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Crude Oil Rises Above $108 to Record

March 10 (Bloomberg) -- Crude oil rose above $108 a barrel in New York to a record as investors purchased futures because the returns have outpaced those of financial markets.

Oil in New York surged 80 percent over the past year as the S&P 500 and Dow averages dropped. China, the second-biggest oil- consuming country, increased crude-oil imports by 18 percent last month and halted overseas shipments to meet rising demand.

http://www.bloomberg.com/apps/news?pid=20601087&sid=astD3YDL_ma4&refer=home
 

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So we have a supply constraint and increased demand. Lovely.
So, the US should increase domestic production if possible to offset it. And work with allied nations to get more oil.

However, it would behoove the US oil companies to work on alternative fuels.
 

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Discussion Starter · #3 ·
So we have a supply constraint and increased demand. Lovely.
So, the US should increase domestic production if possible to offset it. And work with allied nations to get more oil.

However, it would behoove the US oil companies to work on alternative fuels.
The article said that investors were flooding oil futures because the "returns were outpacing stocks". Sounds like a bubble to me.
 

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It is a bubble that has nothing to do with supply/demand, OPEC, China, India, SUVs, DST, etc.
It's all about psychotic uncreative "investors" who can't fathom not making $50 a day for ever penny they have.
Can't wait for this bubble to burst. Then where are our billionaire fools going to put their money? Into an Al Qaida Fund?

The article said that investors were flooding oil futures because the "returns were outpacing stocks". Sounds like a bubble to me.
 

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Since oil is purchased in dollars, since the Fed will promote a short-sighted policy of lowering interest rates to stave off a recession (in which we already live), since the dollar will continue its march into the basement, you will undoubtedly see ever greater inflationary pressures, including oil prices. After all, it's an election year, and we have to pretend to do something about the economy. Artificially lower interest rates, and throw a dab of income redistribution/tax rebates that will do more harm than good to the long-term health of the economy. Makes perfect sense to me.

So we have a supply constraint and increased demand. Lovely.
So, the US should increase domestic production if possible to offset it. And work with allied nations to get more oil.

However, it would behoove the US oil companies to work on alternative fuels.
I'm not at all counting on oil companies to develop alternative fuels. Let's be crystal clear: petroleum refining companies will do little to find alternative fuel sources until every last drop of oil is pulled out of the ground. That's why higher oil/gasoline prices, while in the short-term are painful, will convince more and more independent firms to figure our alternative fuel sources; they will gladly circumvent Big Oil to make a profit. Granted, the US government gave Big Oil $13 billion to "research alternative fuels;" I'm sure the fruits of that wisely spent taxpayer money are just around the corner. I predict a press release any day now, in fact.
 

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Now you know where all the housing speculators went.
First dot coms, then housing, now commodities. This too will crash...
 

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So we have a supply constraint and increased demand. Lovely.
So, the US should increase domestic production if possible to offset it. And work with allied nations to get more oil.

However, it would behoove the US oil companies to work on alternative fuels.
Our wonderful government will not let us produce more oil in the US. This nation has no energy policy! Unless they are blameing big business I E the Automobile industry and putting opressive regulations on them!
 

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I've heard this called commando capitalism, go in , grab what you can, and get out before you get hurt. Screw the long term planning and the effect on anyone else. Tis the new reality.
 

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Do you hear the environazis cheering now?
No, but I do hear them whispering to the "Energy Idependence" crowd. We both have the same goal in mind, just different reasons and ways to get there, is that so wrong? Interesting that instead of criticizing OPEC or the investors who are ballooning the price to the point where the common man is definetly feeling the pressure, you criticize a group that has nothing to do with the rise in price, but instead calls for a solution. That's not cronstructive criticism, that's bitching, and misplaced bitching at that.
 

