Oil prices in free fall

We have an increased supply right now due to the refineries and platforms which were shutdown for Gustav/etc are now on full production again, combined with a stark decrease in demand.

OPEC has an emergency meeting in the next couple of days. Expect supply reductions, or heavy calls for them. Venezuela's entire economy is now petroleum based and state-run and it can not realistically survive low oil prices again. To show you how far things have gone there the state oil company is now growing crops/food.

So... Venezuela's entire economy is petroleum based, yet you think they will actually cut their available production? I don't think so. I bet they (Chavez) is way too short sided to cut even further into his income.
 
So... Venezuela's entire economy is petroleum based, yet you think they will actually cut their available production? I don't think so. I bet they (Chavez) is way too short sided to cut even further into his income.

Chavez has been calling for supply reductions at OPEC for some time. Additionally Venezuela only "sells" about 50% of their oil, the rest they spread around latin and south american countries at huge discounts for political capitol.
 
Gas is about 2.40/ gallon around here.

AvGas went from 4.70 to 5.19 last week!!! Boooo!!! :mad:
 
Gas is about 2.40/ gallon around here.

AvGas went from 4.70 to 5.19 last week!!! Boooo!!! :mad:

Precisely why I said FBOs operate in an inefficient manner. Sales go down so they RAISE their prices to make up for the loss of business. Which in turn just drives away more customers. When there was no good way of comparing avgas prices except by word of mouth, they could get away with doing that. Now I doubt that many aircraft owners fly anywhere without checking on the price of fuel at potential stops ahead of time. There's just no sense in patronizing an FBO that charges a dollar or more per gallon than others in the area.

FBOs around here finally cut their prices a little in the past few days, to the tune of about 40-50 cents a gallon. Our prices around Atlanta are still higher than almost anywhere else in the surrounding states.
 
I think gas prices lag for an obvious reason-

Production cost does not always equal sales prices. Say what?

A lot of gas stations are franchised operations- they're not owned by the oil companies.

As a result, the gas station operators buy tanker loads of gas at prices reflecting current oil prices. Until they sell that order off, they can't lower prices or they lose money. On the other side of the coin, if one station buys a tank of gas at a high price and charges more, it makes total sense for the next gas station to do the same.

If the gas station raising prices to slightly below the highest price station is still selling gas purchased at the pre-rise price, it makes money hand over fist, while the other place just breaks even.

Since it is no longer guaranteed that today's gas order will sell at the same price, most stations are probably dragging their feet on lowering prices.
 
First off, I never said oil was going to immediately go to $200. I said $200 oil is where you will see a massive drop in demand.

Has demand dropped? A little. We still consume nearly 80 million barrels of oil per day. Maybe the economic meltdown has caused oil consumption to drop 2,3,4% (at most!). The price of oil is in free fall because of the economic meltdown. The market dropped 40%. Oil prices are following.


And I still do believe that the price of oil is going to rise over the long term. We already proved we would continue to buy massive amounts of oil at $147 a barrel, so what is stopping OPEC from cutting production and raising prices . Haven't you guys figured out their game. Let oil prices go two steps up, one step back. I remember when oil hit $100 a barrel on the way down and people were jumping for joy. Just a year ago people were shocked when oil hit $80 a barrel. But OPEC has us right where they want us.


By continuing to buy oil, we are willingly allowing the largest transfer of wealth in human history. It is going from us and to our enemies. BILLIONS of dollars a day. Almost a TRILLION per year.

I don't think too many people understand the urgency of this problem. I will leave economic and environmental concerns out of this argument. Purely from a national security standpoint, we have a major problem. We need to stop consuming massive amounts of oil and switch to an alternative form of energy.
 
First off, I never said oil was going to immediately go to $200. I said $200 oil is where you will see a massive drop in demand.

Has demand dropped? A little. We still consume nearly 80 million barrels of oil per day. Maybe the economic meltdown has caused oil consumption to drop 2,3,4% (at most!). The price of oil is in free fall because of the economic meltdown. The market dropped 40%. Oil prices are following.


And I still do believe that the price of oil is going to rise over the long term. We already proved we would continue to buy massive amounts of oil at $147 a barrel, so what is stopping OPEC from cutting production and raising prices . Haven't you guys figured out their game. Let oil prices go two steps up, one step back. I remember when oil hit $100 a barrel on the way down and people were jumping for joy. Just a year ago people were shocked when oil hit $80 a barrel. But OPEC has us right where they want us.


By continuing to buy oil, we are willingly allowing the largest transfer of wealth in human history. It is going from us and to our enemies. BILLIONS of dollars a day. Almost a TRILLION per year.

