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singrdave
singrdave
Join Date 07/2004
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Why Is Oil Going Up?

How does a Middle East war affect ME?

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July 14, 2006 10:59:47 PM from JoeUser ForumsJoeUser Forums
The price of oil hit an all-time high of over $77 per barrel today. Okay, please somebody explain this to me:

The price is skyrocketing because of a war... over no oil reserves? Israel and Lebanon have essentially gone to war.
Neither nation has oil, so no oil reserves are threatened in their battle. Their skirmishes do not cross any oil shipping lanes, like the Suez Canal, so they're not disrupting the flow of oil through the region. They're not jeopardizing any pipelines.

Oil has steadily risen since Tuesday amid a steady stream of headlines out of Israel and concern the conflict could draw in Iran and Syria, Hezbollah's backers, and impact crude supplies. The concern is that the attacks could widen into a larger Middle East conflict and cut crude exports from Iran, the world's fourth-largest producer.

"Many analysts believe that the Hezbollah attacks on Israel were explicitly or implicitly sanctioned if not actually instigated by Iran," said James Williams, an analyst at WTRG Energy Economics in London, Ark. "While the volume of oil involved in the direct participants is minuscule the conflict always has the possibility of encouraging Hezbollah sympathizers to action in other arenas."

So why on earth is the price going north?!
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singrdave
Dr Guy
Join Date 09/2004
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Reply #1 July 15, 2006 4:33:28 PM
from JoeUser ForumsJoeUser Forums
Because Investors fear it will spread.  The Price of oil you see quoted on the news is the spot market.  The most capitalistic market in existance.  it is controlled by no one, but a bunch of (read thousands) of buyers and sellers.
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singrdave
eieio
Join Date 03/2003
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Reply #2 July 15, 2006 5:22:27 PM
from JoeUser ForumsJoeUser Forums
Dr. Guy is right.

While increased consumption (China, India, etc.) and supply disruptions have a certain affect on demand and supply, speculation has been a large, large factor in the price in the last several months.

People often forget oil is a commodity.
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singrdave
bakerstreet
Join Date 03/2001
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Reply #3 July 15, 2006 5:31:23 PM
from JoeUser ForumsJoeUser Forums
Iran has threatened many times to disrupt oil shipments if anyone messes with them. Terrorists have also threatened to do so. Both are pissed at the moment.

On top of that nations tend to start hoarding oil when the supply looks threatened, meaning demand goes up.
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singrdave
singrdave
Join Date 07/2004
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Reply #4 July 16, 2006 8:57:17 AM
from JoeUser ForumsJoeUser Forums
Iran has threatened many times to disrupt oil shipments if anyone messes with them. Terrorists have also threatened to do so. Both are pissed at the moment.

Time to totally scorch the earth in Iraq and start doing what we've been accused of all along...spilling blood for oil. Let's just take the damned stuff already, we owe them nothing and we owe the world no explanations, either.

Exactly the kind of conversation I was hoping to elicit.
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singrdave
singrdave
Join Date 07/2004
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Reply #5 July 16, 2006 8:57:48 AM
from JoeUser ForumsJoeUser Forums
Why is it the first sign of trouble in the Middle East and we suddenly focus on the price of a barrel of oil?
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singrdave
bakerstreet
Join Date 03/2001
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Reply #6 July 16, 2006 9:10:28 AM
from JoeUser ForumsJoeUser Forums
Because that's really the only interest we have in the sandpile, and the only benefit they offer to the world at present. Maybe if you consider them a launching point for our military to fight here and there around the world they might be of use, but as far as what they have or what they are, they've made great efforts to be as valueless as possible.
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singrdave
Dr Guy
Join Date 09/2004
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Reply #7 July 16, 2006 12:37:30 PM
from JoeUser ForumsJoeUser Forums

Because that's really the only interest we have in the sandpile, and the only benefit they offer to the world at present.

What Baker said.

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singrdave
singrdave
Join Date 07/2004
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Reply #8 July 16, 2006 8:41:39 PM
from JoeUser ForumsJoeUser Forums
I saw Thomas Barnett (a lib, but a very good speaker) in person a couple of months ago, and he said this is how he responds to the "No Blood for OIl" chant:

In essence, "Thank God there IS oil under that sand, and that's why we're going in to help all those sad people. No oil in Rwanda, and what are we doing for them?"

Food for thought...
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singrdave
ParaTed2k
Join Date 12/2004
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Reply #9 July 16, 2006 11:22:23 PM
from JoeUser ForumsJoeUser Forums
The price of oil is going up because supply has stayed basically the same but demand has skyrocketed.

People think the price is artificially high right now.. if that were true, their would be surpluses of oil. Some people want the price to be held artificially low.. which would result in an oil shortage.

Like it or not, the price of oil is at equilibrium now. It is going up because the point of equilibrium has moved.

The oil producers are simply getting the highest price they are able from the most buyers possible. The only real way for the price to come down, is for more buyers to be less interested in the product at the present price.
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singrdave
singrdave
Join Date 07/2004
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Reply #10 July 18, 2006 11:17:00 AM
from JoeUser ForumsJoeUser Forums
People think the price is artificially high right now.. if that were true, their would be surpluses of oil. Some people want the price to be held artificially low.. which would result in an oil shortage.

In those secret storage bins in the Gobi Desert or Alaska?

Like it or not, the price of oil is at equilibrium now. It is going up because the point of equilibrium has moved. The oil producers are simply getting the highest price they are able from the most buyers possible.

And the OPEC nations are very, very happy with the high price of oil. They're making money hand over fist, $75+ each for something that five years ago cost $30? Even non-OPEC leaders like Putin are celebrating the $75+ barrel of oil.
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