How much did you pay for gas today?

WS · May 10, 2011

The Big Ragu said:

There are no new known oil reserves in the world and oil supply is dwindling at a fairly rapid clip. The International Energy Agency looked at 800 oil fields in 2008 and their analysis demonstrated that the decline in oil production is at 6.7 percent a year. They predicted that number will grow to 8.6 percent by 2030. When production is steadily decreasing, if there is any amount of increase in demand, oil is going to get pricier. Depending on how much greater demand there is, it is going to get quite a bit pricier. It was getting pricey, because demand was so high a few years ago, mostly fueled by growth in Asia. And then the world's economies crashed in 2008, following the financial crisis. So the price went down, TEMPORARILY, because demand receded.

There is still the issue of dwindling supply, though. And right now, any news that portends renewed global economic growth (and consequently inflation), is sending buyers scurrying to buy, because if we see economic activity pick up, and price inflation (which is usually the corollary of economic growth) the price of oil is going to increase. There is nothing insidious about it. The market has been pricing in the first tentative signs of economic growth.

Focusing on the minute to minute fluctuations in the price of oil (and the market does react to bits of economic data, both positively and negatively), and how it affects gas prices, and the eternal search for the boogymen screwing you is just silly, because as long as there is any news that suggests an uptick in worldwide economic growth -- a Chinese GDP release, a U.S. Labor Market report, etc. -- buyers are going to be buying. When supply is steadily decreasing the way it is -- and will continue to until we are squeezing driplets out of the ground -- even the perception that demand might be pick up because we are seeing more economic activity, means prices are going to go higher.

The price of gas is only going to get higher over the next decade, regardless of the day to day analysis on a thread like this. As Jim Rogers has said many times, they will race to find every last drop of oil before they have any viable alternative energy source, and as he puts it, at $300 a barrel -- and it will get there -- they will be looking to drill under Buckingham Palace.

Of course, your elected officials are there to play on the whole "speculator" and "gouging" nonsense half of you actually believe, rather than accepting the obvious reality that dwindling oil production and no new reserves means prices are going to rise and keep rising. It's populist politics 101, and the same bullshit rhetoric that has been being tossed around for 30 years, of course only when the price of gas is going up. CNN covered it nicely in this clip:

http://www.cnn.com/video/#/video/politics/2011/05/09/bash.gas.prices.political.playbook.cnn?hpt=T2
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Spoken like a true speculator. Keep it real, pal

The Big Ragu · May 10, 2011

What do you imagine a speculator to be?

I'm not sure how to even respond.

And by the way, I haven't bought or sold any oil in years. So I suppose most people would call me an observer. Is that what you imagine a speculator to be?

WS · May 10, 2011

Someone that buys and sells oil on the market

Oil drops $16 last week. Gas gets to dropping only 10 cents, if that. Then Goldman Sachs has an "expert," likely someone with an investment in this, say that gas is going back up. There's no oil. We're going to run out. Now. Whatever

And it goes back up about 7-8 bucks in the last 2 days. And the gas around here is back to the price it was before the drop.

Now, some shit about flooding is causing the price of oil to rise.

This has everything to do with people pushing the price up for their own greed.

YankeeFan · May 10, 2011

$4.699

YankeeFan · May 10, 2011

And, it can't be said enough, but speculators add liquidity to markets and allow for users and producers to lock in prices so that they can make budgets knowing what their costs or revenues will be (depending on whether they are users or producers).

Speculators step in and buy when no one else will and sell when no one else will.

There is a reason why futures markets have been around in one form or another for hundreds of years.

It's also not easy. I was working on the trading floor when one of Germany's largest companies, Metallgesellschaft AG, went broke as a result of a speculative trade in the energy markets that went against them.

On the other hand, if you think it is so easy, get on board. Open an account and ride the trend to profits. The markets are open to all participants.

The Big Ragu · May 10, 2011

I can't find three markets I can trade with any confidence right now. And oil isn't even close.

In the last 8 trading days, the forward crude contract has gone from a high of 114.83 to a low of 94.63 and has sat everywhere in between. I look at a 50-day moving average and I see a price that is trending up -- as I expect oil, which is seeing dwindling supply, to trend up when economies are showing signs of movement again.

Then I look at the medium-term oscillator I use, and I see the price trending down. There is nothing giving me any indication of how to time a trade on any give day. I wouldn't try to trade a market like that with your money.

But if it's that damned easy, tell me who "the people" who can singlehandledly "push the price up because of their greed" are, and tell me how to cash in on some of that easy money. It's gotta be easy if you can see it so clearly (but as yet unexplained).

Be specific, please. I can't do it without you showing your work. That means you have to also explain who the patsies are. Because every trade has two sides -- someone buying and someone selling. Why would anyone sell into a market so obviously (to you) being manipulated with the apparent goal of making you pay more for gas for the benefit of someone's greed? And how do the people who are manipulating get into cahoots every day, every hour, every minute -- with billions of dollars required to send the price to $114 a barrel one day and $98 just four days later. Thanks in advance for the lucid explanation. I eagerly await.

Blitz · May 10, 2011

It's costing me $54 to fill up the 2002 Ford Escape these days.

The Big Ragu · May 10, 2011

Blitz said:

It's costing me $54 to fill up the 2002 Ford Escape these days.
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Do you realize you can buy almost half a barrel of crude oil on the spot market for that?

YankeeFan · May 10, 2011

The Big Ragu said:

Blitz said:

It's costing me $54 to fill up the 2002 Ford Escape these days.
Click to expand...

Do you realize you can buy almost half a barrel of crude oil on the spot market for that?
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Too bad he doesn't have an oil refinery at home.

Della9250 · May 10, 2011

Up 20 cents overnight. It never went down after the drop last week, stayed the same and then jumped today.

YankeeFan · May 10, 2011

If you think you're getting screwed on the difference between crude prices & gas prices, you can trade that too. (Though you'd be trading on the wholesale price of gas, not the pump price.)

Just_An_SID · May 11, 2011

Paid $3.84 early this morning at home. Made a road trip to Chicago this afternoon and it is at $4.56.

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