I don't think too many people understand the urgency of this problem. I will leave economic and environmental concerns out of this argument. Purely from a national security standpoint, we have a major problem. We need to stop consuming massive amounts of oil and switch to an alternative form of energy.

Well at least they're putting our money to good use in Dubai. Guess they figure out that when they run out they'll just use tourism to take the rest of our money:D

Now our money going to Chavez? Now that's scary:D
 
I'd actually like oil prices to freaking plummet. But then I'm afraid that our thirst for a new "Manhattan Project" for energy independence is going to go by the wayside because suddenly, putting 38 gallons in the Hummer to drive down to Starbucks for a $4 latte isn't going to sting like it has in the last six months.

Kind of like being mad at your wife, but then she comes home with a spiffy new set of c-minus breast implants! Hoo hoo! Lookatdemthings!
 
Oil prices have fallen by more than half, and you want to attribute this to a decrease in demand? Are you kidding me? There was never a demand justification for the run-up in the first place. Energy experts have been consistent in this from day one: the demand-justified value of a barrel of oil is around $60.
Sorry man. Energy experts are anything BUT united on the fair price of oil per barrel. I get the "where there is smoke there is fire" argument, but this enormous drop in prices came because of a world economy that is grinding to a slow crawl.

Although I'll admit if you have some proof of what your stating I'll take time to read it. I haven't found anything convincing to support your argument.

Now speculation will of course continue (for end buyers), and assuming a great depression doesn't occur prices will eventually go back up and higher than where they were. (My guess)
 
Precisely why I said FBOs operate in an inefficient manner. Sales go down so they RAISE their prices to make up for the loss of business. Which in turn just drives away more customers. When there was no good way of comparing avgas prices except by word of mouth, they could get away with doing that. Now I doubt that many aircraft owners fly anywhere without checking on the price of fuel at potential stops ahead of time. There's just no sense in patronizing an FBO that charges a dollar or more per gallon than others in the area.

FBOs around here finally cut their prices a little in the past few days, to the tune of about 40-50 cents a gallon. Our prices around Atlanta are still higher than almost anywhere else in the surrounding states.

I can't whine too much. They only buy fuel for the tank once every couple of months, so while everyone elses fule cost kept going up, theirs stayed fixed and cheaper than everyone else around. It just so happens that when they filled up, it was just more expensive. Now that it isn't the cheapest for 100 miles, it'll be MONTHS before it's all used and we get it cheaper. Gotta love it!

How is life in Powder Town?!? :)
 
Still in the $3.40 range in PHX. But then the price of oil and the price of gasoline aren't necessarily directly related. I'll bet you prices stay high for gasoline regardless of oil prices because fuel has always been a loss-leader for the corner store and now the margins are better.

And I'm talking out of my ass. I really have no idea what I'm talking about and that's just blind internet speculation.

$3.03 in Arcadia!
 
Because FBOs (in my opinion) operate on an inefficient business model.
.

Eh, depending on the size of the FBO they might have fuel they bought 3 months ago. They usually don't need to compete as much as the three gas stations on the corner. People wake up and see oil down the expect that to reflect at the pump THAT day.
 
Oil prices have fallen by more than half, and you want to attribute this to a decrease in demand? Are you kidding me? There was never a demand justification for the run-up in the first place. Energy experts have been consistent in this from day one: the demand-justified value of a barrel of oil is around $60.

This would mean that demand would fall by half. I don't buy it.

Speculation inflated the price of oil (or shall I say, perceived value), and the stock market decline is bringing it down. But I'm sure demand did have a very small part in the decline.

Gasoline prices are more impacted on the amount consumers are willing to pay.
 
but this enormous drop in prices came because of a world economy that is grinding to a slow crawl.

Oil (and other commodities) are typically considered hedges against a falling market. Usually investors will dump their money into oil and other commodities when the stock market takes a dump. Didn't happen this time. This is a clear indication that people realize the price of oil was vastly over-inflated. There was never justification for $80/bbl, let alone $150/bbl. This was nothing but speculators jumping on the latest bubble, and the bubble finally popped.
 
By continuing to buy oil, we are willingly allowing the largest transfer of wealth in human history. It is going from us and to our enemies. BILLIONS of dollars a day. Almost a TRILLION per year.

I don't think too many people understand the urgency of this problem. I will leave economic and environmental concerns out of this argument. Purely from a national security standpoint, we have a major problem. We need to stop consuming massive amounts of oil and switch to an alternative form of energy.

Did you just quote a T. Boone Pickens commercial verbatim?
 
Chavez has been calling for supply reductions at OPEC for some time. Additionally Venezuela only "sells" about 50% of their oil, the rest they spread around latin and south american countries at huge discounts for political capitol.

Yes, but that was before he got hooked on $100+ oil. Now that its down around $70/bbl, he may change his tune.
 
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