About Oil Prices

TrojanFootballFan asked:


Apparently crude oil prices dropped to a four week low to $79.02/barrel. I want to know how it could affect a company I might potentially invest in.

Doris

Lavana James asked:


South Africans, together with the rest of the world, have been battered by rising petrol prices in the past 6 months.

With the recent financial turmoil in the most powerful economy in the world, however, we could very well see a drop in the global oil demand, hopefully translating into paying a whole lot less at the pumps.

Market volatility a sign of the financial turmoil on Wall Street

Crude oil prices have been volatile over the last couple of weeks and have added fuel to the fire of the current global economic meltdown.

In mid-September, crude oil prices leapt into triple-digit territory for a very brief period of time, largely due to the weakness of the dollar, associated with the demise of the biggest investment bank in the US, and the recent battering of the oil-rich Gulf Coast by two powerful hurricanes.

As consumers, each of us has felt the negative impact of rising petrol prices. It is not only the cost of filling the tank that is crippling, but the knock-on effect of commodity prices,  particularly spiralling food costs, that has left the vast majority of South Africans struggling to make ends meet.

Negative economic growth our biggest threat

With basics costs on the rise, South Africans will have to change their spending habits and this in turn will have a negative effect on the economic growth so vital to the future of our fledgling democracy.

All is not gloom and doom though, as early indications are that the demand for oil will be markedly less due to the global economic slowdown and this in turn will translate into cheaper petrol, lower food prices and generally a bit of relief for the hard pressed consumer, both locally and abroad.



Brent

Ryan Dube asked:


To understand the constant fluctuations of heating oil prices where you live, it’s important to understand what factors influence the price of heating oil where you live.

The Source of Heating Oil

Heating oil comes from sources both inside and outside the United States. Regardless of where it comes from, heating needs to be refined by refineries within the United States. The U.S. imports most of its oil from the Virgin Islands, Canada and Venezuela. From the refineries to our homes the oil takes an interesting trip through pipelines, barges, trucks, and even by train in some cases. Refineries must balance what type of product they produce based on season, because they can’t produce both gasoline and heating oil at the same time. For this reason, refineries store up heating oil for the colder seasons, however when gasoline demand is high, heating oil supplies at the beginning of the cold season are typically lower, driving prices up.

Why Heating Oil Prices Differ by Location

Many residents within the Northeast part of the country notice that home heating oil fluctuates even as you move from town to town. Often those differences don’t seem to make sense, however they are based on a number of factors that, when they are all taken into consideration, make perfect sense.

The overall price is determined by the cost to produce the oil, how much it costs to distribute the oil to that particular part of the country, the costs of refining, and a small markup by dealers. According to the department of energy, these additional costs are estimated at about 46% of the overall cost of heating oil.

Most of the differences that people notice from region to region mostly involve distribution and competition.

Distribution: Areas that are more rural and difficult to get to will experience some of the highest prices of oil, because the cost of delivering the oil is more significant. However those locations in the country that are actually nearby refineries or major pipelines often enjoy much lower oil prices.

Competition: Even though the dealer markup is small, when there is enough competition in a certain area among oil dealers, this markup may shrink and costumers will see somewhat lower oil prices than surrounding communities.

How to Save on Heating Oil

History teaches consumers an important lesson about heating oil prices. The most powerful weapon a consumer has to fight high heating oil prices is purchasing power. By finding alternate fuels, we can reduce the overall price of heating oil permanently. Several ideas include:

- Better insulate your home

- Buy more fuel efficient vehicles

- Heat your home with other fuels

- Avoid buying products made with petroleum products

In addition to consumers’ collective power to control demand, in the United States they also enjoy the power of a democracy. This means that consumers can direct their elected officials to make sure that alternative clean energies are researched and discovered. The only way the world will be able to detach from dependence on foreign oil, and the political and security ramifications that come along with that, is by changing how the country is fueled.

Visit CostOfOil.net for all kinds of information and resources about the current price of heating oil.



Eugene

Jeto T asked:


“How does the current increase in global crude oil prices affect tourism both here and abroad. Expound on the advantages and disadvantages of this on-going phenomenon.

Jerome

Musa Aykac asked:


Oil prices have risen again and this time it has been the biggest ever single gain. They jumped from $16.37 per barrel to an agonising $120. Not only will this have repercussions on investors, but it is yet again to set the daily living cost to a ridiculous rate including petrol, oil and diesel prices hitting the roof.

