I think this is the beginnings of an economy based on perpetual growth and fossil fuel energy running headlong into geological energy constraints. Basically I see an undulatory downward path for the rest of my life. From here out, I think any rallies in our economic condition are going to be met with spiking commodity prices that knock us right back down.
Joined: Oct 23, 2004 Posts: 5928 Location: New Jersey
Posted: Tue Mar 04, 2008 11:31 am Post subject: EIA Chief Says Speculation Pushing Up Oil Prices
US Energy Information Administration Chief Guy Caruso at first said that speculators were driving up the price of oil by $10 to $50, but later clarified that by saying they had pushed up prices by $12 a barrel. [How did he know that?]
He also said that the price of oil would be $57 in 2016. Anyone who wants to contract to sell oil at $57 in 2016 can contact me.
Quote:
US Official: Speculation Fuels Oil Price
16 minutes ago
WASHINGTON (AP) — A top Energy Department official says market speculation may be adding as much as $12 to the price of crude oil and that prices may not yet have peaked.
The head of the federal Energy Information Administration, Guy Caruso, told a Senate hearing that supply and demand would suggest a price of about $90 a barrel. Prices fluctuated around $102 a barrel Tuesday after surging to a record $104 a barrel on Monday.
Caruso told a Senate hearing that market speculation, the decline of the dollar and money moving into commodities have added to the upward pressure on crude oil prices.
EIA's Caruso Suggests Speculators Having Oil-Price Effect
Quote:
DOW JONES NEWSWIRES
March 4, 2008 11:02 a.m.
By Siobhan Hughes
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--The Energy Information Administration's top official on Tuesday said that speculators were having an effect on oil prices, though the effect was difficult to quantify.
"There's clearly been a surge in moneys coming in to commodities markets, including energy, which has had some upward effect on the price above the trendline," EIA Administrator Guy Caruso said in response to a question during a Senate Energy and Natural Resources Committee hearing.
"Something's clearly going on," he said. "It's difficult to say whether that number is $5 or $10," he said, but said he would "strongly disagree" that it is $50.
EIA Projects 'Real-World Crude' At $57/Bbl In 2016
DOW JONES NEWSWIRES
March 4, 2008 10:19 a.m.
By Siobhan Hughes
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--The Energy Information Administration on Tuesday projected that the price of so-called "real-world crude" oil would decline to $57 a barrel in 2016 as expanded investment in exploration and development brings new supplies to the market.
Guy Caruso, the administrator of the EIA, provided the estimate in testimony before the Senate Energy and Natural Resources Committee.
He said that the price of natural gas would decline through 2016, also as new supplies enter the market. After 2016, he projects that real natural gas prices would rise to $6.56 per thousand cubic feet in 2030.
He also said that the consumption of biofuels would rise to 29.7 billion gallons in 2030, or about 11.3% of total motor vehicle fuel, following the enactment last year of a law that mandated more ethanol be blended into the fuel supply.
Posted: Tue Mar 04, 2008 11:36 am Post subject: Re: EIA Chief Says Speculation Pushing Up Oil Prices
I don't remember whether it was DantesPeak or perhaps Pup55 that mentioned that rampant speculation on crude futures was improbable or impossible , if only because somebody, somewhere must eventually take physical delivery of that crude, and the price they pay is set by the law of supply and demand.
Does anyone recall that conversation? _________________ "It's called the American Dream because you'd have to be asleep to believe it."
Joined: Oct 23, 2004 Posts: 5928 Location: New Jersey
Posted: Tue Mar 04, 2008 11:49 am Post subject: Re: EIA Chief Says Speculation Pushing Up Oil Prices
Futures are a zero sum game. The exchange traded fund for oil, USO as well as others, are based upon futures. Therefore an offsetting short position exists on all exchange traded oil funds.
Speculators could only bid up the price of oil if they took delivery, or in the short term, influenced natural sellers to withhold oil temporarily.
Joined: Oct 18, 2004 Posts: 2106 Location: kiwibush
Posted: Tue Mar 04, 2008 2:14 pm Post subject: Re: EIA Chief Says Speculation Pushing Up Oil Prices
Wasn't the free market meant to be the most efficient model for the allocation of resources? If this particular corner is in effect inefficiently working, what does it say of the entire model? _________________ Bugger me, I hear oil's runnin out mate!
Joined: Apr 28, 2005 Posts: 3879 Location: West shore Lake Eire, MI, USA
Posted: Tue Mar 04, 2008 3:38 pm Post subject: Re: EIA Chief Says Speculation Pushing Up Oil Prices
americandream wrote:
Wasn't the free market meant to be the most efficient model for the allocation of resources? If this particular corner is in effect inefficiently working, what does it say of the entire model?
