Increased Oil Production

[Fusion]

Will have to see if this will ease the price at the pump ...... doubt it !
Oil prices drop after Saudi output announcement (http://www.radioaustralia.net.au/news/stories/200806/s2278528.htm'tab=latest)

[inside]

The oil market is not acting rational and is beyond reacting to supply and demand. Keep an eye on it though as it's an interesting ride all though an expensive one.

[Sprint]

call me a cynic, but all it will do is stabilise fuel prices at the already grossly inflated levels till we're used to them, then come the northern heating season or the next disaster like an oil rig catching fire, the prices skyrocket again

[Reads90]

come on now lets be real:D if you were selling somthng for $140 dollars a barral. Would you produce more to make it $90 a barrel so your get less for your oil.

uuuummmm NO :)

[Tote]

Unless by keeping the price artificially high you forced your customers into a recession which reduced demand. I'd imagine the Saudis have quite a juggling act to consider.

Regards,
Tote

[Pedro_The_Swift]

most manufacturers in America would kill each other to get into Walmart,,
why?
because of turnover.

they then have to conform to walmarts pricing, (can anyone say Rubbermaid?) but their production goes up unbelievably.

so, do you sell a million items at a dollar profit
or one item at a million dollars profit??

[Reads90]

Unless by keeping the price artificially high you forced your customers into a recession which reduced demand. I'd imagine the Saudis have quite a juggling act to consider.

Regards,
Tote

To a point you are right but !
Fuel is not considered under the same supply and demand economics as other products. For example if fags go up by 50c a pack the day after a buget. people will tend to buy as many as they can before they go up, or you give up. This goes the same for alot of products and the normal suppy and demand . After all if your shopping goes up you buy what you need and no more biskets and no more coke and stuff like that
But with petrol if it goes up you can't and don't stock pile, maybe fill your car but thats it. You may try and reduce you fuel useage. But after all no one drives around and around just to use fuel. So most of the trips you make have a use and it is difficult to cut down. And trucks still need to take stuff to the shops. Like food and other products.
So to sum up there will be a reduction in fuel useage but not alot. Maybe 90% of what is 'normal' but charging $140 a barrel for 90% less makes you more money than 100% at $70 a barrel :D:D

[JDNSW]

To a point you are right but !
Fuel is not considered under the same supply and demand economics as other products. For example if fags go up by 50c a pack the day after a buget. people will tend to buy as many as they can before they go up, or you give up. This goes the same for alot of products and the normal suppy and demand . After all if your shopping goes up you buy what you need and no more biskets and no more coke and stuff like that
But with petrol if it goes up you can't and don't stock pile, maybe fill your car but thats it. You may try and reduce you fuel useage. But after all no one drives around and around just to use fuel. So most of the trips you make have a use and it is difficult to cut down. And trucks still need to take stuff to the shops. Like food and other products.
So to sum up there will be a reduction in fuel useage but not alot. Maybe 90% of what is 'normal' but charging $140 a barrel for 90% less makes you more money than 100% at $70 a barrel :D:D

I was only half listening to it, so I don't know the details, but there was a report yesterday that oil imports are down 28%. I don't know what period they are talking about, but the figure does sound a bit high to me. (It was in the context of balance of payments figures)

As you say, it is very difficult to reduce fuel useage in the short term, although over a period of several years, there is considerable opportunity.

To give some examples - I need to go to Sydney next week to see a doctor. My decision to go by train rather than drive probably saves around 100l of fuel. My next door neighbour usually goes to town three or four times a week (130km round trip). She rang me when I was going to town yesterday and asked me to do some shopping for her - and I got her to get me a saw chain on Monday when she was going in anyway. My son is in the habit of making two or three trips to the supermarket each evening after he gets home from work - "its only a couple of kilometres". He is now trying to minimise these. Doesn't save much, but it adds up, and people get better at it over time, although only if the price stays high.

