Herkulesdrvr

Point taken. However, the market eventually has to correct itself which could take months or years. Im in the bottom 10% and no Im not worried because I have invested wisely and have other sources of income, something everyone should be doing already whether your a pilot or waiter. Dont tell me how other people dont have that luxury because that is bull, people need to take responsibility for themselves. I dont buy this sky is falling mentality either. Nobody is driving less, the economy is still growing despite what politicians and cnn says. A recession by definition is the drop in GDP for 6 consecutive months, hasn't happened. We have not had one month with a dip in GDP yet, that is a fact not an opinion. Realistically, oil is going to keep going up for the next few months, get over it already. I dont think you will see the panic of your elected officials and media outlets until after the election. How many months have we had this same conversation? Back in October, we were saying oh my gosh oil is pushing 100 dollars and Southwest hedges are running out (that is funny when I hear it every year). Wow, here we sit in May, we are still kicking and still having the same conversation. Let me say that next month I will start the newest thread on APC that says "Oil 150 a barrel, what now?" Life goes on people.

Nicless

LOL, I am trying hard to write this without violating the TOC's!
Lets put it this way..a certain industry is making a killing. One major player in that industry is running revenue greater than the GDP of Saudi Arabia.

Think about that for a moment.


Good.
Now think about this. Oil affects everything you do. From the internet to eating. Not just because we make our living flying airplanes that burn fuel. Everything is oil based.

From a website..
"It’s so easy, nothing has been a more reliable indicator for an upcoming recession as the price of Oil. Every major bear market, every major economic decline has been preceded by a large spike in oil prices. The 73-74 recession, recession of beginning 80’s and the recession of 2000. Oil prices jumped 80% between 1999 and 2000. Oil prices have been the most important indicator of major economic disasters. Whenever Oil prices rises about 80% from year ago levels, a fair chance does exists that a recession/bear market will follow. "

Now oil has gone up about 450 % since 2003.

Just based on this we should be in a depression.
Call me a doom and gloomerBut the numbers speak volumes.

As for the OPEC countries laughing at us...they aren't. Yes they get more dollars that are worth less almost everyday.Yes they build nice shiny buildings with that money. But they too know what will happen to them if this continues. Besides they reinvested huge amounts back into the US.

Drill ANWR. Its really a drop in the bucket.And even if as a poster said, a 10 percent increase is a ten percent increase... it only delays the inevitable.

We need a government driven project to find some other source of energy that can power our homes and cars. That way we will cut demand.

But, that requires money and leadership.Money we don't have.And vision we seem to be lacking.

Herkulesdrvr

I will say it again, oil price is a function of an open market. An open market doesn't have a name like Exxon so no blame can be placed on them. Instead, the blame is placed on companies like Exxon that make huge profits. I am not an advocate for oil companies, hell I dont even own any of their stock, but free markets benefit us most of the time. Also, shareholders of any company expect profits so all blame on the oil companies should be laid on its shareholders as well, correct? Now can the politicians do anything about it? Yes, but they wont. They are working for themselves whick in turn hurts all of us. Until this country starts its quest for energy independence this conversation will go on and on.

aerospacepilot

Very well written post. Probably the best post I have read on APC regarding oil prices.

__________________
By buying oil, we are willingly allowing the largest transfer of wealth in human history.

aerospacepilot

Let me address a few key misconceptions about the price of oil.


It is all because of the weak dollar.

True, the price of oil rose because the value of the dollar has gone down. However, the value of the dollar is the same today (with oil at $133/barrel) as it was in the beginning on March 2008 (with oil at $103/barrel). So why has the price of oil increased $30/barrel (about 30% in 3 months) when the value of the dollar has been stable?

Drilling in ANWR is the solution

ANWR has oil predicted oil reserves of approximately 4 billion barrels. To put that number in perspective, the US consumes 20 million barrels of oil per day. The world consumes 83 million barrels of oil per day. If we drilled in ANWR, they estimate we could produce 1 million barrels per day. That is only 5% of what we consume every day. Barely 1% of the world oil supply. Oh yeah, and it would be all gone in 11 years. Do you really think that will solve our problems? Yesterday the Saudi's announced they were increasing production by 300,000 barrels to day. Despite this news, the price of oil went up $2.30/barrel to an all-time record high. 1 million barrels a day is nothing on the global scale. It is just a short term solution to a long term problem. It is like putting a band-aid on a gushing wound, and quite frankly, I don't think that small amount of production will make a difference. Plus, you would have to be an idiot to drill in some of the most sacred environment on the face of the planet. Drilling in ANWR is not the solution to our energy crisis.

The law of supply and demand will cause the oil bubble to burst

That entire statement is so wrong. The rising price of oil defies the law of supply and demand. In May 2003, the price of oil was $30/barrel (hard to believe, huh?). In May 2008, the price of oil is currently $133/barrel. The price has increased 433% over 5 years. Demand in the world has slightly increased from 78 million barrels to day in 2003 to 83 million barrels per day in 2008. Barely a 6% increase.

