Gas Prices Head Towards $5.00/Gallon

[ILoveMyRHS13]

I'm just going to keep paying for it. We still have gas MUCH cheaper than a lot of other countries. Premium just hit $4.03 yesterday, so it's only a matter of a month or so before we actually see $5, haha.

[holemilk00]

Originally Posted by holemilk00

Other countries that pay more per gallon/liter of gas, also have a higher median income per household. Not to mention they have little to no domestic production of oil. When you look at the economical end of how gas prices are determined, and you take out oil speculators, we should be paying around $2.49

Originally Posted by ILoveMyRHS13

I'm just going to keep paying for it. We still have gas MUCH cheaper than a lot of other countries. Premium just hit $4.03 yesterday, so it's only a matter of a month or so before we actually see $5, haha.

Read what I said earlier. Those countries that pay so much more than we do, do so because they have no domestic production. Did you know that the US produces enough oil to be self sustainable? The problem is its too profitable for those companies to sell that oil to countries that other oil producing countries won't do business with than to keep it in the states. Even still, of our oil consumption 51% of it is domestically produced, out of the 49% left, less than 17% of that comes from northern Africa (Libya) and less than 9% comes from the middle east. We import most of our oil from Canada. These numbers were form a HLN story on two nights ago. I DVR'd it to show my dad.

[axiomatik]

Originally Posted by NissanEnthus

Isnt that F&^$#*n insane bullshit that the price goes up for any stupid reason they command which raises the barrel price but the Oil Companies record BILLIONS in profit every quarter!!

The oil companies rake in huge profits when oil goes up, but they aren't really to blame for the prices. Oil is a publicly traded commodity (like gold, or currencies, etc), so it's price varies like the stock market. If investors think that demand might outstrip supply, the price gets bid up. If there is too much capacity, prices fall.

Originally Posted by holemilk00

Read what I said earlier. Those countries that pay so much more than we do, do so because they have no domestic production. Did you know that the US produces enough oil to be self sustainable? The problem is its too profitable for those companies to sell that oil to countries that other oil producing countries won't do business with than to keep it in the states. Even still, of our oil consumption 51% of it is domestically produced, out of the 49% left, less than 17% of that comes from northern Africa (Libya) and less than 9% comes from the middle east. We import most of our oil from Canada. These numbers were form a HLN story on two nights ago. I DVR'd it to show my dad.

Countries don't pay a higher price depending on whether or not they have any oil production. No matter where you are in the world, the price of a barrel of oil is roughly the same, because it is traded on the global oil commodity market. Producers offer their oil on the market, and it is bought at whatever price oil happens to be that day. Oil producers don't set the prices, the commodity market does.

2nd, the US doesn't produce nearly enough oil to satisfy domestic consumption. The US consumes about 20 million barrels a day of oil, but only produces 8 million bbl/day. That means the US imports 2/3rds of the oil we consume. Oil production in the US has been falling since the 1970s as the easiest oil to get to has been consumed. Oil is getting harder and harder to extract in the US, requiring more technology, and higher oil prices to make it economical.

The largest source of our imported oil is indeed Canada. However, this is a recent phenomenon that only occurred once Canada started widespread extraction from the tar sands. Back when oil was $30/bbl, it wasn't economical to extract oil from tar sands. It was not too long ago that Saudi Arabia was the largest exporter to the US. Mexico also used to be a much larger exporter to the US, but Mexico's oil production has fallen drastically in the last couple years.

[holemilk00]

Originally Posted by axiomatik

The oil companies rake in huge profits when oil goes up, but they aren't really to blame for the prices. Oil is a publicly traded commodity (like gold, or currencies, etc), so it's price varies like the stock market. If investors think that demand might outstrip supply, the price gets bid up. If there is too much capacity, prices fall.

Then how do you explain that we are at record prices at the pump, but more than 20% lower than the record price per barrel? Oil and other commodities are influenced more by speculation than actual trading, its the main point on the agenda for the CEC right now. They are having a conniption fit about it.

Originally Posted by axiomatik

Countries don't pay a higher price depending on whether or not they have any oil production. No matter where you are in the world, the price of a barrel of oil is roughly the same, because it is traded on the global oil commodity market. Producers offer their oil on the market, and it is bought at whatever price oil happens to be that day. Oil producers don't set the prices, the commodity market does.

You can't believe this first sentence to be true?? You really think it doesn't matter if you produce any of it domestically? If you think all oil is traded on the global oil commodity market then how is it that you can buy it on the US commodity market? All oil is not on the global market, only exported oil is.

Originally Posted by axiomatik

2nd, the US doesn't produce nearly enough oil to satisfy domestic consumption. The US consumes about 20 million barrels a day of oil, but only produces 8 million bbl/day. That means the US imports 2/3rds of the oil we consume. Oil production in the US has been falling since the 1970s as the easiest oil to get to has been consumed. Oil is getting harder and harder to extract in the US, requiring more technology, and higher oil prices to make it economical.

I accept this, I meant to say that oil production in North America meets consumption. So you are correct in your rebuttal.

Originally Posted by axiomatik

The largest source of our imported oil is indeed Canada. However, this is a recent phenomenon that only occurred once Canada started widespread extraction from the tar sands. Back when oil was $30/bbl, it wasn't economical to extract oil from tar sands. It was not too long ago that Saudi Arabia was the largest exporter to the US. Mexico also used to be a much larger exporter to the US, but Mexico's oil production has fallen drastically in the last couple years.

This really depends on what you consider recent, Canada has been our leading importer of oil for over a decade now. Brazil is about to ramp up production and will quickly surpass them if the projections of their untapped fields are correct.