Back in July, when oil hit its all time high price of around $145 per gallon, panic struck, flights were being cancelled and people could not afford to drive. Airline such as XL even had to call it a day. But since then the price had steadily relieved its self and brought drivers alike some relief.

Analysts have been amazed at the shock of such a big inflation jump in one day. They blame this on the continuing crisis at Wall Street, and it looks as though we should tighten our belts, for a bumpy ride over Christmas and New Year. We have already seen 2 major companies on the brink of extinction AIG and Lehman Brothers, with AIG getting a last minute rescue from government authorities.

Monday’s record rise reflected a type of trading fluke. By this I mean that it could be classed as a phenomenon called the short squeeze.

Consumer rights groups are also having there saying, as they are suggesting that with no war threat, pipeline leak, or ship wreck, there should be no reason for the prices to take such a dramatic turn.

As the world is set for more financial turmoil, we can only see things getting worse by the day, as there is no foreseen drop forecast in the near future for oil. As a matter of fact, it is only set to increase, as the November contract also rose to $109.37 a gallon, which is an increase of $6.62.

Bad weather may be an important aspect in the hike of oil prices. Hurricane hit places in America have had there productive facilities brought to a halt, bringing more damage to offshore oil and natural gases.

So where does this continuing inflation leave the world? Well it could be said that equipment should be made more energy efficient, and not use as much petrol or diesel. The new hybrid cars have hit the market, but not yet to a global audience. Maybe the world should look at this avenue, and efficiently market it, as we will one day be short of oil and then can you imagine the prices?



Brenda

Diggity asked:


If they say that due to increase oil prices companies are moving production back to the states due to high shipping cost, how much do you think that will actually decrease the unemployment rate? (5.5% in May 2008)

Annette

G-unit asked:


Geez, what a coincidence? When oil prices have risen so drastically becuase of the “Iraq war”, American oil companies are making more money then ever.

Derek

Robert Thomas asked:


 

Are all the analysts still predicting a rise in crude oil prices? Which way should you bet on Oil to go next, up or down?

 

We have scoured the financial press for reputable sources predicting a drop in oil prices. There are not many. Of course the negatives with this sort of research come in three forms of self interest.

 

Firstly, the media want to print high oil price stories. That sells papers. Writing that Analyst Abc of Company Xyz predicts a drop to $130 is not going to shift the broadsheets.

 

Secondly, some predications could be seen as self-serving prophecies such Gazprom’s repeated forecast of $250 per barrel.

 

Thirdly, it is the role of many an employee to keep their company in the headlines. At least that was one charge levelled at Argun Murti of Goldman Sachs who predicted the $200 super spike. Although it was the same energy man who predicted that crude would hit $100 per barrel. As we all know, his previous prediction was correct.

 

If that is the case then who has said what about the price?

 

$60. Fadel Ghiet, Equity Analyst Oppenheimer. “Based on Supply and Demand…Crude Oil should not be above $60 per barrel”.

 

$80. But not before summer 2009. Simon Denom of Capital Spreads suggests that if the North Sea extraction costs are less than $20 per barrel then $80 is likely.

 

$150. Simon Denom. In the short term but not just yet. “The $150 level is within a single trading days range but we may pause for breath before we take the leap. Remember the delay at the $100 level where the market continually rejected the psychological three-digit number before breaking decisively through it?”

 

$150. Ole Slorer, Analyst, Morgan Stanley. Estimate for 4 July. Note that Brent Crude Oil closed at $144.42 and Nymex US Light Crude (WTI) closed at $143.97 on 4 July. Close but no cigar.

 

$150. Nauman Barakat, Macquarie New York. Crude Oil will hit $150 per barrel sooner rather than later and that is with or without any further problems in the Middle East.

 

$200. Energy Strategist, Argun Murti, Goldman Sachs.

 

$200. A lot of energy brokers. According to the Financial Times, there were nearly 30,000 open contracts in July for Nymex December to hit $200. That is up nearly 90% since June. Up 600% since January.

 

$225. Jeff Rubin, Chief Economist, CIBC. Do not panic yet though. The CE of the Canadian Bank is only predicting $225 by 2012.

 

$250. Alexei Miller, CEO, Gazprom. He says Da to $250 per barrel by the end of 2008.

