Question: When gasoline spiked above $2 last year, oil was around $30 a barrel. We're nearly DOUBLE that now, and gasoline is still hovering at or around $2/gal.
Now assuming the laws of supply and demand can't be circumvented, one of these scenarios must be true:
1) Oil companies have been ripping off the public by grossly overcharging us vis-a-vis oil prices and the pump, or
2) Gasoline will be at $3 in sudden fashion.... or....
3) Demand is slowing.
We know #3 is false. So, either we will see a spike in gaosline prices very shortly, or the #1 scenario has to be true. I'm guessing the #2 scenario is the true scenario. I'm think the oil companies are doing their best to keep prices in check with the election coming up.
Thoughts??
Winter Concerns Push to Record High
Reuters | October 7, 2004 | Tanya Pang
SINGAPORE (Reuters) - Oil prices broke into record territory above $52 Thursday on heightened concerns that supplies of heating fuels will prove inadequate during the northern hemisphere winter.
U.S. light crude futures set an all-time high at $52.38 a barrel, marking a 60 percent surge in prices so far this year on the strongest demand growth in a generation and a thinning cushion of spare capacity to cope with supply outages.
London's Brent crude also struck a record peak, at $48.15 a barrel.
"We're in uncharted territory. There aren't many reasons to sell and there's lots of reasons to buy oil," said David Thurtell at Commonwealth Bank of Australia in Sydney.
Most Asian stock markets fell as sky-high oil reignited worries that high energy costs would dent household incomes, raise companies' expenses and hurt global economic growth.
The yen (JPY=: Quote, Profile, Research) slid against the dollar due to Japan's heavy reliance on oil imports.
A senior International Monetary Fund official warned on Thursday that tight oil supplies could leave the global economy worryingly vulnerable for years to come.
David Robinson, deputy director of the IMF's research department, said the continuing rise in oil prices meant the fund's forecast of 4.3 percent global growth in 2005, published on Sept. 29, was already out of date and would probably be scaled back to around 4 percent if recalculated now.
"I do worry about the medium-term outlook, about the sustained vulnerability to oil prices looking forward," he said. U.S. government data Wednesday showed heating oil stocks fell 1.2 million barrels to 51.2 million barrels in the week to Oct. 1, leaving commercial tanks 6 percent lower than a year ago.
Other major oil consumers in Europe and Asia also hold thin heating oil supplies. Inventories of heating fuels should normally rise at this time of year to cater for a surge in consumption in winter months.
"We don't have enough inventories before winter when oil demand typically peaks," said Tony Nunan at Mitsubishi Corp. in Tokyo.
Worries about a thin supply cushion have intensified after mid-September's Hurricane Ivan, which drove U.S. crude production to the lowest level since 1950 and disrupted operations at refineries along the Gulf Coast.
About 478,000 barrels per day of crude output in the Gulf of Mexico, 28 percent of total gulf production, remains shut due to storm damage and industry executives estimate it could take 45-90 days to restore supplies from offshore platforms.
The hurricane also disrupted operations at Gulf Coast refineries, where plants were still working at only 89 percent of capacity last week, cutting into heating fuel supplies.
Nigeria also remains a concern.
Nigerian oil union NUPENG is threatening to disrupt production Sunday ahead of a general strike Monday, unless the government starts talks on retail fuel prices.
Nigeria's oil unions have called strikes four times this year over rising fuel prices in the world's seventh largest exporter. So far none have affected output
Now assuming the laws of supply and demand can't be circumvented, one of these scenarios must be true:
1) Oil companies have been ripping off the public by grossly overcharging us vis-a-vis oil prices and the pump, or
2) Gasoline will be at $3 in sudden fashion.... or....
3) Demand is slowing.
We know #3 is false. So, either we will see a spike in gaosline prices very shortly, or the #1 scenario has to be true. I'm guessing the #2 scenario is the true scenario. I'm think the oil companies are doing their best to keep prices in check with the election coming up.
Thoughts??
Winter Concerns Push to Record High
Reuters | October 7, 2004 | Tanya Pang
SINGAPORE (Reuters) - Oil prices broke into record territory above $52 Thursday on heightened concerns that supplies of heating fuels will prove inadequate during the northern hemisphere winter.
U.S. light crude futures set an all-time high at $52.38 a barrel, marking a 60 percent surge in prices so far this year on the strongest demand growth in a generation and a thinning cushion of spare capacity to cope with supply outages.
London's Brent crude also struck a record peak, at $48.15 a barrel.
"We're in uncharted territory. There aren't many reasons to sell and there's lots of reasons to buy oil," said David Thurtell at Commonwealth Bank of Australia in Sydney.
Most Asian stock markets fell as sky-high oil reignited worries that high energy costs would dent household incomes, raise companies' expenses and hurt global economic growth.
The yen (JPY=: Quote, Profile, Research) slid against the dollar due to Japan's heavy reliance on oil imports.
A senior International Monetary Fund official warned on Thursday that tight oil supplies could leave the global economy worryingly vulnerable for years to come.
David Robinson, deputy director of the IMF's research department, said the continuing rise in oil prices meant the fund's forecast of 4.3 percent global growth in 2005, published on Sept. 29, was already out of date and would probably be scaled back to around 4 percent if recalculated now.
"I do worry about the medium-term outlook, about the sustained vulnerability to oil prices looking forward," he said. U.S. government data Wednesday showed heating oil stocks fell 1.2 million barrels to 51.2 million barrels in the week to Oct. 1, leaving commercial tanks 6 percent lower than a year ago.
Other major oil consumers in Europe and Asia also hold thin heating oil supplies. Inventories of heating fuels should normally rise at this time of year to cater for a surge in consumption in winter months.
"We don't have enough inventories before winter when oil demand typically peaks," said Tony Nunan at Mitsubishi Corp. in Tokyo.
Worries about a thin supply cushion have intensified after mid-September's Hurricane Ivan, which drove U.S. crude production to the lowest level since 1950 and disrupted operations at refineries along the Gulf Coast.
About 478,000 barrels per day of crude output in the Gulf of Mexico, 28 percent of total gulf production, remains shut due to storm damage and industry executives estimate it could take 45-90 days to restore supplies from offshore platforms.
The hurricane also disrupted operations at Gulf Coast refineries, where plants were still working at only 89 percent of capacity last week, cutting into heating fuel supplies.
Nigeria also remains a concern.
Nigerian oil union NUPENG is threatening to disrupt production Sunday ahead of a general strike Monday, unless the government starts talks on retail fuel prices.
Nigeria's oil unions have called strikes four times this year over rising fuel prices in the world's seventh largest exporter. So far none have affected output
