Why doesn't oil cost more?

You are expecting to see oil at $80.00/bbl, then?

Yes.... and I think once the drop begins, it will drop to that level VERY quickly.

Normally anytime a commodity is trading around its all-time high, the downside risk is greater than the upside potential. That's just as true with a necessary product like crude oil as it is with a more "optional" commodity like gold. When the August oil contract drops from $144 to $140, long traders are down $4000 per contract, and that can and does happen in a matter of minutes.

That's what keeps prices a bit in check.

But so long as oil is priced in US$, the price is not apt to contract very much.

debacle wrote :



as the oil producing countries have pointed out , if the U.S. dollar regains its former strength , the oil price will drop .
unfortunately , it doesn't look like the U.S. dollar will regain its stregth anytime soon - seems that the ever climbing debt keeps pushing the U.S. dollar lower .
we should also remember that china and india have become large oil importers - which also is pushing up the demand for oil .
there is really a two pronged attack on a lower oil price :
the lower U.S. dollar and higher demand by other users .
hbg

I'm getting so tired of hearing that the increased demand for oil from China is helping push up the price. Again I will refer back to the 70's... The reason the price went up so high back then was because there was an "OIL SHORTAGE". What happened then? I don't believe there ever was an oil shortage then, and I definately do not believe there is an oil shortage now. If there was a shortage in the 70's, then where has all our oil come from since then, and why did the price come WAY back down since then?
....the words political manipulation come to mind for some reason.

That shortage was caused by an OPEC embargo, not a shortage of oil.

I'm tired of hearing about the demands for oil by China and India, too. Our wearyness doesn't make it less true.

full report :
OPEC : NO OIL SHORTAGE !

JUST BRING UP THE U.S. DOLLAR VALUE AND THE OILPRICE WILL COME DOWN !

the oil producing countries don't see why they should accept the depreciated U.S. dollar at its old value .

U.S. companies do not accept other currencies that have been devalued at its former value either .

it's tit-for-tat !

buffalo wrote :



china's oil consumption was about 2 million barrel/day in 1986 ,
it had increased to about 7 million barrel/day by 2006 .
production increased from about 2.8 m b/day to 3.2 m b/day .
a nation EXPORTING oil in 1986 now has to IMPORT about 4 m b/d .
and china has the money to pay for it - they've stashed away plenty of U.S. dollars and are not shy in spending those dollars .
they've started to look at some canadian companies in the alberta tarsands and expressed interest !



source :
CHINA - OIL

... Like I said in my 1st post that oil will take a huge dive soon after the 4th..... It has dropped about $9 per barrel in the last two days!

Keep an eye open for the mid $80's (or LOWER) very soon!

Two problems IMHO.

First there is a finite quantity of oil, and OPEC production production is at or possible past their peak production. There may be more fields available, but not with the capacity or the resources of the past. So the days of muscle cars and SUVs for routine driving are past. In summation--The present oil age is at an end.

Second---Oil is still cheap when you consider that the pump price really only represents about half of the cost of oil. When you figure in the costs of the automotive infrastructure required to support the automobile then real fuel costs should be twice its present price.

At this time, the US should take a clue from what Brazil did in the 70's. Get an energy policy that encourages alternate energy sources (safe nuclear, clean coal, wind, solar, geothermal, renewable energy) alternate transportation methods (mass transit, light rail, electric vehicles, CAFE standards), promote conservation.

It will take 15 to 20 years to implement many of these energy plans, but implementation will have several benefits--one it will encourage technological innovation (never a bad thing), start the US (like Brazil) on the road to energy independence, create jobs (also never a bad thing), and restore the economy (like it of not the real gold standard today is the kilowatt hour).

Now for the "I told you so" part of my rant---If Reagan had listened to Jimmy Carter in 1978, the US wouldn't be in the situation it finds itself.

Rap