Oil crosses $129 for first time, heads for $130

Source: Associated Press


By ADAM SCHRECK, AP Business Writer
2 minutes ago

NEW YORK - Oil prices spiked to a new trading high Tuesday, sweeping toward $130 a barrel as supply concerns intensified the momentum buying that has lifted crude deeper into record territory.

The June contract for light, sweet crude traded as high as $129.58 on the New York Mercantile Exchange before settling back to $129.09, up $2.04. The imminent expiration of that contract created additional volatility in the market, and raised the very real possibility that crude could hit $130 before the end of the day, when the contract was ending.

(snip)

Oil prices are now about twice as high as the were just a year ago. Prices have been propelled by a number of factors, including supply concerns, soaring global demand and a sliding dollar…






Read more: http://news.yahoo.com/s/ap/20080520/ap_on_bi_ge/oil_prices

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Alas, Babylon...

Molly Ivins was wrong....he's all ass, no hat.

$200 isn't that far off, and nobody is stopping them.

I think Obama needs to start pounding on the oil price scam every single day.

The problem they say is you and me. We use too much oil. Plus we aren't funding the oil companies exploration and drilling in Alaska and offshore.

We are the problem. You and I.

Don't look at the frenzied orgy the speculators are having in commodities. Instead we are supposed to blame ourselves.

So how can there ever be a workable solution if the powers that be are deliberately placing blame in the wrong place.

Demand is apparently way down and supply is up (according to SA), yet the price at the pump has tripled in 7 years. Supply and demand is no longer an economic reality, and that scares the crap out of me.

Supply and demand is not the driving force behind the run up in food prices in the food futures markets.

Count me in as a member of your scared shitless group.

:grouphug:

Demand is still growing, but somewhat less than the historical average rate of about 2.5% per year. Meanwhile, supply has essentially stayed flat for the last three years. Saudi Arabia has actually started to decline, with estimates of the annual rate ranging between 2% (Aramco) and 8% (The Oil Drum).

That is one reason it keeps going up. They stay solid and make profits to make up for bad housing loans.

:yoiks:

And boy will that bubble be messy with it pops on the people blowing it. The Saudis are telling us $200 a barrel which is helping fuel the rise and these speculators are listening to them. The good news about the higher prices is that one would think it would help ward off a U.S. attack on Iran since that would cause oil prices to god knows go where. Of course Bush may feel compelled to do it anyways as he cares little about the American people and will justify it be safe to do with only a small increase in oil prices as the reserves are 95% full as can be used (yet at even these high prices of $130 per/b the U.S. spends over $8 million a day adding more to the reserves)

The U.S. government must mandate major funds to creating a massive domestic and green alternative fuel source, it is a national security issue. Every President after Carter is guilty of putting the U.S. in the position it now finds itself in today because they did not invest enough resources into a domestic energy program. George W. Bush is by far the most guilty as he allows it to continue even at this critical point with no real action. Seeing he is an oil man this is no surprise, I hope those who voted to re-elected him feel the pain in their wallet when filling their SUVs' at the pump and take it as a lesson learned.

The problem waiting for the private sector to create a domestic alternative energy system is when they starting getting closer and closer to a real solution OPEC will release more oil to drive down the price and investors will run away from alternative energy sources as it will no long be economical to pursue with 'cheap' oil prices around. It's long past time to stop the addiction, are foreign polices will continue to be hijacked and dictated by our oil interests until we provide for ourselves! This should be the #1 issue the U.S. as it has the potential to help fix our foreign policy, our economy, and our environment.

Addicts in Denial:

#3: "It's the greedy speculators"

Actually, no. Oil is in global decline, and the loss is hard to take. It's time to move on through the other stages, get to acceptance and start dealing with it.

But nobody ever gets past the supply/demand curves they learned in high school. Those work (sort of) when neither supply nor demand is constrained. Rising demand (for some random good) results in a rising price, which stimulates more demand, thus bringing down the price. If supply isn't available quickly enough, the price stays high, some consumers go without, and the price falls. Nice and simple.

The key to this situation, though, is "own-price elasticity of demand", and what happens when inelastic demand meets a constrained supply. Demand goes up, raising the price. But in this case the supply is constrained by geology and logistical limits, and can't rise to meet it. As a result the price stays high. So some consumers do without (e.g. Africa and various other poor countries), but the increasing economies of the world (like Chindia) must have oil to feed their growing economies, and the USA and Europe have enough disposable income to pay the high prices so their consumption doesn't go down (that's inelasticity at work). so the price never falls, it just keeps rising.

But here's the kicker. The one thing that would drop demand is a global recession or depression that hits the US, Europe and China. We'll probably get to see one of those within the next decade or so. The question is whether the resulting drop in demand will be faster than the drop in supply. If the call on the supply always stays ahead of the supply volume, then even in a recession we will still see rising oil prices. That's the painful implication of economic growth that reaches a resource limit before enough substitutes are deployed.

And that, friends, is called stagflation.

The poor dollar is really taking a beating today. Why is no one in the media calling Bush on this and asking him what solutions he has? Maybe it's because the solutions would involve raising interest rates and ending wars and deficit spending.

http://finance.yahoo.com/echarts?s=USDEUR=X#symbol=USDEUR=X;range=1d

:toast:

and why would he want to raise rates and disturb his Wall Street masters?

They'll all making a ton on money on these oil spikes, it's only the lower and middle class that suffer.

The Feds role has changed during the bush administration. It's role now is to make the rich wealthier.