John

[Reads90]

I was only half listening to it, so I don't know the details, but there was a report yesterday that oil imports are down 28%. I don't know what period they are talking about, but the figure does sound a bit high to me. (It was in the context of balance of payments figures)

As you say, it is very difficult to reduce fuel useage in the short term, although over a period of several years, there is considerable opportunity.

.

John

i would be surprised if that was the case. I was lead to belive that one of the reasons for the high price of fuel was that the demand for oil has gone up . Manly from China and India , These markets are taking more and more oil a year. Hence putting up price of oil . we may (as a country) be using less fuel but world wide there is more oil being used
After all if less oil was being used then why would saudi need to produce more barrels :)

[JDNSW]

i would be surprised if that was the case. I was lead to belive that one of the reasons for the high price of fuel was that the demand for oil has gone up . Manly from China and India , These markets are taking more and more oil a year. Hence putting up price of oil . we may (as a country) be using less fuel but world wide there is more oil being used
After all if less oil was being used then why would saudi need to produce more barrels :)

Should have made it clearer - the figure was for Australia, and as you point out, Australia's oil imports are pretty negligible on the world scale, probably our total imports are less than the monthly increase in imports to China and India.

What I was pointing out is that, if correct, the figure demonstrates that it IS possible to reduce consumption. But your point is valid as well - useage in China in particular is rapidly increasing. This is swamping savings elsewhere. Note that in common with some other high use countries, fuel is subsidised in China, and it is unlikely that their rate of increase in consumption will decrease while the subsidy continues.

John

[Lotz-A-Landies]

John

You may have an answer to this, I read recently that the price of $US140/barrel is only just higher that the price of crude at the peak of the oil crisis in the 1970s. At the time of the oil crisis we were still only paying less than $A0.30/per litre - the excuse for the rampant price at the bowser today is the price of crude. How does this work particularly when there has been no new refineries built in the last 25 or so years (in fact the Total refinery at Botany has closed).

Do you have any ideas, or is it as we suspect the Oil Co's pushing the price envelope to see what we'll pay at the bowser (and the concurrent impact of the GST)?

Diana

[Fusion]

John

You may have an answer to this, I read recently that the price of $US140/barrel is only just higher that the price of crude at the peak of the oil crisis in the 1970s. At the time of the oil crisis we were still only paying less than $A0.30/per litre - the excuse for the rampant price at the bowser today is the price of crude. How does this work particularly when there has been no new refineries built in the last 25 or so years (in fact the Total refinery at Botany has closed).

Do you have any ideas, or is it as we suspect the Oil Co's pushing the price envelope to see what we'll pay at the bowser (and the concurrent impact of the GST)?

Diana

Hi Diana , I was wondering too if the oil company's are pushing just to see how far they can push the price before they are frowned upon but the all mightys of the world .

[rick130]

I posted this on an oil forum nearly a month ago.
Makes interesting reading.

Asia Times Online :: Asian news and current affairs (http://www.atimes.com/atimes/Global_Economy/JE24Dj02.html)


As business and consumers consider the implications for them of crude oil selling at US$130-plus per barrel, they should bear in mind that, at a conservative calculation, at least 60% of that price comes from unregulated futures speculation by hedge funds, banks and financial groups using the London ICE Futures and New York Nymex futures exchanges and uncontrolled inter-bank or over-the-counter trading to avoid scrutiny (see Speculators knock OPEC off oil-price perch (http://www.atimes.com/atimes/Global_Economy/JE06Dj07.html), Asia Times Online, May 6, 2008).
US margin rules of the government's Commodity Futures Trading Commission allow speculators to buy a crude oil futures contract on the Nymex by paying only 6% of the value of the contract. At the present price of around $130 per barrel, that means a futures...............




Washington is trying to shift blame, as always, to Arab oil producers and the Organization of Petroleum Exporting Countries (OPEC). The problem is not a lack of crude oil supply. In fact, the world is in over-supply now. Yet the price climbs relentlessly higher. Why? The answer lies in what are clearly deliberate US government policies that permit the unbridled oil price manipulations.

