price of oil:

“The oil market is demonstrating both ‘fright and flight.’ Instead of the proverbial ‘flight to the dollar’ in times of economic uncertainty, we’re now seeing ‘a flight to oil.’ The strengthening of oil since August is responding, in part, to the weakening of the dollar. For the last few years, the force behind rising oil prices has been strong global economic growth. Over the last several weeks, the market focus has shifted to economic weakness in the United States. At the same time, tension over Iran’s nuclear program will continue to recharge anxiety on a continuing basis in the oil market.

Historical assumptions about the dynamics of oil prices, demand, supply, and the global economy have given way to a new, but still unfolding, paradigm. This new paradigm is not without risks and dangers. The world economy can withstand the headwinds of very high oil prices much better than in the past, but prices of $90 to $100 push geopolitics and the economy deeper into uncharted territory. High oil prices will tend to exacerbate geopolitical tensions in the short term and create a sharper divide between the winners and losers of a very high oil price environment.

Today’s price levels bring us farther into the range where the oil price can contribute to an economic slowdown. The effect on economic and oil demand growth depends on the duration of $90-$100 oil. Although not widely recognized in the face of the attention on the record, for 2007 the year-to-date annual average for West Texas Intermediate is just $70- not $100.

Burkhard continued: “The reaction to oil prices varies much around the world, owing to differences in income levels, taxes, subsidies and the relative use of oil in a national economy. But, if oil prices were to average around $110 for six months or more, it would increase the world economy’s vulnerability to a serious downturn of the early 1980s’ type. But even prices in the $90s have negative impacts on the economy and consumer spending. We just haven’t seen the full effects yet, for the year-to-date annual price for oil this year has been $70- not $100!

“CERA’s Break Point scenario (as described in CERA’s Dawn of a New Age: Energy Scenarios to 2030 study) demonstrates that $120-plus prices would not only have major economic impact, but would lead to much stronger conservation policies among consuming countries and would greatly accelerate innovation and efficiency and a move away from oil, even in transportation.”

High oil prices in the 1970s set the stage for the most severe global downturn since the Great Depression. Indeed, the high prices of 1980 were at the beginning of the worst three-year period of economic growth of the past four decades. For the oil price to potentially play a similar role in a significant economic slowdown, prices would have to average from $100 to $120 per barrel for six months to a year. To be sure, negative economic repercussions on consumer spending and economic growth will also materialize even at prices in the $90s range. Also, of course, oil prices do not exist in a vacuum, but will interact with other economic developments, particularly the unfolding consequences of the credit crunch.

The jump in price from $75 at the beginning of September to the mid-$90s in early November highlights the dominant sentiment driving the oil market-that oil supply will be unable to keep pace with rising demand. The market may hit prices above $100 unless signs emerge that the oil price has reached a level that is reducing economic and oil demand growth. However, if oil demand growth hits the brakes or if supply anxiety eases, we could see a steep fall in price.

Daniel Yergin added: “Oil prices at this level will themselves be a negative in conjunction with everything else going on in the U.S. economy. While $60 or $70 oil had little effect on the economy, that does not mean the same will hold true for $100 oil. One point is obvious - we’re much more likely to see an impact on demand at this higher price level, especially in the context of a slowing economy.

“A continuing downslide for the dollar will put oil on an upslide.”

Albert

Ernie Fitzpatrick asked:


Who would have believed $75 a barrel oil, much less $100? How about $125 or $150 a barrel? Just how high can oil go before it crashes the economy- WORLD WIDE? I think we’re about to see. There will come a tipping point and when we reach it you can’t simply drop the price and go back. Too much damage will have been done.

Oil prices spiked to a record $117.40 a barrel after a Japanese oil tanker was hit by a rocket near Yemen and militants in Nigeria claimed two attacks on pipelines. The 150,000-ton tanker Takayama was attacked about 270 miles off the east coast Yemen coast in the Gulf of Aden while it was heading for Saudi Arabia, its Japanese operator, Nippon Yusen K.K., said in a statement.

Isn’t it interesting that we continually find “reasons” that oil must go up!

There’s never a reason it should go down! Everything goes up in today’s world! Oh yeah, there is the housing thing and the falling US Dollar!

Adding to the worries were claims Monday from the main militant group in Nigeria’s restive south that it had launched two more attacks on oil pipelines in the region. There was no immediate confirmation.