Oil prices can continue to rise because there is demand for oil. The price has increased 433% in the past 5 years, yet we are consuming more oil than 5 years ago. Is oil worth $133/barrel? Of course it is! If you bought gasoline recently, you are certainly willing to pay $133/barrel. Anything is worth what you are willing to pay for it. If you continue to pay for oil when the price hits $150, $180, $200/barrel, you must believe it is worth the price.


Up until very recently, OPEC had a strategy of not letting oil prices get out of control because they thought if they drove the price too high, the world economy would crumble, and someone would develop an alternative to oil, leaving Saudi Arabia as a piece of desert atop 200 billion barrels of worthless black crap. Oil kept going up and no one has done anything about it (including the US, the worlds richest, most powerful, most technologically advanced country who is the world's largest oil consumer). So recently it seems like they have changed their strategy, and are just going to let oil prices rise, and see how much oil is really worth. My opinion is oil is worth about $200/barrel. That is gas at $6-$7 a gallon. Above that, you will start to see a significant reduction in oil consumption.


In short, the people most responsible for $4/gallon gas are ourselves, because we continue to buy gasoline and not do anything about the rising price of oil. The price of oil is only going to go up and up and up. The only thing we can do to stop it is to stop consuming a big portion of it (by developing an alternative energy) and leaving Saudi Arabia with 200 billion barrels of worthless black crap. Until we switch to an alternative energy, there is really not much we can do. Crude oil was a one time gift to mankind. It was nice while it lasted...now lets get over it.

__________________
By buying oil, we are willingly allowing the largest transfer of wealth in human history.

LuvJockey

I'm curious as to why nobody here has mentioned the fact the petroleum prices in China are set by the governement and subsidized...if consumer prices for petroleum are not going up there, China is not going to slow down their consumption growth, and decreased US consumption of oil will have little effect on oil prices...

ewrbasedpilot

Apparently the airlines don't think it's worth it since they are beginning to park airplanes left and right. You can't charge $200 for something that costs $500 and in this environment, you'll never be able to charge enough for a coach passenger to make much of a profit. You just can't keep raising prices every day and expect to stay in business, unless you're in to big oil. Until our whole travel industry comes to a grinding halt, nothing will be done.

joel payne

Didn't read the other 36 posts on this subject, so forgive me if it's been posted before.



If Gull Island Didn't Get Your AttentionThis Will!

Gull Island just proved what the oil companies have believed for some time. It authenticated the seismographic findings. Seismographic testing has indicated that there is as much crude oil on the North Slope of Alaska as in Saudi Arabia. Since the Gull Island find proved to be seismographically correct, then the other testings are correct also. There are many hundreds of square miles of oil under the North Slope of Alaska.
To clarify what I am about to say, let me first re-emphasize that the government permitted the oil companies to drill and prove many sites (subsequently making them cap the wells and keep secret the proof of the finds), but they do not allow them to produce from the wells. This is why I have referred (below) to a number of wells having been drilled (after I left the North Slope). The only production permitted is from the small area of the North Slope.
Gull Island is located five miles off shore from Prudhoe Bay. It is in the Beaufort Sea.
The chemical structure of the oil at Gull Island is different from that of the oil in the Prudhoe Bay field and the pressure of the field is different, proving that it is a totally different pool of oil from that at Prudhoe Bay.
The Gull Island burn produced 30,000 barrels of oil per day through a 31/2 inch pipe at 900 feet.
Three wells have been drilled, proven, and capped at Gull Island. The East Dock well also hit the Gull Island oil pool (you can tell by the chemical structure). For forty miles to the east of Gull Island, there has not been a single dry hole drilled , although many wells have been drilled. This shows the immensity of the size of the field.
The Gull Island oil find is even larger than the Prudhoe Bay field, which is presently producing more than two million barrels of oil every twenty-four hours.
Where is the energy crisis? It surely is not on the North Slope of Alaska, so it must be only in Washington, D.C.!
Now,just in case Gull Island didn't blow your mind, try this on for size! Only recently, just west of Gull Island, the Kuparuk oil field has been drilled.
Again, this is a totally separate pool of oil from either the Prudhoe Bay field or the Gull Island field. The chemical make up of the field and the pressure of the field is different from the others, proving it to be a totally separate pool of oil.
In an entirely different area of the North Slope than the 100-square-mile area of the Prudhoe Bay field, the Kuparuk field is approximately 60 miles long by 30 miles wide and contains approximately the same amount of oil as the Prudhoe Bay field.
The oil in the Kuparuk field is at a 6,000-foot depth and there is 300 feet of oil sand. The field pressure is 900 lbs. at well head, and test wells have flowed at 900 barrels a day at normal flow pressure.
It is projected that 800 to 1,400 wells will be drilled into the Kuparuk field.
From 1973 through 1980 we were being told continually that America was in the midst of a major energy crisis, yet no oil production was allowed from the Kuparuk field. It wasn't until 1981 that permission was finally granted for production. Why the delay,if there really was a crisis?
The reason Mr. X made the statement that there is as much crude oil on the North Slope of Alaska as in all of Saudi Arabia is because the oil companies have drilled all over the North Slope and have proven there is that much oil there, but still they are only allowed to produce from the small area.
The North Slope is everything in Alaska North of the Brooks Mountains. Prudhoe Bay is a very small portion of this enormous area (just remember the size of Alaska, as we illustrated earlier in the book).
After the first edition of this book was printed, many people requested additional technical data. This added chapter is a result of those requests.
As I was dictating this additional material, I had the opportunity of being with a gentleman who is a speculator in oil leases. He made the statement, to me, as he looked over the oath I was making public, that every oil speculator in America who is interested in Alaskan oil leases should get a copy of this, because he had never seen such pertinent information in print before. So what you have just read will excite many oil speculators and cause them to search the maps and watch for the latest leases.
Possibly you, have heard it stated that the Alaskan crude oil has such a high sulphur content that it cannot be refined by most oil refineries in the U.S. We are being told that this is the reason why the Alaskan oil is not helping to solve America's energy crisis. This is also the excuse that is being used for shipping Alaskan crude oil to other countries. It has also been reported that major power companies are even telling this to their customers (in their monthly statement inserts), using it to justify their need for rate increases.
Well, here is a statistic that should silence those false claims and blow the lid off of that phony excuse of too much sulphur in the Alaskan crude. An August 11, 1980, analysis of the Prudhoe Bay crude oil, which is flowing in the Trans-Alaska Oil Pipeline, reads as follows:

