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post #1 of 47 (permalink) Old 08-30-2010, 12:59 PM Thread Starter
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Oil should be $10 a barrel...

http://finance.yahoo.com/news/Oil-Sh...3&asset=&ccode


Oil Should Be Around $10 a Barrel: Analyst

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EmailPrint..On Monday August 30, 2010, 12:57 pm EDT
The price of a barrel of oil would be closer to $10 if the commodity wasn't traded as an investment instrument, given the record-high levels of U.S. oil inventories, Peter Beutel, president of Cameron Hanover, told CNBC Monday.



"I honestly think that if there were no investors using oil as an asset that the price of oil right now would be $10 or $15 or $18, but it wouldn't be anywhere near where it is," Beutel said.

"We have so much oil right now, more than we've had in 27 years. Why is it 27 years? Because that's how far our records go back. It's probably the most in 50 or 100 years," he added.

Part of the reason the price of oil is currently above $74 (BIS: [email protected]) a barrel is because of a belief in the economic recovery, Beutel said.

Comments by Federal Reserve Chairman Ben Bernanke over the weekend gave the commodity a boost as he signalled a willingness to support the fragile economic recovery with additional policy measures.

From a historical perspective, Beutel pointed out that the current level of inventories is even higher than when the price of oil was below $20 a barrel.

"We've got 50 million barrels of crude more than we had two years ago. We have 176 million of distillate," Beutel said. "When I started in the business back in 1980 we used to think to ourselves: "Gee, we would love it if we had 140 million barrels of distillates to start the winter."

Not all market watchers agree that the price of oil should or will go lower. Jonathan Barratt, managing director at Commodity Broking Services, told CNBC that he thinks oil will rise to between $82 and $85 a barrel.

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post #2 of 47 (permalink) Old 08-30-2010, 01:25 PM
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Yup, why the speculation market is bad for us consumers.

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post #3 of 47 (permalink) Old 08-30-2010, 01:37 PM
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Oil Should Be Around $10 a Barrel:


yeh and we should have obama in jail for treason.

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post #4 of 47 (permalink) Old 08-30-2010, 03:00 PM
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Wasn't it around $10 back in '98/'99? I think I remember paying $1.10 or so for premium back then.

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post #5 of 47 (permalink) Old 08-30-2010, 03:07 PM
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Wasn't it around $10 back in '98/'99? I think I remember paying $1.10 or so for premium back then.
Yep the good ole days. I use to throw $10 in my car and cruise all night back then.
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post #6 of 47 (permalink) Old 08-30-2010, 03:19 PM
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I remember when it was $.75/gallon.

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post #7 of 47 (permalink) Old 08-30-2010, 03:29 PM
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lol, great idea lets run the price of a non renewable resource down so low we all use a lot and run out before a proper replacement is in order!
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post #8 of 47 (permalink) Old 08-30-2010, 03:36 PM
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lol, great idea lets run the price of a non renewable resource down so low we all use a lot and run out before a proper replacement is in order!
Show me proof where it's a non renewable resource. Hell there is an oil boom in Midland going on right now and they've been sucking oil out of the ground in that area for the last 70 years. Yet they still find oil where they previously thought non existed or it had all been sucked dry. What are you going to tell me next? That diamonds are rare. If they are so rare why does every jewerly store in the mall have hundreds of them.

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post #9 of 47 (permalink) Old 08-30-2010, 03:45 PM
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I remember when it was $.75/gallon.
When I started driving, 98 octane premium was .58 a gallon. Early 1976...

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post #10 of 47 (permalink) Old 08-30-2010, 04:05 PM
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post #11 of 47 (permalink) Old 08-30-2010, 04:08 PM
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Where are all the investors storing all the oil they are buying to force the price up?
If i recall correclty investors don't have to buy the actual product.. AL P or someone else smarter than me can verify this..that's why they call it speculation...

