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  1. #1
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    Oil prices (Gadhafi dead)

    So now that Gadhafi is dead, prices of oil are supposed to drop off a little bit in a few months. What do you think they will drop to? Hopefully a lot, though I doubt it. Isn't it funny that the prices go up overnight, but they take months to come back down?



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    Re: Oil prices (Gadhafi dead)

    No, you just have to wait for the next "price influence" event like a tropical storm or minor uprising in a country that might produce oil. Every time someone sneezes in the middle east the price of oil goes up. Every time there is a storm anywhere near an oil facility the prices go up. The price of oil is so speculative with so many people trading it as a commodity. It has gotten to the point where supply and demand are secondary pricing factors.



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    Re: Oil prices (Gadhafi dead)

    Supply and demand are not even a concern for oil unless gas prices start effecting driving habits. Then and only then does supply and demand matter.



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    Re: Oil prices (Gadhafi dead)

    Gas and oil prices do not have a direct correlation. You also need to take into account exploration, refining, etc.

    That being said, Libya will not be up to pre-war production for months.



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    Re: Oil prices (Gadhafi dead)

    Quote Originally Posted by pyrocyz View Post
    Supply and demand are not even a concern for oil unless gas prices start effecting driving habits. Then and only then does supply and demand matter.

    +1, As long as people keep buying gas at more than $3/gallon there is no incentive to drop the price.



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    Re: Oil prices (Gadhafi dead)

    Doesn't matter what oil prices do. The holidays are coming up, so we all know what to expect at the pump.

    ..................



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    Re: Oil prices (Gadhafi dead)

    Find a gas station that doesn't buy contracts months ahead of time and you will find two things:

    1. A gas station that has prices that follow oil prices.
    2. An out of business gas station.


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    Re: Oil prices (Gadhafi dead)

    BP needs $3.50 a gallon to encourage more drilling. That is, if they can get the permits to drill.


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    Re: Oil prices (Gadhafi dead)

    Oil and gas are very inelastic products. The change in % of price going up will not result in the same or greater % change in consumption going down.
    Thus, prices will continue to be unrealistic. Hopefully Libya will start pumping out some serious amounts of oil, but it wont amount to much in the price that Americans pay.


    Cy 'till I Die

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    Re: Oil prices (Gadhafi dead)

    I trade oil, diesel, gasoline and LP for a living, so take this for what it is worth. The Libyan conflict being over does have some influence on crude prices going forward, but not complete influence. Libya is Africa's largest producer of crude oil and most of their product there gets exported to Europe and particularly Italy. Since the conflict began there, Libya is one of two major reasons why Brent (European) Crude has become so expensive compared to WTI (American Oklahoma NYMEX) crude. In fact, in what historically used to be a relatively even spread in prices between the two, Brent has been trading around a $25 premium for a while now to WTI crude.

    The other main reason for WTI crude being so cheap compared to Brent crude has been the finished connection of the Keystone pipeline from Alberta Canada to Cushing, Oklahoma, which is the delivery point for WTI crude. This has flooded the American market with more Alberta oil sands crude oil than it needs, which has been the other main influence for the big spread in prices. This makes WTI crude cheap due to high supplies. Keep in mind that Canada, NOT any country in the Middle East or Africa is the number one importer of crude oil to the U.S.. Current debate in Washington is happening over finishing the last leg of the Keystone pipeline to the Gulf (export) market, which would then push WTI crude higher due to more competition worldwide in the export market for that product.

    So, while Libya is coming back on line with some of their product by the end of the year,and will gradually get back to full capacity, this will probably help to bring some of that American/European crude spread back together. However, it is hard to tell how much of it is due to Libya and how much is due to the Keystone pipeline.

    So how will this affect our gasoline prices then? Well, gasoline and diesel prices have risen way more over the last year than crude oil (crack spreads have gone up) mainly because those products have been trading more off of Brent crude oil than WTI crude lately. Brent crude is around $112, while WTI crude is only around $88. This is because many of our refiners in the U.S. are on the East Coast or are in the Gulf where they have to use Brent Crude because they don't have access to the cheap WTI crude. Therefore, since they are paying a lot more for their crude, they need to get paid more for their refined products. So, all said and done, if the Libyan conclusion does end up closing in some of that WTI/Brent crude oil spread over time, I would expect some easing in gasoline and diesel prices even if WTI crude stays around the same price. If you want to predict what WTI crude is going to do over the long haul, you need to look directly at what our economy is going to do as WTI crude is simply following the stock market anymore.

    I apologize for the long explanation, but unfortunately, the situation isn't simple enough to explain in two sentences.


    Last edited by Triggermv; 10-21-2011 at 11:09 AM.

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    Re: Oil prices (Gadhafi dead)

    Who cares? Ride a bike.



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    Re: Oil prices (Gadhafi dead)

    Let my Fred's Posse Ride: Georges, Naz, Hogue, Bryce, Nader, Monte, Matt, and McKay.

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    Re: Oil prices (Gadhafi dead)

    We've heard it all when it comes to explanations (and excuses) as to why we still have high gas prices when U.S. and worldwide demand is and has been down for years now. I may be all wet but it looks to me like the oil industry does about whatever they want to with the price of gasoline. Every gas station in town now goes up and down the same amounts within hours of each other, and as someone pointed out, it goes up by 10 cents at a time and down by a penny or two at a time. It would also seem that the oil industry is so awash in cash now that they could use their large traders and fund managers to affect not only their stock prices, but the price of crude, buying to drive up the prices and selling short to drive them down. It seems the stock prices of most oil companies are down now, as well as a barrell of oil, yet the price of gasoline remains high. Could politics be involved? Imagine what the economy would do if gas prices were in the mid to high two dollar range, which is what demand would seem to indicate. And I'm not buying that BP or anybody else needs anywhere near $3.50 gas to drill. BP endured by far the worst disaster in history and still made money. And anybody can check the profit statements of the big oil companies to see that they can still make a ton of money with gas far below $3.50.



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    Re: Oil prices (Gadhafi dead)

    I blame trigger.



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