[waynep]

What I was pointing out is that, if correct, the figure demonstrates that it IS possible to reduce consumption. But your point is valid as well - useage in China in particular is rapidly increasing. This is swamping savings elsewhere. Note that in common with some other high use countries, fuel is subsidised in China, and it is unlikely that their rate of increase in consumption will decrease while the subsidy continues.
John

So hows this for a theory/projection then :

1. Fuel prices are being pushed up by demand from China.
2. The demand for fuel is largely so they can satisfy the insatiable demand for cheap consumer goods by the Western world ( most notably USA )
3. Fuel costs if they keep increasing will eventually cause the demand for consumer items by Western countries to slow dramatically. ( people won't have the money for anything other than basics ). Also when the Chinese Govt has to finally kill the fuel subsidies, ( as Malaysia has done ) those goods won't be so cheap anymore.
4. This will cause a decline in production by China
5. Demand for fuel will therefore decrease, fuel prices will therefore decrease.

A balance will eventually be reached, as it always does. Some pain may be involved along the way.

Just a simple theory and I'm sure a lot more comes into it. Be interesting to observe how it all goes.
Whatever, the human race will never have the foresight to collectively preempt and prevent it getting to a crisis level. On the whole we seem to be a greedy and selfish species.

[Lotz-A-Landies]

Thanks Wayne, Mick and Rick

However none of that answers the question if crude was over $US100/barrel during the 1970s fuel crisis and we were still paying less than $A0.30/litre.

Why are we now paying more than 5 times as much at the bowser than were were in the 1970s with crude at a similar price.

It can't be China, if there is an oversupply and it can't simply be the increased cost of refining if they were able to produce petroleum (and automated process) at 30c/litre with crude over $100./barrel.

It has to be gouging by the oil companies.

Diana

[JDNSW]

Thanks Wayne, Mick and Rick

However none of that answers the question if crude was over $US100/barrel during the 1970s fuel crisis and we were still paying less than $A0.30/litre.

Why are we now paying more than 5 times as much at the bowser than were were in the 1970s with crude at a similar price.

It can't be China, if there is an oversupply and it can't simply be the increased cost of refining if they were able to produce petroleum (and automated process) at 30c/litre with crude over $100./barrel.

It has to be gouging by the oil companies.

Diana

Sorry, I was offline, so I did not respond to your earlier query. The price of crude in 1973 reached over $100 a barrel - in 2008 dollars! It went from around $2 a barrel in 1970 to $11.65 by the end of 1973. By 1980 it was up to $36, but in 2008 dollars the big increase was over due to massive inflation in the first half of the seventies. By 1986 the price of oil was below $10, in real terms less than half what it had been in 1971. (see Chronology of world oil market events (1970-2005) - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/Chronology_of_world_oil_market_events_%281970-2005%29)
for example)

I don't know how much inflation there has been in Australia since then compared to the US, but I suspect that the bowser price in real terms was as high if not higher in the mid seventies than now - I know that if I was in the same job today that I was in 1975, I would be getting more than ten times what I did then, and paying a lot less tax on it as well.

So the answer to your question is that you are comparing apples with oranges - the price of oil at its worst in the seventies was about a tenth what it is now, and petrol at the bowser was a bit more than a tenth of what it is now (most of the difference is because excise + GST is a bit over a third of the bowser price today, where in 1975 excise plus state levies in some states made up over two thirds of the price)

[Fusion]

Not sure how correct this is .......

Image:Oil Prices 1861 2007.svg - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/Image:Oil_Prices_1861_2007.svg)

[JDNSW]

So hows this for a theory/projection then :

1. Fuel prices are being pushed up by demand from China.
2. The demand for fuel is largely so they can satisfy the insatiable demand for cheap consumer goods by the Western world ( most notably USA )
3. Fuel costs if they keep increasing will eventually cause the demand for consumer items by Western countries to slow dramatically. ( people won't have the money for anything other than basics ). Also when the Chinese Govt has to finally kill the fuel subsidies, ( as Malaysia has done ) those goods won't be so cheap anymore.
4. This will cause a decline in production by China
5. Demand for fuel will therefore decrease, fuel prices will therefore decrease.

