High gas prices

[areamike]

I hate to say it but I think he is right. We are going to be sitting here in ten years figuring out that ethanol and hybrid and all this other new technology didn't work. Then we are going to ask ourselves. Why didn't we just go ahead and start drilling? All I want to know is when is the first hybrid monsoon coming out?

Hybrid HammerHead please.

[chrisallenhogs]

I hate to say it but I think he is right. We are going to be sitting here in ten years figuring out that ethanol and hybrid and all this other new technology didn't work. Then we are going to ask ourselves. Why didn't we just go ahead and start drilling? All I want to know is when is the first hybrid monsoon coming out?

Hybrid HammerHead please.

You know we could be on to something here, just think of all the extra weight that the batteries would add. If I could get 30 batteries under the seats I don't believe I would need ballast.

[Malibudude]

The new $5 bill...

[areamike]

The new $5 bill...

that's not even funny

[chathamsolutions]

...

As he has in the past, Tillerson said Exxon Mobil will continue to spend the bulk of its profits on finding and producing new supplies of crude oil and natural gas. The company predicts global energy demand will grow by 1.3 percent annually, on average, from 2005 to 2030, and it often cites government forecasts that say fossil fuels will continue to provide about 80 percent of global energy supplies in 2030.

"Notwithstanding the growth in all of the other options for supplying energy -- renewables, nuclear, biomass, alternatives -- the world's going to require substantially fossil fuels to meet its energy needs," Tillerson said. "And two-thirds ... of that is going to come from oil and natural gas."

To that end, Exxon Mobil has said it expects to invest between $25 billion and $30 billion on capital and exploration projects annually for the next five years, up from about $21 billion in 2007. The increase in part reflects the rising costs of finding new supplies of oil and natural gas.

Oil, Tillerson said, is simply a necessity of life.

"Whether people like that or not, that's just a fact," he said. "You can run but you can't hide. That's what you're going to be using 25 years from now."

Exxon Mobil shares slipped a penny to $89.79 in afternoon trading Thursday. They've traded between $77.55 and $96.12 in the past year.

Uhhhh.... Exxon is an OIL company. What do you expect the CEO to say?

Of course the company is going to roll it's profits into finding MORE oil. duh.

If you think we're going to be able to get off the oil teet any time soon, you're crazy.

BTW - your 401(k) depends on the likes of Exxon / Chevron / BP doing well. We all want these companies to keep rolling in the profits and proping up our investment accounts. If they 'did what the lefties are telling them to do, give all the profits back and invest in solar panels - they would be broke in 5 years.

Corporate America BE PROFITABLE!

[JohnDoe]

Is there no profit in solar panel companies? Have you seen what some of the renewable energy funds have done recently? The relative success of a retirement account isn't measured by its Exxon position, but rather that the money is invested appropriately. At this time, it makes sense for many people to have aggressive exxon holdings, at another time, it may make sense to invest in another energy company, but success of an IRA should not depend exclusivly on the success of Exxon. I think you know that (aren't you a FA?) but just wanted to clarify.

[chathamsolutions]

yep I know, all too well. I sell diversification. Alternatives rock, but they are nothing compared to the big oil companies. We drive cars every day. IIRC there's one car for every two people in CA. That's crazy. We will be stuck to the oil teet for the rest of our lifetime. Do I like it, not necessarily. It means that the Saudi's love our money but send us terrorists who take out the WTCenter and our Pentagon. I wish there were a quick way out, but I don't see it.

RE the 401(k) comment: The reality of most people's 401(k)'s is that they are probably WAAY overweighted in LargeCap Domestic - I.E. Exxon.

Too often the media screams foul that a company is making a huge profit. Those profits all trickle down to you and I. Yes, we are all paying more for gasoline, but our retirement accounts are also benefiting and allowing us to potentially retire earlier. Companies that are profitable are only doing what they are supposed to be doing - making a profit. Vote with your wallet if you don't like it.