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post #12 of 47 (permalink) Old 08-30-2010, 04:14 PM
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When I started driving, 98 octane premium was .58 a gallon. Early 1976...

1 1/2 years before that..... (before Kissinger made the deal with the Arab country's)
it was .38
Then they pulled the shortage crap and if shot up to .78 a gallon in 78/79.



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post #13 of 47 (permalink) Old 08-30-2010, 04:19 PM
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Show me proof where it's a non renewable resource.
Didn't you know it's made from squished up dinosaurs? It may not technically be renewable but we can synthetically generate plenty of it from renewable sources. It's just cheaper to drill and process raw crude for now. Besides, there is more oil in the ground than we'll use in the next 5+ generations.

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post #14 of 47 (permalink) Old 08-30-2010, 04:19 PM
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If i recall correclty investors don't have to buy the actual product.. AL P or someone else smarter than me can verify this..that's why they call it speculation...
I they had to take delivery before they could resell it, this current market foolishness would go away.
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post #15 of 47 (permalink) Old 08-30-2010, 04:19 PM
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Where are all the investors storing all the oil they are buying to force the price up?
They don't actually have physical capital. It is all an electronic numbers game, no physical trading.

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post #16 of 47 (permalink) Old 08-30-2010, 04:20 PM
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Wasn't it around $10 back in '98/'99? I think I remember paying $1.10 or so for premium back then.

Ahh yes. I started driving in '98 and can remember 87 octane being .89/gal.

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post #17 of 47 (permalink) Old 08-30-2010, 04:41 PM
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The current price could also be a function of inflation.

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post #18 of 47 (permalink) Old 08-30-2010, 04:42 PM
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I they had to take delivery before they could resell it, this current market foolishness would go away.
Yeah..and I'm all for capitalism and stock markets, I'm just too dumb to figure out why would you trade oil this way? Sure trading oil would be as good as trading coal or other minerals..but it just seems so wrong that the investors don't have to buy the actual product before the price is affected.

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post #19 of 47 (permalink) Old 08-30-2010, 04:45 PM
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The perfect price for oil is around 89.00/bbl. If it sits at that then im sitting pretty on all sides.

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post #20 of 47 (permalink) Old 08-30-2010, 04:45 PM Thread Starter
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Where are all the investors storing all the oil they are buying to force the price up?
Cushing, OK but supposedly those tanks are full. We have to guess since an inventory isn't really released. They are building more tanks last I heard. They are also storing it on tanker ships.

The way I look at it is that they can store all they want, the piper has to be paid eventually. There will eventually be a huge oil glut.
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post #21 of 47 (permalink) Old 08-30-2010, 04:45 PM
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Where are all the investors storing all the oil they are buying to force the price up?
See the post after yours. They aren't actually buying the oil.

That said, oil companies have oil stored in tankers, offshore, that refuse to port until the magical price per gallon hits. They are basically, forcing a "shortage" creating a supply/demand issue that will raise the prices. It's bullshit. And it's very well known. Yet, nobody can seem to do anything about it. That said, I really don't think it's the Govt's responsibility. I'm conservative. I want LESS govt. And if the past 16 months has taught us ANYTHING, it's that everything this administration touches, turns to shit, because none of them have a fucking clue. Our luck, Obama would get invovled, and prices would hit $5/gallon and we'd all be screwed.
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post #22 of 47 (permalink) Old 08-30-2010, 04:47 PM Thread Starter
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Show me proof where it's a non renewable resource. Hell there is an oil boom in Midland going on right now and they've been sucking oil out of the ground in that area for the last 70 years. Yet they still find oil where they previously thought non existed or it had all been sucked dry. What are you going to tell me next? That diamonds are rare. If they are so rare why does every jewerly store in the mall have hundreds of them.
Part of the answer to this is new technology. That is why peak oil is horseshit. They know of oil deposits all over the world that they can't get or that they can't use. All they need is new technology to use those deposits and you have an instant increase in supply.