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so who created this futures market? sounds like a load of bs to me, they do nothing except make it worse for all of us who pay for gas, a$$holes
This ain't nothin' new. For example, the Chicago Mercantile Exchange was founded in 1898 as the Chicago Butter and Egg Board.
As they say on the Exchange, buy low, sell high.... if you want one, get your FS SUV before the crash.
 

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This nation has no energy policy!
Bingo, we have a winner. Have we ever had a cohesive energy policy? Of course, I haven't heard of any oil companies wanting to build refineries either or people downsizing their cars to cut back on demand, so who should we really be yelling at? It's not just one problem, it's many. Too bad our energy policy doesn't take that into account. We'll give a tax break on SUV's but not when you buy a fuel efficient car. Huh? So we reward excess and criticize frugality? Nice. You're right, no energy policy.
 

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Since oil is purchased in dollars, since the Fed will promote a short-sighted policy of lowering interest rates to stave off a recession (in which we already live), since the dollar will continue its march into the basement, you will undoubtedly see ever greater inflationary pressures, including oil prices. After all, it's an election year, and we have to pretend to do something about the economy. Artificially lower interest rates, and throw a dab of income redistribution/tax rebates that will do more harm than good to the long-term health of the economy. Makes perfect sense to me.



I'm not at all counting on oil companies to develop alternative fuels. Let's be crystal clear: petroleum refining companies will do little to find alternative fuel sources until every last drop of oil is pulled out of the ground. That's why higher oil/gasoline prices, while in the short-term are painful, will convince more and more independent firms to figure our alternative fuel sources; they will gladly circumvent Big Oil to make a profit. Granted, the US government gave Big Oil $13 billion to "research alternative fuels;" I'm sure the fruits of that wisely spent taxpayer money are just around the corner. I predict a press release any day now, in fact.
I agree with you 100% on this. Oil has gone up, some due to a little demand, some recently due to speculation, but I beleive the majority of it is due to the falling dollar (caused primarily by our trade and budget/spending deficits).

Look at it this way, since 2001 the price of gold has more than tripled. Gold, with no large 'real industrial value' has simply become an 'anti-indicator' of the buying power of the U.S. Dollar. For most of 2001, gold was near the $270-$280 mark. About the same time in 2001, Oil was about $25 a barrell. Since then, the price of gold has risen about 3.6 times what it was then. The price of oil has risen about 4.3 times since then...pretty close. It seems to me, we should not be blaming the middle east for the high oil prices...nor opec, nor the war in Iraq (not primarily at least), but instead we should be blaming our politicians for continuing to run up spending deficits and the national debt (and the trade deficit also)...because the VAST MAJORITY of the increase in oil prices is NOT actually an increase in oil prices...but a function of a falling dollar.
 

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so who created this futures market? sounds like a load of bs to me, they do nothing except make it worse for all of us who pay for gas, a$$holes

Let's say you were a cotton farmer and there was speculation that cotton would not be needed next year. If you planted something else instead and there actually was a need for cotton, you would be kicking yourself for not growing cotton. The next year you decide to grow cotton, because you think it will make more money. Your cotton and all of the other people who decided to sell cotton flood the market and prices are low. Futures were created so farmers/cattle owners (and now other industries) could have a set price to sell their crops/cattle and would not have to guess what to grow. Futures are generally a very good idea.
 

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We've seen gold go crazy before... years ago it went to $800 an ounce, a princely sum back in the day. Silver went up even more.... all due to speculation.

Then it took a big 'ol dump.
 

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so who created this futures market? sounds like a load of bs to me, they do nothing except make it worse for all of us who pay for gas, a$$holes
It's always been there. Sometimes it worked in our ( the user's ) favor. Now it's against us and in the seller's favor. As long as China decides to buy up all the excess fuel in the world and the value of our dollar plummets as tgagneguam noted we the US users will be hurt more than those say in Canada or Europe or certainly those in the MidEast.

Wait isnt this the 'Let the market do it's thing' in action? You bet it is. This is pure capitalism at work doing its thing.
 
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