A balance will eventually be reached, as it always does. Some pain may be involved along the way.

Just a simple theory and I'm sure a lot more comes into it. Be interesting to observe how it all goes.
Whatever, the human race will never have the foresight to collectively preempt and prevent it getting to a crisis level. On the whole we seem to be a greedy and selfish species.

I think this is a pretty good summary - except that 4 and 5 don't necessarily follow, as 2. is not correct - China, as it industrialises, has an immense domestic market. Even a slowdown in the rest of the world will not make much of a dent in this. Because China needs imports to supply raw materials for this domestic demand as well as for exports, it has to keep selling products, and the basis of this is an artificial exchange rate. But to put these numbers in perspective consider this fact - China imports most of Australia's coal exports; and Australia is the world's largest coal exporter; yet China produces around ten times as much coal as does Australia - all used domestically, and increasing more rapidly than are their imports.

The current high price of oil is undoubtedly helped by speculators - but history tells us that speculation driven price increases are only short term, and mostly, whoever gets left holding the contract when the prices start down is going to lose a lot of money. Whether curbing speculation is an improvement on the market distortions that seem inevitable by any efforts to do that is open to argument.


John

[JDNSW]

Not sure how correct this is .......

Image:Oil Prices 1861 2007.svg - Wikipedia, the free encyclopedia (http://en.wikipedia.org/wiki/Image:Oil_Prices_1861_2007.svg)

It is not too bad, but read the discussion on it. It is pretty difficult to give the price of oil, because, to put it simply, there is not a single price for oil - at any one instant, there are a range of prices paid for oil, because of different types, because it is in different places, because a lot is covered by pre-existing contracts, and so on (let alone that it is in a variety of currencies, all changed into $US at a rate that may be different in a minute's time).

John

[Fusion]

Straight to the point ;) ......

IndiaDaily - How the oil man Bush raised the oil price and now holds the country hostage to environmental pollution by drilling offshore (http://www.indiadaily.com/editorial/19621.asp)

[JDNSW]

Straight to the point ;) ......

IndiaDaily - How the oil man Bush raised the oil price and now holds the country hostage to environmental pollution by drilling offshore (http://www.indiadaily.com/editorial/19621.asp)

Like most conspiracy theories, it rates the intelligence and ability of the alleged conspirators far too highly!

Off shore oil drilling does not necessarily lead to pollution (and there is extensive offshore oil drilling in the USA anyway - it is not permitted only in a few key areas, notably the California and New England Coasts). To say that he "holds the country hostage to environmental pollution by drilling offshore" is total nonsense anyway, since he hasn't a hope of getting it through congress.

Note that in over forty years of offshore drilling off the Australian coast, I cannot remember a single case of significant pollution related to exploration or production. Transport of oil, or bunker oil on other ships, on the other hand...... . And Australia does not allow exploration on the Great Barrier Reef, but allows a continuous procession of tankers and other oil fired ships to go up and down the barrier reef, through some of the most dangerous navigation in the world. Missing a bit of logic somewhere.

And as for comments on offshore drilling from India - there is a massive offshore exploration effort in India as we write, with not even lip service to conservation.

John

[Lotz-A-Landies]

Exactly Mick - And they try to say it was never about the Oil! :Rolling:

The failed businessman, failed President now has 6 months to establish his superannuation 8 figure salary as CEO of another oil exploration company drilling the continental shelf off the Alaskan wilderness coast.

And we all thought he was stupid! We're the stupid ones for letting our pollies follow G Dubilia Bush nose-in-bum. :mad:

At least I can stand up and say I was opposed to the war in Iraq from before it happened and even have Howard's personal reply letter telling me what has happened wouldn't happen.