 

$300. There are some $300 per barrel Call Options being sold. However these have been widely described in the press as Lottery Tickets.

 

The current Crude Oil price with spread betting company Financial Spreads is $138.92 - $138.97 for Brent Crude September. With the crude oil market so volatile and trading a $4-5 dollar range in a single day is it best to stay out of the market or is it worth following all the, possibly self serving, predictions?

 

Note that spread betting carries a high level of risk and may not be suitable for all classes of investor. Only trade with money that you can afford to lose. Make sure you fully understand the risks involved. If necessary, seek independent financial advice.

* Note that Tax Law may be different if you pay tax in a jurisdiction outside the UK, it can also change.

 



Lester

Ryan Dube asked:


Given recent price fluctuations in crude oil, many customers are trying to learn how to avoid high fuel oil prices. Please read on to learn a few tips to save a significant amount on your oil bill.

It’s Important to Avoid High Fuel Oil Prices

While it may feel overwhelming at times to try to learn how to avoid high fuel oil prices, it isn’t impossible. There are a number of convenient and easy methods you can use to significantly reduce your fuel oil consumption. Doing so is important for several reasons.

1. You will immediately see reduced fuel oil prices.

2. You will contribute to the overall reduction of national fuel oil consumption.

3. Reducing demand will result in lower oil prices later.

4. You will be contributing to a more energy efficient society.

5. You will be helping to establish a cleaner planet.

There are Many Ways to Avoid High Fuel Oil Prices

Many people don’t realize how many products they use every day makes use of petroleum. A few examples include plastics (just think of all the products you buy that use plastic), wax, sulfur acid used throughout various industries, tar and asphalt, and paraffin wax. Fuels that come from crude oil include ethane, diesel, gasoline, jet fuel, kerosene, petroleum gas, and natural gas.

What this means is that consumers have a multitude of options to choose from when it comes to cutting back on their overall crude oil consumption. The first step should be to avoid plastic products whenever possible, avoiding any products that use sulfer acid or sulfur, and finding alternatives to using tar or asphalt.

How to Reduce Gasoline Consumption

One of the most difficult areas people have difficulty cutting back on is gasoline for vehicles. While gasoline prices were somewhat reasonable before 2003, people were buying large SUVs and trucks with a lot of power, but terrible fuel efficiency. Once oil prices started to climb drastically after 2003, running these vehicles was no longer affodable. This is why the single most effective method to reducing gasoline consumption is by trading in or selling these larger vehicles, if possible.

Once you have a more fuel efficient vehicle, there are additional steps you can take to even double the gas mileage of your vehicle.

1. Make sure to properly maintain your car. Simple things, like front-end alignment, proper tire pressure, and a well-maintained engine can add to your gas mileage significantly.

2. Drop the extra weight in your trunk by emptying it of unnecessary tools or objects that weigh a lot but which you don’t really need.

3. Unless your car manual calls for it, there’s no need to purchase anything more expansive than low octane gasoline.

4. Don’t top off your tank. Much of the gas at the top of the tank evaporates or leaks out - so topping it off to the top of the fill tube doesn’t do you any good.

5. The one basic rule to remember when driving to save on gas is that acceleration eats up fuel. The more you are able to maintain a constant speed for the car, and avoid hills as much as possible, the further your car will be able to travel with less gas.

6. Don’t idle the car. Most cars only require a couple of minutes for all fluids to start flowing properly, even in the subzero cold of the middle of winter.

7. Plan your errands carefully. If you need to go grocery shopping, plan to pick up your mail at the post office during the same trip. Just making a few efficient changes to your schedule will cut down the total miles that you drive every week.

8. Don’t use air conditioning unless absolutely necessary. Air conditioning reducing gas mileage substantially, and often people use the air conditioning when it isn’t really necessary.

Final Words on How to Avoid High Fuel Prices

Cutting down on your gasoline consumption is only the first step to reducing your individual fuel oil consumption as well as our national consumption. The most significant way to lower our national dependence on oil is to stop buying products that are based on petroleum, and requesting corporations to find non-petroleum alternatives.

Visit CostOfOil.net for all kinds of information and resources about the current price of crude oil.



Edna

biggunner asked:


I am building a presentation on oil heat verses bio heat. I need to use some clippings that show people waiting inline in the 70’s for gas, people pumping gas this past year, and clippings stating that fuel prices are climbing making homeowners feel uncomfortable.

Allen