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Phillyfanfrombirth · 08-15-2006, 09:28 PM

That's a pretty good synopsis, Rev...

The last marginal buyer is always the one that sets the price for everyone. That simply means that if there is more demand than supply, the price of the supply is determined by the price the buyer of the last bit of supply is willing to pay.

While not everyone pays the same for oil because of their government structure, the world oil market is where prices are set that we pay. For example, a gallon of gasoline can cost 25 cents in Venezuela because it is largely government run and regulated. Excess supplies are sold on the world markets, to bring revenues into the government and allow it to sustain itself...

Markets are a continuous discount mechanism. They ALWAYS are weighing the risks from all sides to supply and demand and determine price. Prices fluctuate because those risks and perceptions fluctuate. And although it seems like oil has been high forever, in fact it was only 2 years ago when we first crossed $40 and $50.

Now, the part that ticks me off is that we do have ability in the US to be more energy independent... Why is it that Cuba can sign a deal with Venezuela and China to drill for oil 50 miles off of the Florida coast, but it is illegal for US companies to do the same? This is flat out insane.

Now, that is not to say that the problem is crude... but we could certainly help on that front by tapping our own resources on the outer continental shelf and ANWR...

Our real problem is refining capacity and the centralization of our infrastructure as we so vividly realized after Katrina. As of now, most excess supply capabilities to produce oil in the world come from Saudi Arabia...

Problem:

Saudi crude is filled with incredible amounts of sulphur... With the exception of Valero, there are few if any US refineries that are even capable of refining that cheaper sour crude because of environmental standards...

Answer is easy, right? Just build more refineries... yeah right. Not with today's political environment where NIMBY and BANANA protest everything and tie it up in courts for decades...

Great news... Saudi Arabia realizes that this is a huge problem, so they've come up with a solution:

They are in the process of building some of the biggest refiners on the planet that could serve the US market...

Great right? Problem...

Wasn't the goal to get away from Foriegn supplies of oil and oil from hostile/unstable regions? Well, I guess we will be less dependent on their oil, we'll just be more dependent on their refined product.

Conspiracy theorists need to get their heads out of their butts and realize that as a robust economy, we need sustained and increasing forms of energy. The solution will not be "demand destruction" and "government giveaways" (anyone else know that we place a HUGE tariff on Brazillian ethanol? Think about that the next time you pull up to the gas station)... it absolutely must be comprehensive that allows for a wide range of solutions. New supplies of domestically produced oil being one of them. Harvesting oil shale, Fischer Trophs coal gasification, wind farms, nuclear being just a few others.

If people would get over the hyperbole and politics, they might not only learn something, but get something done.

08-15-2006, 09:28 PM	#106
Phillyfanfrombirth Registered Member Join Date: Dec 2004 Location: South Central PA Posts: 358	Re: Fuel Prices That's a pretty good synopsis, Rev... The last marginal buyer is always the one that sets the price for everyone. That simply means that if there is more demand than supply, the price of the supply is determined by the price the buyer of the last bit of supply is willing to pay. While not everyone pays the same for oil because of their government structure, the world oil market is where prices are set that we pay. For example, a gallon of gasoline can cost 25 cents in Venezuela because it is largely government run and regulated. Excess supplies are sold on the world markets, to bring revenues into the government and allow it to sustain itself... Markets are a continuous discount mechanism. They ALWAYS are weighing the risks from all sides to supply and demand and determine price. Prices fluctuate because those risks and perceptions fluctuate. And although it seems like oil has been high forever, in fact it was only 2 years ago when we first crossed $40 and $50. Now, the part that ticks me off is that we do have ability in the US to be more energy independent... Why is it that Cuba can sign a deal with Venezuela and China to drill for oil 50 miles off of the Florida coast, but it is illegal for US companies to do the same? This is flat out insane. Now, that is not to say that the problem is crude... but we could certainly help on that front by tapping our own resources on the outer continental shelf and ANWR... Our real problem is refining capacity and the centralization of our infrastructure as we so vividly realized after Katrina. As of now, most excess supply capabilities to produce oil in the world come from Saudi Arabia... Problem: Saudi crude is filled with incredible amounts of sulphur... With the exception of Valero, there are few if any US refineries that are even capable of refining that cheaper sour crude because of environmental standards... Answer is easy, right? Just build more refineries... yeah right. Not with today's political environment where NIMBY and BANANA protest everything and tie it up in courts for decades... Great news... Saudi Arabia realizes that this is a huge problem, so they've come up with a solution: They are in the process of building some of the biggest refiners on the planet that could serve the US market... Great right? Problem... Wasn't the goal to get away from Foriegn supplies of oil and oil from hostile/unstable regions? Well, I guess we will be less dependent on their oil, we'll just be more dependent on their refined product. Conspiracy theorists need to get their heads out of their butts and realize that as a robust economy, we need sustained and increasing forms of energy. The solution will not be "demand destruction" and "government giveaways" (anyone else know that we place a HUGE tariff on Brazillian ethanol? Think about that the next time you pull up to the gas station)... it absolutely must be comprehensive that allows for a wide range of solutions. New supplies of domestically produced oil being one of them. Harvesting oil shale, Fischer Trophs coal gasification, wind farms, nuclear being just a few others. If people would get over the hyperbole and politics, they might not only learn something, but get something done.