Sulphur content - 0.9%
Flash point of the oil - 35 0F
Wax content - 6%
Asphalt content - 2%
Crude oil freeze temperature (better known as pour point) - 15 0F

The sulphur content of the Prudhoe Bay Alaskan oil is low in comparison to oil from other sources in the U.S., as well as many foreign oils.
The Alaskan Prudhoe Bay oil can be refined by any major refinery in America without damage to the ecology.
This means, then, that the widely publicized excuse of too high a sulphur content is simply not true. Therefore, it is just one more link in the long chain of falsehoods that we are asked to believe as Americans.
An energy crisis??????
More Recent Facts, A Comparison
The following is a comparison between the three oil fields on the North Slope of Alaska which have been drilled into with numerous wells, tested, and proven. Prudhoe Bay can produce two (2) million barrels of oil every 24 hours for 20 to 40 years at artesian pressure. Imagine what the production of the Kuparuk and Gull Island fields could be.
Field Pay Zone Oil
(Average depth of oil pool)
Area of Field
Prudhoe 600 Ft. of pay zone 100 square miles
Kuparuk 300 Ft. of pay zone Twice the size of Prudhoe
Gull Island 1,200 Ft. of pay zone At least four times the size of Prudhoe . . . Estimates are that it is the richest oil field on the face of the earth.

__________________
"I think we're going to need a bigger boat."

cfii2007

Canada has alot of oil too........

A300_Driver

The mean estimates are 10.3 Billion Barrels of recoverable oil in ANWR, not the 4 you suggest.

Drilling critics have tried to confuse wildlife refuges with national parks, wilderness areas and other more highly protected categories of federal lands. But national wildlife refuges typically allow limited mining, logging, drilling, ranching or other activities. Indeed, the statute creating ANWR contemplated future oil production on the coastal plain, subject to congressional approval.

It is worth noting that another wildlife refuge in Alaska, the Kenai National Wildlife Refuge, has had drilling onsite for decades. The oil production there rarely makes the news because it has not caused any problems, even though Kenai has far more wildlife than ANWR.

An extensive track record proves that oil development does not harm Local Wildlife. In addition to Kenai, Alaska has oil drilling in the Prudhoe Bay field, only 55 miles west of ANWR. Prudhoe Bay has produced more than 10 billion barrels of oil since the 1970s, which has been transported through the Alaska pipeline to the American market. Decades of studies show that this oil production has had a negligible impact on the environment.

Environmental opponents of drilling cannot point to a single species that has been driven to extinction or even a population decline attributable to Prudhoe Bay. In addition, the drilling there was done with decades-old technology and methods far less environmentally sensitive than what would be required in ANWR.

This current Energy Crisis is in large part due to a lack of excess supply. To that end, we must increase domestic exploration (even if it's ONLY 1 million barrels per day), we need to incentivize investment in viable domestic biofuels that do not lead to a decrease in corn supplies, and we need to start encouraging corporate, government, and individual energy conservation.