Discussion in 'Too Hot for Swamp Gas' started by HallGator, Nov 13, 2013.
If true then it has major impacts across the globe as well as our own fragile economy.
Vitol is an interesting company. Not sure who controls it
I just saw a report on FoxNews that the U.S. is now the biggest oil producer in the world. But no one who discussed the report asked what to me is the most obvious question that could be asked. Why in the hell are we buying Middle East oil?
If we use our own oil the other question is, why is it priced like it came from the North Sea.
Good questions all around.
there are multiple different indexes for pricing oil and at different costs
WTI is oil delivered in Cushing Ok and meeting certain specifications
WCS is western canadian sour and is much cheaper but harder to refine
Brent crude meets a certain standard is priced fob.
We do not import much from ME anymore. Most comes from Mexico, Canada, Nigeria, Venezuela, Russia. SA is only ME country in our top 5. Iraq and Kuwait are also ME suppliers but in smaller quantities
the coastal refineries on east and west coast used to have to import the great majority of their oil paying Brent Sea prices but are now getting more via rail from ND and Canada.
I am shocked, ok I am not since I believe the whole financial market is rigged to some degree.
I don't profess to know how the world oil markets work, but the US started producing more oil as the price went up. US oil is certainly not necessarily cheaper to produce than oil from other parts of the world.
I don't think oil prices need to bottom out nor expect them ever to again. Higher prices lead to more money for exploration and more incentive to do so. However artificially high prices which are brought on by manipulation in order to line someone's pocket is a different thing.
I really doubt that the oil companies are causing a huge part of the oil price to be what it is. More likely, they are making a few cents here and there on a barrel, maybe a dollar or two when the stars align. The rest is supply and demand. They can affect supply by not producing, but they don't make as much money because they have fewer sales. It is no different from OPEC, I suspect. Oil is a huge global commodity. If major players (like the U.S.) get serious about conservation (and demanding that countries they do business with are likewise serious), oil usage will go down and the price will drop with it.
Price was $12/bbl in 1998, $25/bbl in 2003, and $147/bbl in 2008 (before the crash). What happened during that time? China started some serious manufacturing capability (and started a construction boom that is still going on today), for one. China and India also started driving large numbers of cars. It was the rise of the BRIC countries--nations that had very large populations and were starting to industrialize. Of course oil demand was going up and the price would go up with it. That is the major factor affecting the price of oil--not manipulation.
Bush's "oil buddies."
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Do some research and go back and trace the price of oil since 1998. You'll see the price jumped after Bush's administration allowed oil to be treated as a commodity. Once on the commodity market, all bets were off. Manipulated? Do the math.
the cost to get oil is higher now. Canada needs $55 +/- to get the oil out of the sand and US needs about the same to get the oil out of the shale. Deep sea oil is $35 + to get but you only get one out of two so it is very expensive to find and then the logisitics of transport are expensive so they end up around $55 to get.
And it takes billions and billions in capital to go get it. I rode back from Alaska sitting next to a guy that was chief safety operations officer on the biggest rig ever built. BP built it to drill the Liberty field in Alaska where they were going to drill a well a total length of 7 miles to hit a target. Midway through, the Horizon happened and BP revised policy so that whenever they were drilling a well they would have a standby rig capable of drilling same depth to drill a relief well if needed. Since the Liberty was largest drill ever attempted, there was no second rig capable. Project mothballed after several hundred million spent.
big oil ror is not that good, much further down than tech, bio, finance.... so they aren't the culprits. their costs are real and huge.
Oil was traded on the commodity market long before the Bush administration.
That graph just shows the last 30 years.
Interesting to compare that link with the prices to this link with the supply.
We could certainly claim that this leaves out the question of demand as a driver of cost overpowering the increase in supply to cause increasing prices. But then we also have this communication between Bush and the Saudis about the lack of demand that they were facing.
Because it's a global market
It is not the location but the type of crude you get from that particular location. Some of types of crude are West Texas Intermediate and Gulf coast sour. Each type has different costs associated with refining so the prices can be different.
good article here explaining oil futures. worth reading if interested