oil prices and rumors of bankruptcy

in the last 24 hours, i've noticed that the price for a barrel of oil has dropped over six and half dollars. Combine that with rumors of Greece declaring bankruptcy, does anybody else here see red flags like I do?

the price of oil to decrease. Also, there is still an oversupply of oil out there.

The view is that the prices will actually be declining over the next several months.

Since Greece is not an oil producing nation, it really has nothing to do with the price of oil.

they are in danger of declaring bankruptcy. If they were to do that, what kind of effect could that possibly have on the rest of the world? Bad loans caused the world's economy to collapse, but to my knowledge, i didn't hear about any country declaring bankruptcy. I just wonder that if one country goes that route, what would happen? Could it continue, or could it be just Greece? Makes you wonder.

However rising dollar is also.

It is a one two punch. Dollars are worth more so each dollar buys more oil thus barrel of oil is "worth" less in terms of dollars.
However dollar has only risen about 3% while oil has fallen about 6% so rise in dollar alone can't account for it.

Rising dollar plus Europe falling off a cliff (if Greece insolvency spreads to rest of EU) has potential to really kill demand for oil.

Lower demand and rising dollar = lower oil prices.

it's even washing up on the gulf shore. Oil for everyone! :sarcasm:

Prices have been manipulated over the last few months in order to get the price of oil and gas up for the summer months, even though there were huge surplus's of both, the "speculators" used all kinds of reasons to raise prices, and as usual, it worked for them. The dollar is up and that also makes the speculators slow down their buying of oil or any commodity traded in dollars.

One day they say oil prices are up because the world wide economy is looking good, the when prices drop they say it was over some "worry" about this or that, then the next week they jack price up again for no apparent reason, but when the numbers on surplus come out and are raising in every report week after week, and on top of that gas surplus is also way up, well even they can't keep justifying their manipulation of th prices! It's all about "greed"!

"over supply" of oil "out there"? Could you PLEASE provide proof of this?

That is the time from spot purchase, to refining, to transportation to the tank at your retail station.
The gas you buy today was made from oil bought a month ago. So expect gas prices to keep rising for a couple weeks or so.

Let's say a gas station has 10000gal of $2/gal gas, but it will cost $3/gal to refill the tanks next week.
Wouldn't the gas station have to charge $3 for the gas they currently have... despite the fact it was procured @ $2?

Most stations operating on the model of the HIGHER of
a) current asset value
b) replacement asset value.

So in rising oil environment the current spot price is relevant however in falling oil environment the prior oil prices are relevant. It only takes a short period of upward oil prices to raise wholesale gasoline prices however it takes a long trend of lower oil prices to result in lower gasoline prices.

(My grandfather in-law was owner operator of 5 gas stations for about 3 decades).

So that is why it takes a very long time for gas prices to go down and then they move up in large quick movements.

So
Gas in tank: $2.80
Replacement Gas: $3.00
Station charges $3.15

Gas in tank: $3.00
Replacement Gas: $2.80
Station charges $3.15

Gas in tank: $2.80
Replacement Gas: $2.70
Station charges $2.85

So gas goes down slowly. Penny here, nickle there and them moves up much more quickly.

Owners who didn't do this go destroyed when oil fell from $145 to $35. Week after week the replacement cost was less than the price of oil in their tanks. If prices were set at replacement cost only they would operate for months selling gasoline continually at a loss.

prices and not lower them in a timely manner. IMO, they use any excuse they can latch on to, to raise prices.

However I notice that when oil goes up, the price at the pump jumps at the same time, and I remember back when it go over $4 a gallon that it went up two and sometimes 3 times in one week! When the price of oil drops it takes about a month before I notice a drop. Also about a month before a major holiday prices "always" go up no matter what! These days nobody know why the prices go up and down like they do, only the speculators who manipulate prices know that, and they are nothing but greedy bastards trying to make a buck of the misery of those who "have" to have gas for their cars and trucks!

Gasoline prices are set at the higher of replacement price and tank (price of gasoline in station tank) price.

Speculators aren't controlling the prices set by nearly 20,000 independently owned gas station.

Gas IMHO should be much much much more expensive. Like $7-$8 per gallon. Either by taxation or by higher oil prices.
Gasoline & car culture is killing the planet. What good is cheap gasoline prices is the planet is dead? Higher gasoline prices will drive innovation in hybrids, electric vehicles, natural gas vehicles, fuel cells, etc.

Even at $4 per gallon gasoline is insanely cheap for the amount of energy it contains which is part of the problem. It is why it is so tough to break from this fossil fuel addiction.

I agree with the other posters, but also we have to remember that "Memorial day" is coming up, and no matter what prices "always" go up for holiday when millions of people will be hitting the roads! It has a lot to do with "greed" and getting it while they can!

Article from February of this year.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7159456/Fears-of-Lehman-style-tsunami-as-crisis-hits-Spain-and-Portugal.html

<snip>
Portugal has been in political crisis since the Maoist-Trotskyist Bloco won 10pc of the vote last year. This is rapidly turning into a market crisis as well as investors digest a revised budget deficit of 9.3pc of GDP for 2009, much higher than thought. A €500m debt auction failed on Wednesday. The yield spread on 10-year Portuguese bonds has risen to 155 basis points over German bunds.

Daniel Gross from the Centre for European Policy Studies said Portgual and Greece need to cut consumption by 10pc to clean house, but such draconian measures risk street protests. “This is what is making the markets so nervous,” he said.

In Spain, default insurance surged 16 basis points after Nobel economist Paul Krugman said that “the biggest trouble spot isn’t Greece, it’s Spain”. He blamed EMU’s one-size-fits-all monetary system, which has left the country with no defence against an adverse shock. The Madrid’s IBEX index fell 6pc.

Finance minister Elena Salgado said Professor Krugman did not “understand” the eurozone, but reserved her full wrath for the EU economics commissioner, Joaquin Almunia, who helped trigger the panic flight from Iberian debt by blurting out that Spain and Portugal were in much the same mess as Greece.

.......more