I believe it is a huge fucking scam.
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post #23 of 47 (permalink) Old 08-30-2010, 04:49 PM
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Cushing, OK but supposedly those tanks are full. We have to guess since an inventory isn't really released. They are building more tanks last I heard. They are also storing it on tanker ships.

The way I look at it is that they can store all they want, the piper has to be paid eventually. There will eventually be a huge oil glut.
Which means what? A drastic drop in price, a bottoming out in effect? Or will they have some disasters that destroy storage and force prices even higher?

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post #24 of 47 (permalink) Old 08-30-2010, 04:56 PM Thread Starter
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There will be a huge amount of over supply eventually and the price will take a huge dump. I hope it ruins more hedge funds.

Go to Bing.com and look up an aerial for Cushing, OK and you will see the tanks they have there, I bet they have over a hundred visible. I am not sure if they have underground storage.

Here is an article about Cushing, it says that they only hold 10% of US inventory but it is where the NYMEX clearinghouse is, meaning that the oil stored there is speculative oil.

http://www.mindfully.org/Energy/2007...here6oct07.htm
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post #25 of 47 (permalink) Old 08-30-2010, 05:10 PM
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The price of oil is at the same level it was a year ago. Everyone that is "storing" oil waiting for the price to hit the magic number has unproductive money sitting idle. The world is going through deflation the next couple of years, like Japan did. Cash is king, that is why companies are sitting on $trillion of cash. They know things will be cheaping in the future.
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post #26 of 47 (permalink) Old 08-30-2010, 05:19 PM Thread Starter
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The price of oil is at the same level it was a year ago. Everyone that is "storing" oil waiting for the price to hit the magic number has unproductive money sitting idle. The world is going through deflation the next couple of years, like Japan did. Cash is king, that is why companies are sitting on $trillion of cash. They know things will be cheaping in the future.
The money isn't unproductive if they sell a contract on the oil.

I own 1 barrel of oil that I paid $75 for. You think the price will go to $100 in the next six months. I sell you a contract for $3 saying I will deliver you that barrel of oil for $85 in six months. Six months goes by, oil is still $75. I made $3 and your contract is now worthless.

I do that shit all day long with stocks. I make good money not buying a damn thing!
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post #27 of 47 (permalink) Old 08-30-2010, 08:33 PM
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Yeah..and I'm all for capitalism and stock markets, I'm just too dumb to figure out why would you trade oil this way? Sure trading oil would be as good as trading coal or other minerals..but it just seems so wrong that the investors don't have to buy the actual product before the price is affected.
It would keep people who have no business buying/selling oil out of the oil business, inflating the price by buying and selling oil while sitting in their undies at home with no intent of taking delivery.

It would shift the market back to true supply/demand pricing.

And i hope that Al is right about the upcoming glut collapse.
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post #28 of 47 (permalink) Old 08-30-2010, 08:39 PM
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lol, great idea lets run the price of a non renewable resource down so low we all use a lot and run out before a proper replacement is in order!
Oil could be renewable.
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post #29 of 47 (permalink) Old 08-30-2010, 09:02 PM
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lol, great idea lets run the price of a non renewable resource down so low we all use a lot and run out before a proper replacement is in order!
What do you base your claim of oil not being a renewable resource on? The rantings of the same people who claim that we are killing the planet? Or the people who claim that diamonds a super rare?

About 20-25 years ago a man drilled a well in a rock formation called a shield. This was in Sweden or Switzerland; I don't remember which country. The rock formation is nearly 2 billion years old and has existed since before the first sparks of life ever came about. Every theory there is says that it is impossible to find oil there. Despite of all of the theory's, this well produces about 100 barrels a day (that is 4800 gallons per day) and has done so for the past 20 years. Barron's magazine did a very in depth story about this well and I'll bet that you can find the article without to much effort.

The Petro Physicist that drilled the well says that oil IS NOT a fossil fuel. He says that some oil is but the bulk of it is just a natural by product of the earth. He also pointed out that may wells that were considered tapped out 50-60 years ago are full again.

