Oil prices in free fall

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

You act as though a large reduction in capacity is required. It's not, especially if OPEC moves as a whole.

Which is better? Selling 10 oranges for $1/ea or selling 8 for $1.30/ea?
 
Didn't you say way earlier in the year that oil would be back to $70/barrel by the end of the year and got ridiculed for it? I think somebody even put your quote in their signature:D

I had one of his quotes in my sig.

It said something like "it'll be 50 by July!"

I took it down when we cleared 140.
 
As it realates to aviation what are your thoughts on the airlines ability to capitalize on this price reduction? The price of oil today is more similar to the price when the airlines were finally making money for a short period. The CEO of Northwest airlines was quoted as saying that his airline could turn a profit with $100 oil. But with the dire situation in the financial markets what is the ability of US airlines as a whole to even secure financial oil contracts? If I was a lender on money I think Arilines would be the last place I would be lending money right now. Add that to a certain decline in air travel demand I wonder how the airlines will fair next year.
 
I disagree. Oil hit the $147 mark back in June. From that point, it began to fall, before the stock market, or the economy became an issue. It began to fall, because reports began to surface, not only here in the U.S., but also throughout the world, that demand was dropping, due to the increase in prices. I wouldn't say that demand dropped "a little", it has actually dropped a lot. China has completely stopped importing oil, and with each new report that comes out, there is a continued drop in demand here in the U.S. The bubble has popped, and I do not believe, for one second, that the market supports $147 oil. It may support it momentarily, but long term, it will not support $147 oil. Oil began it's fall almost as soon as it hit the $147 mark. Had it remained at that level, or gone higher, I guarantee the demand drop would have been great. I think the demand will continue to drop, even with lower prices. Car manufacturers have nearly stopped production of SUVs and trucks, and are focusing on more fuel efficient cars, including more electric and hybrid cars. I would suspect that over the next few years, if that continues, we will see demand drop much more.

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.
 
I disagree. Oil hit the $147 mark back in June. From that point, it began to fall, before the stock market, or the economy became an issue. It began to fall, because reports began to surface, not only here in the U.S., but also throughout the world, that demand was dropping, due to the increase in prices. I wouldn't say that demand dropped "a little", it has actually dropped a lot. China has completely stopped importing oil, and with each new report that comes out, there is a continued drop in demand here in the U.S. The bubble has popped, and I do not believe, for one second, that the market supports $147 oil. It may support it momentarily, but long term, it will not support $147 oil. Oil began it's fall almost as soon as it hit the $147 mark. Had it remained at that level, or gone higher, I guarantee the demand drop would have been great. I think the demand will continue to drop, even with lower prices. Car manufacturers have nearly stopped production of SUVs and trucks, and are focusing on more fuel efficient cars, including more electric and hybrid cars. I would suspect that over the next few years, if that continues, we will see demand drop much more.


Although I agree with with you that market demand would have continued to drop exponentially as oil went above $150, I think it's incorrect to say that the economy was not an issue back in June. The fed was already cuttting interest rates to curb a recession in Jan. In fact it was the biggest rate cut since Oct of 1984. Article below.

http://money.cnn.com/2008/01/22/news/economy/fed_rates/index.htm
 
You are correct, and I didn't mean to imply that the economy was of no issue, at all, in June, simply that it was not the issue as is currently. The economy was an "issue", even during the ascent of oil to $147. I just think the economy, while it is having some effect, is not the main cause of oil's loss. I believe it was the reports than began to surface, showing a decline in demand, and a realization, I hope, that oil cannot be sustained at those high prices.

Although I agree with with you that market demand would have continued to drop exponentially as oil went above $150, I think it's incorrect to say that the economy was not an issue back in June. The fed was already cuttting interest rates to curb a recession in Jan. In fact it was the biggest rate cut since Oct of 1984. Article below.

http://money.cnn.com/2008/01/22/news/economy/fed_rates/index.htm
 
the reason avgas takes so long to go up and down to my understanding is that it's sold in less quantity, therefor gas may be @ $70/barrel, however the FBO is still trying to sell off the stock from the $110/barrel.

hence the higher price.
 
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!

Hopefully the public & govt. won't have short term memory on this one and will still see the need to change the way we do things with regard to oil. If we drop all of our new projects and changes with regard to energy, we are going to see the same high oil price issues at some point in the future. (Near future I would bet.)

. . . . . . .Nice comparison BTW. Hmmmmm, how mad do you have to be at your wife to inspire her to "buy" a pair of c-minus' ? :D
 
You act as though a large reduction in capacity is required. It's not, especially if OPEC moves as a whole.

Which is better? Selling 10 oranges for $1/ea or selling 8 for $1.30/ea?

Historically, OPEC doesn't move as a whole. They come to agreements, but then rogue nations get greedy and start pumping flat out. It's happened many times, and I certainly don't see why it wouldn't happen again.

If demand continues to drop (which I suspect it will as world economies decline), then they will need a rather significant drop to maintain a stranglehold on consumers.
 
If demand continues to drop (which I suspect it will as world economies decline), then they will need a rather significant drop to maintain a stranglehold on consumers.

Stranglehold. Okay, now I've gone from Tom Petty stuck in my head to Ted Nugent.
 
Historically, OPEC doesn't move as a whole. They come to agreements, but then rogue nations get greedy and start pumping flat out. It's happened many times, and I certainly don't see why it wouldn't happen again.

If demand continues to drop (which I suspect it will as world economies decline), then they will need a rather significant drop to maintain a stranglehold on consumers.

Another way to look at it is they have to pump more in order to generate the same amount of revenue they are used to...
 
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