Diana

[JDNSW]

.......
At least I can stand up and say I was opposed to the war in Iraq from before it happened and even have Howard's personal reply letter telling me what has happened wouldn't happen.

Diana

Actually I wrote to my local member, who happened to be the Deputy PM - and I have his reply. Must go back and see what he actually said.

As you may guess, I was opposed to it as well, but I still think you overestimate Bush's ability. The war was just plain stupid - they talked themselves into believing their own rhetoric, not, in my view, some Machiavellian scheme.

(On the other hand despite my view of the war, and Australia's involvement, I can see that a good case could be made for Australia's involvement - if the US is being so dangerously unpredictable, it is much better to be a definite ally than a possible enemy. I don't agree with this, but I can see it as a valid view)

[numpty]

I believe one obvious mistake has been made in the previous two posts. "War in Iraq"........what war.........it was an INVASION pure and simple, no matter what you thought of the incumbent despot of Iraq.

WOMD indeed. Oil, people, that's what it was/is all about.

[JDNSW]

I believe one obvious mistake has been made in the previous two posts. "War in Iraq"........what war.........it was an INVASION pure and simple, no matter what you thought of the incumbent despot of Iraq.

WOMD indeed. Oil, people, that's what it was/is all about.

"Invasion" is an "act of war". The two words are not exclusive. You can have a war without an invasion, but you would find it very difficult to have an invasion without a war.

And I don't think it is "all" about oil, although that certainly was an influence on it. In my view it was much more about GWB showing everyone how much "better" he was than his father.

The WOMD seems to me to have been more a miscalculation by Hussein - he did not have them, but was careful to deny it in such a way as to make outsiders believe that he did (and opposing international inspection), expecting that this would deter aggression from Iran (much bigger - and he had already lost one war against them). What he failed to realise was that it invited aggression from the US, who could use the excuse that they were afraid of a possible nuclear war in the area that supplied much of their oil (after all he had had one go at seizing Kuwait). And the US leaders were not bright enough to see through it, partly because it gave them the excuse they were looking for.


John

[numpty]

I agree with what you say John, although the invasion, as an act of war, was perpetrated by the US, who led us to believe it was the Iraqi's who were the instigators of their actions.

What we can agree on was that it was an enormous mistake and something that will be a millstone around the West's neck for decades to come.

[JDNSW]

I agree with what you say John, although the invasion, as an act of war, was perpetrated by the US, who led us to believe it was the Iraqi's who were the instigators of their actions.

What we can agree on was that it was an enormous mistake and something that will be a millstone around the West's neck for decades to come.

I agree with you. The biggest problem is that it is impossible to see a way out. (Australia is withdrawing troops, but this only removes the direct risk to Australians)

If the US withdraws, I can see either a long running civil war, probably followed by either a dictatorship that will make Hussein look a piker, or a rapid Taliban type takeover to make another middle east theocracy. Another possibility is an invasion by Iran to stop the fighting. In this sort of scenario none of the parties are going to worry about rules of engagement or war crimes. GWB's father probably had the right idea to leave Hussein alone!

John

[rangieman]

It has nothing to do with production , It,s the futures market (speculaters) in the US .
Its all to do with speculating future demand :eek:

[Lotz-A-Landies]

G. Dubilya Bush is a Texan oil man, who comes from a family of Texan oil men. What ever has happened, it is not Machiavellian intrigue, GW rose to power on the back of his oil rich mates like Kenneth Lay CEO of ENRON and what ever G.W. has done is done from the perspective of an oil man from an oil family and you scratch my back and I'll scratch yours attitude.

It's not conspiracy, its not intrigue its nepotism and cronyism.

Diana

[numpty]

It has nothing to do with production , It,s the futures market (speculaters) in the US .
Its all to do with speculating future demand :eek:

Agreed, at least as far as fuel pricing is concerned. But I don't think everyone's read the whole thread rangieman, so will have missed your first attempt.

Nothing to do with the Iraq conflict though.