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post #30 of 47 (permalink) Old 08-30-2010, 09:18 PM
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It would keep people who have no business buying/selling oil out of the oil business, inflating the price by buying and selling oil while sitting in their undies at home with no intent of taking delivery.
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post #31 of 47 (permalink) Old 08-30-2010, 09:28 PM
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Where are all the investors storing all the oil they are buying to force the price up?
Supposing they did have to take possession of it, they would just use an idle super-tanker that would otherwise (in a healthy global economy) be in use, parking it off the coast of the pacific rim somewhere.

... but that's if they had to take possession.

26 miles of tankers

Ghost fleet off Singapore

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post #32 of 47 (permalink) Old 08-31-2010, 05:13 AM
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The money isn't unproductive if they sell a contract on the oil.

I own 1 barrel of oil that I paid $75 for. You think the price will go to $100 in the next six months. I sell you a contract for $3 saying I will deliver you that barrel of oil for $85 in six months. Six months goes by, oil is still $75. I made $3 and your contract is now worthless.

I do that shit all day long with stocks. I make good money not buying a damn thing!
Someone mentioned company storing oil, but to your point, if someone purchase a contract (increasing demand) and just to sell in later (increasing supply) then the net effect is zero. If what you are suggesting, then we would actually see high demand for future contracts in oil for December delivery high in price and August contract low in price. That would mean people holding the contact for six month would see the value drop.
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post #33 of 47 (permalink) Old 08-31-2010, 05:18 AM
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Supposing they did have to take possession of it, they would just use an idle super-tanker that would otherwise (in a healthy global economy) be in use, parking it off the coast of the pacific rim somewhere.

... but that's if they had to take possession.

26 miles of tankers

Ghost fleet off Singapore
Now to the point, it cost money to put not only put the oil in the tanker, plus the cost of renting the tanker to just sit there. I guess the price of a super tanker is above $1 million a month. This has to be a great way to make money.
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post #34 of 47 (permalink) Old 08-31-2010, 08:38 AM Thread Starter
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Someone mentioned company storing oil, but to your point, if someone purchase a contract (increasing demand) and just to sell in later (increasing supply) then the net effect is zero. If what you are suggesting, then we would actually see high demand for future contracts in oil for December delivery high in price and August contract low in price. That would mean people holding the contact for six month would see the value drop.
The net effect would be zero if you were to restrict the writing of contracts only to those who physically own oil. Or more precisely, you would see a shift of the demand/supply from one month to another.

However, you don't have to physically own oil to buy or sell contracts. You can do it without owning anything and that is where the problem is. During the days of $150 a barrel oil (and $5 per gallon gasoline), there were 27 contracts outstanding on each physical barrel of oil. That is according to the 60 minutes story done on the subject.

To me that signals a problem. I think people should be able to speculate on oil if they want to, that is a free market. But if there are that many contracts outstanding it generally acts to inflate demand today and increase supply tomorrow. When you add in the shenanigans of the owners of the actual barrels of oil, it gets that much worse. There should be some sort of cap on the amount of speculation that can be done on each barrel of oil. I have no idea what would be a smart way to go about doing that without harming free enterprise but it needs to be done.
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post #35 of 47 (permalink) Old 08-31-2010, 08:54 AM
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Supposing they did have to take possession of it, they would just use an idle super-tanker that would otherwise (in a healthy global economy) be in use, parking it off the coast of the pacific rim somewhere.

... but that's if they had to take possession.

26 miles of tankers

Ghost fleet off Singapore
Any more recent stories than 2009? I was under the impression a lot of those ships had been activated.

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post #36 of 47 (permalink) Old 08-31-2010, 08:59 AM
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lol, great idea lets run the price of a non renewable resource down so low we all use a lot and run out before a proper replacement is in order!
A majority of people use the same amount of gas/oil regardless of price. It takes me x amount of gallons a week to get to work and do the driving i do. That number required is not affected by the price of gas/oil.

