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Before most people were even aware there was an economic crisis, investment managers abandoned failing mortgage-backed securities and looked for other lucrative investments. What they settled on was oil futures.

An oil future is simply a contract between a buyer and seller, where the buyer agrees to purchase a certain amount of a commodity -- in this case oil -- at a fixed price [source: CFTC]. Futures offer a way for a purchaser to bet on whether a commodity will increase in price down the road. Once locked into a contract, a futures buyer would receive a barrel of oil for the price dictated in the future contract, even if the market price was higher when the barrel was actually delivered.

As in all cases, Wall Street heard the word "bet" and flocked to futures, taking the market to strange new places on the fringe of legality. In the 19th and early 20th centuries it bet on grain. In the 21st century it was oil. Despite U.S. petroleum reserves being at an eight-year high, the price of oil rose dramatically beginning in 2006. While demand rose, supply kept pace. Yet, prices still skyrocketed. This means that the laws of supply and demand no longer applied in the oil markets. Instead, an artificial market developed.

Artificial markets are volatile; they're difficult to predict and can turn on a dime. As a result of the artificial oil market, the average price per barrel of crude oil increased from $31.61 in July 2004 to $137.11 in July 2008 [source: DOE]. The average cost for a gallon of regular unleaded gas in the United States grew from $1.93 to $4.09 over the same period



Most speculators are greedy Conks. Blame it on Obama, though.....

I see greed on both sides of the fence, good thing for Soros and the oil barons, that Obama is in his back pocket.

Clearly it's Bush's fault.

ASUG8 wrote:Clearly it's Bush's fault.

Clearly it's no one's fault in particular. But if you're a "free market", deregulation guy, don't you have to own this a bit?

I blame Randolph and Mortimer Duke.

kalm wrote:

ASUG8 wrote:Clearly it's Bush's fault.

Clearly it's no one's fault in particular. But if you're a "free market", deregulation guy, don't you have to own this a bit?

And what would you do from a regulation standpoint that would have an impact of making oil affordable, assuming you could define what affordable is? I mean, if you're going to tar and feather the free market and deregulation, that would imply that non-free market and regulation would work better.

Even if you yanked every subsidy out of the oil market (and gave those subsidies to non-oil forms of energy), it would still be the dominant form of energy in this world and that puts it in kind of a unique place. Sure it's great to scream about speculators and bemoan the free market, but at the end of the day, it's still by far the most adaptable and the cheapest form of energy out there and we have it in vast abundances and will have it in vast abundances for at least the next century. If someone was able to make money on a different form of energy, we would've done that already. Until that time, the more oil we have means the less ammo the speculators have to drive up prices when something scary happens in some part of the world.

kalm wrote:

ASUG8 wrote:Clearly it's Bush's fault.

Clearly it's no one's fault in particular. But if you're a "free market", deregulation guy, don't you have to own this a bit?

I don't blame Obama for this although each president helps to create or perpetuate an environment that can influence gas prices. Bush clearly had a lot of big oil ties, and the Deepwater Horizon disaster set off a Obama retrenchment on offshore drilling. Those things, along with resistance to the Keystone pipeline, big oil subsidies, caps on refining capacity, the Saudis managing supply to hit target prices/barrel, Iranian tension, etc. all create a great environment for speculation.

ASUG8 wrote:

kalm wrote:
Clearly it's no one's fault in particular. But if you're a "free market", deregulation guy, don't you have to own this a bit?

I don't blame Obama for this although each president helps to create or perpetuate an environment that can influence gas prices. Bush clearly had a lot of big oil ties, and the Deepwater Horizon disaster set off a Obama retrenchment on offshore drilling. Those things, along with resistance to the Keystone pipeline, big oil subsidies, caps on refining capacity, the Saudis managing supply to hit target prices/barrel, Iranian tension, etc. all create a great environment for speculation.

I think Obama raised federal taxes on oil.

GannonFan wrote:

kalm wrote:
Clearly it's no one's fault in particular. But if you're a "free market", deregulation guy, don't you have to own this a bit?

And what would you do from a regulation standpoint that would have an impact of making oil affordable, assuming you could define what affordable is? I mean, if you're going to tar and feather the free market and deregulation, that would imply that non-free market and regulation would work better.

Even if you yanked every subsidy out of the oil market (and gave those subsidies to non-oil forms of energy), it would still be the dominant form of energy in this world and that puts it in kind of a unique place. Sure it's great to scream about speculators and bemoan the free market, but at the end of the day, it's still by far the most adaptable and the cheapest form of energy out there and we have it in vast abundances and will have it in vast abundances for at least the next century. If someone was able to make money on a different form of energy, we would've done that already. Until that time, the more oil we have means the less ammo the speculators have to drive up prices when something scary happens in some part of the world.

That's all true if you don't add up the externalities.

-
The "progressives" don't understand the free market.
They need to send someone over to N Dakota to take a look

Doesn't matter who's fault...just like when the dems attacked Bush over high gas prices

Join me in putting "How do you like that hope and change? "stickers on the gas pumps when you fill up

Bronco wrote:-
The "progressives" don't understand the free market.
They need to send someone over to N Dakota to take a look

Doesn't matter who's fault...just like when the dems attacked Bush over high gas prices

Join me in putting "How do you like that hope and change? "stickers on the gas pumps when you fill up

You will be met with our bumper stickers:

"Republicans are speculating us to the poor house "

Or, this:

kalm wrote:

GannonFan wrote:
And what would you do from a regulation standpoint that would have an impact of making oil affordable, assuming you could define what affordable is? I mean, if you're going to tar and feather the free market and deregulation, that would imply that non-free market and regulation would work better.