This corner is working efficiently based on economics, it just isn't producing cheap oil that so many free marketeers have assumed would come along. _________________ Always appeal to a man's enlightened self interest, you can trust him to look out for himself honestly, It's when you appeal to his Honor or the Common Good that he stops paying attention.
Joined: Oct 18, 2004 Posts: 2106 Location: kiwibush
Posted: Tue Mar 04, 2008 5:31 pm Post subject: Re: EIA Chief Says Speculation Pushing Up Oil Prices
That's not what Gary the Carrot's saying though, is it, Tanada. He's accusing the oil markets of speculatively bucking up the prices with the retort that there's enough black stuff in the ground. If thats the case, this damn well sounds to me like someones being shafted, namely the not so well-off consumer. In fact, this sounds to me like the impostion of a tax...except its the rich taxing the poor.
Either oil is depleting or there's a con afoot!
When are the media going to do their job in this so-called free society we inhabit and inform us of the facts...so that we may exercise our vote in an INFORMED MANNER! _________________ Bugger me, I hear oil's runnin out mate!
Joined: Apr 28, 2005 Posts: 3879 Location: West shore Lake Eire, MI, USA
Posted: Tue Mar 04, 2008 5:34 pm Post subject: Re: EIA Chief Says Speculation Pushing Up Oil Prices
americandream wrote:
Either oil is depleting or there's a con afoot!
When are the media going to do their job in this so-called free society we inhabit and inform us of the facts...so that we may exercise our vote in an INFORMED MANNER!
The next time the mass media gives an unvarnished account of ANYTHING would be the first time, especially in the realm of pollitics and voter information. _________________ Always appeal to a man's enlightened self interest, you can trust him to look out for himself honestly, It's when you appeal to his Honor or the Common Good that he stops paying attention.
Posted: Tue Mar 04, 2008 5:40 pm Post subject: Re: EIA Chief Says Speculation Pushing Up Oil Prices
americandream wrote:
That's not what Gary the Carrot's saying though, is it, Tanada. He's accusing the oil markets of speculatively bucking up the prices with the retort that there's enough black stuff in the ground. If thats the case, this damn well sounds to me like someones being shafted, namely the not so well-off consumer. In fact, this sounds to me like the imposition of a tax...except its the rich taxing the poor.
Either oil is depleting or there's a con afoot!
When are the media going to do their job in this so-called free society we inhabit and inform us of the facts...so that we may exercise our vote in an INFORMED MANNER!
I kind of resent that...
Guy Caruso may be a tool, but we are #1 in the world for "oil news" according to Google.Not OGJ or CNN or ABC News... Peakoil.com
Man that's gotta smart.
But I understand what you mean. _________________ "When you understand why you dismiss all the other possible gods, you will understand why I dismiss yours." - Stephen F Roberts.
Joined: Oct 23, 2004 Posts: 5928 Location: New Jersey
Posted: Tue Mar 04, 2008 6:00 pm Post subject: Re: EIA Chief Says Speculation Pushing Up Oil Prices
I agree with Aaron, and from what I gather, Caruso was just giving his opinion. I'd like to see someone come up with some kind of proof that speculators drive up oil prices the next time they go before Congress.
As I have said before, for all we know, speculators could be driving down prices. Pickens admitted to being short the market recently. Think back at the beginning of 2007, with the oil price down, when it seemed most everyone on Wall Street expected lower prices.
Caruso expects oil priced at $104 to bring on new supplies. Didn't we hear that as it past $40, $50, $70, and $90?
Anyway, the damage is done - but Caruso does expect higher prices in 2030:
Quote:
ENERGY UPDATE: Oil Prices May Drop In Near Term, Then Soar Again
The Energy Information Administration (EIA) gave Congress today, March 4, a mixed outlook for oil prices, saying they may drop in the next few years then rise again possibly as high as $185 a barrel. Appearing before the Senate Energy and Natural Resources Committee, EIA Administrator Guy Caruso presented an updated energy outlook since Congress approved an energy bill in December that included new fuel efficiency standards for light vehicles and energy efficiency standards for appliances.
For the short term, Caruso said the updated analysis shows that real world crude oil prices would decline from current levels to $57 a barrel, in 2006 dollars, by 2016 or about $68 in nominal or actual dollars. Caruso said the current high prices – nudging up to a record price near $104 a barrel Monday -- would produce expanded investment in exploration and development, bringing new supplies to the market in the short run.
After 2016, however, the average real price of crude oil would go to $70 a barrel in constant 2006 dollars or about $113 a barrel in actual dollars by 2030, according to the outlook. Caruso said his agency recognizes the uncertainties in the energy markets in the long run and therefore projected a "high price case" where oil prices could soar to $185 a barrel in actual dollars. His overall report to the committee was welcomed by Senate Energy and Natural Resources Chairman Jeff Bingaman (D-New Mexico) and ranking member Pete Domenici (R-New Mexico) who both gleaned good news from it.