However, the price of gas/oil does effect my monthly budget so that I can buy x amount of gallons needed. If the price went down I would have some extra money to spend, save, or pay off debt which would help the economy out.
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post #37 of 47 (permalink) Old 08-31-2010, 09:14 AM
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A majority of people use the same amount of gas/oil regardless of price. It takes me x amount of gallons a week to get to work and do the driving i do. That number required is not affected by the price of gas/oil.

However, the price of gas/oil does effect my monthly budget so that I can buy x amount of gallons needed. If the price went down I would have some extra money to spend, save, or pay off debt which would help the economy out.
More people would be inclined to take weekend trips to places if it didn't take $100 just in gas to get to San Antonio.

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post #38 of 47 (permalink) Old 08-31-2010, 09:24 AM
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More people would be inclined to take weekend trips to places if it didn't take $100 just in gas to get to San Antonio.
I do not think this will cause such a drastic increase in demand that it will cause us to run out of oil any faster as indicated by the intial post I replied to.
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post #39 of 47 (permalink) Old 08-31-2010, 10:27 AM
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I do not think this will cause such a drastic increase in demand that it will cause us to run out of oil any faster as indicated by the intial post I replied to.
I am agreeing with you. I think the impact on the economy will be very positive. Shit at $10 a barrel I would be ok with a tax increase on the gas (as long as toll roads are abolished, and they only spend it on highway construction.

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post #40 of 47 (permalink) Old 08-31-2010, 10:48 AM
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What is the forumla for converting price per barrel of oil, to price per gallon at the pump?

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Whoops double post. For some reason.

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post #42 of 47 (permalink) Old 08-31-2010, 11:15 AM Thread Starter
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What is the forumla for converting price per barrel of oil, to price per gallon at the pump?
There isn't one. Mainly because different types of oil yield a different amount of each product. The oil that comes from Texas is different than the oil from the Russia, for example.

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post #43 of 47 (permalink) Old 08-31-2010, 08:31 PM
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Originally Posted by justinsn95 View Post
What is the forumla for converting price per barrel of oil, to price per gallon at the pump?

2 different futures contracts



When oil was $150, gas was $4


When it fell to low 30's after the run up gas was $1.30


Now oil is $75 and gas is 2.50


Using the current correlation, next time oil reaches $150, a gallon of gas will be $5+

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post #44 of 47 (permalink) Old 08-31-2010, 08:44 PM
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This country has more NG resources than it does oil. 1mcf of NG =7 gallons of diesel. 1mcf=4 bux 7gallons of diesel=21 bux. Do the math or keep sending billions a year overseas to fund both sides of our wars

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post #45 of 47 (permalink) Old 08-31-2010, 11:57 PM
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Oil prices have been the same for the last 50 years, and so have gold prices. Now the value of your dollar is in the toilet thanks to your government. That's inflation and it is real.

Look at housing, auto, and even the value of toilet paper. It hasn't changed. It's the money that is worthless.
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post #46 of 47 (permalink) Old 09-03-2010, 08:17 AM
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However, you don't have to physically own oil to buy or sell contracts. You can do it without owning anything and that is where the problem is. During the days of $150 a barrel oil (and $5 per gallon gasoline), there were 27 contracts outstanding on each physical barrel of oil. That is according to the 60 minutes story done on the subject.
There is a buyer and sell on every transaction. I don't see how that many people could promise to deliver without the product. I would think that if there were 27 contracts for every physical barrel of oil, someone would be caught naked.
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post #47 of 47 (permalink) Old 09-03-2010, 08:35 AM Thread Starter
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There is a buyer and sell on every transaction. I don't see how that many people could promise to deliver without the product. I would think that if there were 27 contracts for every physical barrel of oil, someone would be caught naked.
As long as you have someone willing to take cash instead of physical delivery of the product, we will have this problem.

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