Even if you yanked every subsidy out of the oil market (and gave those subsidies to non-oil forms of energy), it would still be the dominant form of energy in this world and that puts it in kind of a unique place. Sure it's great to scream about speculators and bemoan the free market, but at the end of the day, it's still by far the most adaptable and the cheapest form of energy out there and we have it in vast abundances and will have it in vast abundances for at least the next century. If someone was able to make money on a different form of energy, we would've done that already. Until that time, the more oil we have means the less ammo the speculators have to drive up prices when something scary happens in some part of the world.

That's all true if you don't add up the externalities.

And people start talking about the externalities it seems when they have no other argument to resort to. How much of those same externalities can be applied to any other source of energy just as they are applied to oil? It's not as if without oil we could pull back from spending what we do on those externalities. That's the rub.

And all but 6.93% of them gave to Obama.

Ivytalk wrote:And all but 6.93% of them gave to Obama.

They're all contributing to his Rushmore Pledge Fund, IT.

2 of the biggest factors going into the price of oil are current supply and demand and the anticipated future supply vs demand.

Current domestic oil output is up largely because individual states such as North Dakota, Pennsylvania, and Texas allow drilling on nonfederal lands to get oil and gas locked in shale formations such as the Bakken (ND), Marcellus (Mid Atlantic), and Eagle Ford (TX), and because of increased permitting on fed lands & waters under Bush.

As far as the future offshore and on federal lands, things don't look so rosy.

Federal lands:
Shortly after Obama entered office he cancelled 77 oil & natural gas exploratory leases that Bush had sold in Utah.
"...The Obama administration recently rescinded 77 oil and gas leases in Utah and stalled oil shale research and development in Utah, Colorado and Wyoming, where the federal government owns most of the world's oil shale reserves.

Out West, we may have a "Persia on the Plains." A Rand Corp. study says the Green River Formation, which covers parts of Colorado, Utah and Wyoming, has the largest known oil shale deposits in the world, holding from 1.5 trillion to 1.8 trillion barrels of crude — most of it locked up by federal edict.

Under President Obama, the American Petroleum Institute notes, leases on federal lands in the West are down 44%, while permits and new well drilling are both down 39% compared to 2007 levels...."

Of course there was the recent denial of Keystone...

Off both coasts:
Bush opened up exploration off of both coasts before he left office. Obama rescinded that shortly after he got into office.
"...Only 2.2% of federal offshore land is currently being leased for production...."

Gulf of Mexico:
"....After the BP oil spill, President Obama shut down most Gulf of Mexico drilling and there's been a 57% drop in monthly deepwater permits since 2008, according to the Greater New Orleans Gulf Permit Index...."
Article doesn't even mention his 7 year moratorium on exploration in the Eastern Gulf.

Alaska Onshore
He still won't open up ANWR:
".....Then there are the 10 billion barrels locked up in the Arctic National Wildlife Reserve, which would require drilling in just 2,000 acres out of 19 million....."

Alaska Offshore
"....The federal government estimates there are 26.6 billion barrels of recoverable oil and 130 trillion cubic feet of natural gas in the Arctic Ocean's Outer Continental Shelf but repeated safety reviews and designation of much of the region as critical polar bear habitat has slowed development to a crawl....."
In 2010 he canceled 5 leases sales set for 2011 and 2012 in the Chukchi and Beaufort seas in Alaska. They have since granted up to 15 lease sales in the Chukchi and Beaufort, but now they won't take place till 2015 and 2016.

http://news.investors.com/article/60206 ... es.htm?p=1" onclick="window.open(this.href);return false;

Refining capacity need to increase, as even though have had numerous refineries expand current capacity, haven't had a new one built since '08, and haven't had a major, complex one built since '77.
http://www.eia.gov/tools/faqs/faq.cfm?id=29&t=6" onclick="window.open(this.href);return false;
Elk poin, SD, is the location of the 1st new, major refinery to be opened in the US since 77'. Permit was applied for in 07' construction not slated to start till 2013- TOO MUCH RED TAPE. Not Obama's fault here, but he hasn't done anything to help matters.
http://articles.aberdeennews.com/2012-0 ... nvironment" onclick="window.open(this.href);return false;

Because of opposition & stonewalling from Obama, that is having a great effect on the futures market, and therefore the increase in the CURRENT price of gas, because it takes announcements & plans NOW to increase supply 5-10 years down the road.

If Obama announced:
-He was immediately reversing his rescinding of the rest of the 77 leases out West.
-Immediately approving Keystone (it was studied for over 3 years)
-Immediately reversing his rescinding of opening up both coasts for exploration as Bush did.
-Immediately fast tracking Gulf of Mexico permits.
-Ending his 7 yr moratorium in the eastern Gulf of Mexico.
-Asking Congress to open a tiny spec of ANWR for exploration (which is mostly barren, frozen tundra).
-Fast tracking the Alaskan offshore permits in the Chukchi and Beaufort
-Submitting a plan to fast track approval of new refineries

NONE of this would mean an increased supply of oil & natural gas this yr. Most wouldn't begin to take place for several years. But it would have an IMMEDIATE impact on the futures market, with a significant drop in the price of crude, both Brent and West Texas, which would have an IMMEDIATE impact at the pump. People say there is no quick fixes. BALONEY.

Obama's in bed with speculators.