World Events
Topic: Oil up $10 last week! Record price of $126 PPB!!

#	Author	Message
11	Elderp Sat 5/10/2008 4:04a	It stops when we stop buying it. As long as they rise prices and we still buy it then prices are going to go up. As for myself, we are serious considering moving in closer to work. It means a smaller house but what you going to do, we have done the math in our house $5/gal and we will sell the house.
12	X-san Sat 5/10/2008 5:08a	Elder, the thing is the math is so complex right? I can understand the "$5 and we're done" concept, but be sure you consider the longterm as well...that smaller house might be worth considerably less than the big one in the longterm no? Tough decision anyway, right? Yikes! I wish you the best of luck!
13	DisneyFreak96 Sat 5/10/2008 9:23a	I know several people who are considering life changing decisions such as Elderp. I know one woman who may drop out of University because she simply can't afford the drive (and this is a private U!). I know another two people looking for jobs closer to home.
14	Mrs ElderP Sat 5/10/2008 11:43a	Gas prices are in elastic in the short term, and in the mid term, even, but I doubt that you can argue that they are in elastic in the long term. People can move closer to work, (like we will probably end up doing eventually) they can buy a smaller, more fuel efficient car the next time they buy a car, some can figure out other, cheaper, less convient transportation like car pools, van pools, and mass transit. A few weeks ago npr had a story about how in the major metropolitain areas (Washington DC and Suburbs, Atlanta, and others) have all seen housing prices *rising* inside metropolitan areas. People are choosing to shrink their commutes. http://www.npr.org/templates/s...89803663
15	fkurucz Sat 5/10/2008 2:55p	<<That sounds nice but it is not accurate. Supply is not the problem here. Take a look at this:>> So OPEC says that there is no shortage. Isn't that like quoting a crack dealer regarding drug supplies. FWIW, I recall the Saudi oil minister not so long ago saying the they were not going to increase production.
16	EighthDwarf Sat 5/10/2008 4:01p	<<So OPEC says that there is no shortage. Isn't that like quoting a crack dealer regarding drug supplies.>> Nope. Oil is tightly regulated and its production is monitored by everyone. <<FWIW, I recall the Saudi oil minister not so long ago saying the they were not going to increase production.>> He knew supplies were sufficient. I know Americans like to think of the Saudis as money-grubbing anti-Christs but that is too simplistic. Even for Americans. If you wanna blame someone, blame the financial institutions and soveriegn wealth funds that are looking for a quick buck in the aftermath of the credit crunch. They are driving up commodity prices. So in essence we are all paying for the credit crisis through higher food and gasoline prices. But most people would prefer not to know that.
17	Dabob2 Mon 5/12/2008 6:25a	My guess (and mind you, it's just a guess): Gasoline rises to about $4.25 a gallon by mid-June or 4th of July. Psychologically, we've sort of prepared ourselves for 4-dollar gasoline, and $4.25 isn't "that much more" in our reptilian brains. After the 4th of July it will decline slightly and hover around $3.80 or so by the Fall, which will allow us to feel relatively "good" about it. It will stay there through the election, thus becoming less of an issue. Next winter we will see another rise, first in heating oil, then in gasoline, as we mentally prepare ourselves for $5.00 gas; when it doesn't quite get there, we feel "well, it could have been worse." Meanwhile, inflation in general creeps up as the cost of getting goods in the stores continues to climb. But although we see mini-trends to cut consumption like a rise in small car sales, basically consumption remains where it is. That's my guess.
18	EighthDwarf Mon 5/12/2008 6:43a	You may be right of course, but it's hard to say. I think we are heading toward inventory overload as producers are trying to supply as much oil at these prices as they can right now. So once this artificial demand tails off there should be a glut of oil that will put downward pressure on prices. My guess is we're close to a peak and we should see the price per barrel fall back down to the $80 range (its real mid-term equilibrium) by year-end. But that's just my guess.
19	X-san Mon 5/12/2008 6:59a	That is a bold guess, Eighth... Are you short selling oil? If you're right, you could make a fortune in a few months!
20	Dabob2 Mon 5/12/2008 7:02a	8th D could be right too. And I hope he is!

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