Senator Byron Dorgan (North Dakota) said, "I think there's some good news in this report" but added no one knows what will happen in 24 months, let alone 24 years. He also blamed market speculators for driving up oil prices, a point Caruso acknowledged as a factor that perhaps was adding "some upward pressure" on prices.
Posted: Tue Mar 04, 2008 8:56 pm Post subject: Re: EIA Chief Says Speculation Pushing Up Oil Prices
Aaron said:
Quote:
Guy Caruso may be a tool, but we are #1 in the world for "oil news" according to Google.Not OGJ or CNN or ABC News... Peakoil.com
Well .... when you put it that way ......... maybe we are important!
Thanks Aaron, from all of us.
DantesPeak said:
Quote:
Caruso expects oil priced at $104 to bring on new supplies. Didn't we hear that as it past $40, $50, $70, and $90?
It is amazing that anyone would still listen to this same old absurdity. It just shows how uninformed the general public is about PO, or just about oil in general. That is our biggest hurdle in getting the message out there; without a doubt!
Joined: Jan 14, 2008 Posts: 321 Location: The Yukon
Posted: Wed Mar 05, 2008 12:02 am Post subject: Re: EIA Chief Says Speculation Pushing Up Oil Prices
DantesPeak wrote:
Caruso expects oil priced at $104 to bring on new supplies. Didn't we hear that as it past $40, $50, $70, and $90?
The last time a barrel of oil sold for $40 was in Sept 2004. In that quarter, flow was only 83.3-mbd. Sept 2004 was also the month that Colin Campbell made his bold forecast that All Liquids would peak in 2006 at 84-mbd. Today it is 87-mbd.
All Liquids is tracking the growth trend forecast by most geologists and analysts.
The spec spikes are getting higher and broader as more parties join this playground:
Posted: Wed Mar 05, 2008 11:06 am Post subject: Re: EIA Chief Says Speculation Pushing Up Oil Prices
shortonoil wrote:
Aaron said:
Quote:
Guy Caruso may be a tool, but we are #1 in the world for "oil news" according to Google.Not OGJ or CNN or ABC News... Peakoil.com
Well .... when you put it that way ......... maybe we are important!
Thanks Aaron, from all of us.
DantesPeak said:
Quote:
Caruso expects oil priced at $104 to bring on new supplies. Didn't we hear that as it past $40, $50, $70, and $90?
It is amazing that anyone would still listen to this same old absurdity. It just shows how uninformed the general public is about PO, or just about oil in general. That is our biggest hurdle in getting the message out there; without a doubt!
It is most certainly been my pleasure.
You're welcome. _________________ "When you understand why you dismiss all the other possible gods, you will understand why I dismiss yours." - Stephen F Roberts.
Posted: Wed Mar 05, 2008 12:17 pm Post subject: Re: EIA Chief Says Speculation Pushing Up Oil Prices
Quote:
somebody, somewhere must eventually take physical delivery of that crude
I hope I didn't tell you this, because it is of course not right at all. Anybody can write a contract for delivery of some quantity of crude oil at some time in the future, whether they have the crude or not.
I, some jerk sitting in some office, can sell 1000 barrels of crude oil right now, if I want. Some other jerk elsewhere can buy some if he or she wants.
As long as I buy some back before the contract expires, I don't have to mess with it. That's why there is such a flurry of activity at the end of the month when the current contract expires.
I am taking a hell of a risk, of course. If I sell some November crude oil right now, the closer it gets to November, the more nervous I will be. I will be willing to pay whatever to get this offsetting contract.
What I would be speculating is that I can buy this contract back between now and November at something less than what I sold it for in the first place. If I can't, I lose. I will be pretty frantic on October 22, when the November contract expires, if I have not done something with this by then.
Each contract is 1000 barrels, so there are many many more contracts outstanding at a given time than there is actual physical oil.
The current (noon EDT) volume on April Crude Oil is 225,000 contracts, which represents 219,000,000 barrels of oil, and we are only talking about a half a day, and only one grade of oil, WTI. This does not inclue the "open interest" which is the number of contracts sitting around in some account somewhere. Right now, it's 333,000,000 barrels for April.
Posted: Wed Mar 05, 2008 12:24 pm Post subject: Re: EIA Chief Says Speculation Pushing Up Oil Prices
Thanks for the info, Pup55. I probably (completely?) misunderstood the concept at first, but your explanation makes a lot of sense. _________________ "It's called the American Dream because you'd have to be asleep to believe it."
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, if only because somebody, somewhere must eventually take 