Last Friday, oil prices rose to touch $117 for the first time after an attack on a Royal Dutch Shell PLC pipeline by the Movement for the Emancipation of the Niger Delta. Shell confirmed a pipeline leak that it said appeared to have been caused by explosives. It said it had isolated the line for repairs and that a small quantity of production had been shut.

An OPEC official that the group isn’t likely to increase production also supported prices on Monday. So let inflation continue to rise til it totally chokes the world wide economy.

Attacks since early 2006 on Nigerian oil infrastructure by the militant group have cut nearly one-quarter of the country’s normal petroleum output. Nigeria is a major supplier of oil to the U.S. Pervan said incidents such as the pipeline and tanker attacks were “one-off” issues that didn’t really change the market. “They’re not fundamental, they’re not going to be sustainable,” he said.

But the prices still rise now don’t they! Until the goose that lays the golden eggs is killed- which might now be too far away. And then we might see oil at $50-$75 a barrel again.

Helen

Graham H asked:


Petrol tax is charged as a percentage. That means that every time the price of oil goes up the government receives more tax for it, so why do they need to raise other motoring taxes?

In fact they should even be able to cut the percentage of fuel tax.

And North Sea oil used to be expensive because it is offshore but now the cost of production has shrunk as a proportion of the sales price so the tax revenue on the oil and on the profit has increased.

When are we going to get the benefit of all this increased income?

Theodore

Rakesh P asked:


The prices of man-made fibers intermediates were largely governed by the volatile crude oil values in 2006. Oil prices rose significantly by 18-20% during the year. This was over and above the 36-40% increase recorded in 2006. The surge is attributed to geo-political issues and unrest in the middle-east, supply disruption in Nigeria and speculation over sanctions on Iran who is pursuing a nuclear programme despite global opposition.

Naphtha, the basic feedstock for all fiber intermediates, mirrored the movement of crude oil prices. They rose by 15% during 2006 in Asia and Europe. In Asia naphtha averaged US$582 a ton. This rise was clearly reflected in prices of olefins and aromatics which were occasionally in short supply. Prices of fiber intermediate raw material via ethylene, Paraxylene and propylene rose in tandem with energy prices. During the year prices of ethylene rose 24% and Paraxylene by 25%.

The significant rise in feedstock prices had an impact the downstream polyester intermediates in Asia but not in Europe. Prices in the polyester segment rose significantly. PTA prices rose 95. in Asia. MEG prices were up 3%. This led to changes in the polyester fibers and yarns segment. However, price rise was limited due to weak demand from consumers. PSF and PFY prices rose by 5% in Asia and by 3% in Europe.

They average US$1.24 a kg of PSF in Asia and Euro 1.45 a kg in Europe. The rise was significant in the third quarter of 2006 both in Europe and Asia. They touched a high of US$1.39 a kg in Asia and Euro 1.55 a kg in Europe in September 2006. However, as the year came to a close, PSF prices were ruling at US$1.31 a kg in Asia and Euro 1.53 in Europe.

Georgia

Rakesh P asked:


Crude oil prices have been capturing many news headlines worldwide, be they are falling or rising. Crude oil has been demonstrating a sense of its importance to global consumers for the past couple of years. In the past, many economies had failed to adeptly face crude oil price shocks of 1974 and again in 1979. This time around the shock was building up steadily. Most economies, developed and developing, had the knowledge of this built-up and had prepared to face this shock.

Between 2001 and 2004, the OPEC Reference Basket of crude oil was in the range of US$20 and US$40 a barrel. In 2006, it rose to over US$70 a barrel before receding to current level of US$55 a barrel. Though it should be noted that in real term these crude oil prices are still below those heralded in the early 1980s, when the crude oil basket had reached US$85 a barrel at today’s prices. In July 2006, the US light crude oil touched an all time high of US$78.40 a barrel. Analysts and experts, both from industry and commodity investors, had predicted crude oil to even touch US$105 a barrel, if the pace of increase persisted.

The crux of the rise in crude oil prices is the mismatch between supply and demand of refinery products. Refining capacities have not commensurately kept pace with the rise in demand. Crude oil, as such, was in ample supplies and this was time and again asserted by OPEC itself. The OPEC was also determined to increase output if crude oil prices continue to spurt. It did so in 2006 to rein in rising prices. Now that crude oil prices have touched the year’s low, and have lost almost 30% of its peak, OPEC have cut output in November and have indicated that crude oil output will be further cut if the current free fall in crude oil prices continue

Margaret