It's a 2 edge sword.

http://www.threadless.com/submission/163164/Evil_Empire

[Bobby Light]

Here you go, sign this. We need to start drilling.

http://www.americansolutions.com/

[Guest J-Ro]

Oil moved a total of $7 today. A commodity should never 5% intraday based on one EIA report. It is obvious that there is a bubble here. Many factors go into it (Which we have beaten to death) but if/when the rats jump of the oil ship it may drop precipitously. There hasn't been any information or supply/demand changes to warrant the doubling of oil so quickly. These things were priced into oil long ago. You can't tell me that all the economists 3 years ago wouldn't have at least mentioned the possibility of these prices if they thought those factors could close to triple in 3 years?

[Faceplant409]

The new $5 bill...

It is a reality for us Diesel owners...

I paid $5.19 today and passed up 4 or 5 stations asking $5.30...

Pat

[ilovetrains]

Since current oil prices are being fueled by speculation alone (ie, the traditional supply and demand economic model no longer applies, the new model is supply/political or national instability plus anticipated demand), and we have seen what has happened to other speculation based markets (west coast housing, high risk lending, etc.) shouldn't there basically be a bust pretty soon?

Basically, the demand sinks, it would take much, maybe 7% or so, for 60-90 days, and all the oil already loaded onto ships becomes worthless as the price falls, which sparks a panic.

People thought it could never happen in housing, it did. People thought it could never happen in lending, it did.

[Dan P]

BTW - your 401(k) depends on the likes of Exxon / Chevron / BP doing well. We all want these companies to keep rolling in the profits and proping up our investment accounts.

You're right on, Andy!

Get on board, people. You can make big profits just like the oil companies. The money I'm making in my energy fund investments FAR OUTWEIGHS the extra I'm paying at the pump.

[chrisallenhogs]

Since current oil prices are being fueled by speculation alone (ie, the traditional supply and demand economic model no longer applies, the new model is supply/political or national instability plus anticipated demand), and we have seen what has happened to other speculation based markets (west coast housing, high risk lending, etc.) shouldn't there basically be a bust pretty soon?

Basically, the demand sinks, it would take much, maybe 7% or so, for 60-90 days, and all the oil already loaded onto ships becomes worthless as the price falls, which sparks a panic.

People thought it could never happen in housing, it did. People thought it could never happen in lending, it did.

I agree with you for the most part, the only thing is the house is tied to the ground and the loan is tied to the lender. There are tons of people who would love to have the floating oil.

[Guest J-Ro]

Blame the institutional investor-

This is a good read. Quoted parts below.

http://www.reuters.com/article/ousiv/idUSN3036922920080530

An avalanche of cash has rolled into commodities through simple long-only indexes this year, feeding the record-setting oil rally some experts say could be a bubble that is becoming more vulnerable to shifts in supply and demand fundamentals.

A sell-off in oil could spell big losses for the pension funds, municipal funds, college funds, unions and other groups that jumped out of equities-market plays and into the indexes, but have little experience or flexibility to deal with fundamental changes in commodities.

"A lot of the accounts that that have moved into commodities over the last 8-12 months clearly don't belong in this forum," said Peter Beutel, president of Cameron Hanover.

"It means that when this market turns, these people are going to get hurt, and they are going to get hurt badly, and there will be tons of lawsuits because they have no understanding how quickly commodities markets can turn and leave them in the dust," he explained.

While many in the energy sector, such as U.S. Energy Secretary Sam Bodman, argue that fundamentals are driving oil's rally, others say investment in commodity indexes has pushed prices beyond what supply and demand may justify, contributing to the 30 percent price rise over $130 per barrel this year.

"We are seeing the classic ingredients of an asset class bubble," said Edward Morse, chief energy economist for Lehman Brothers. "Financial investors tend to 'herd' and chase past performance, comforted by the growing analytical conclusion that markets are tightening, and new flows, in turn, drive prices higher."

Some experts say much of the 30 percent rise in oil prices since the start of this year may owe a lot to the inflow of new money, and that fundamentals may not justify current prices.

Demand from big consumer nations like the United States has already faltered, and moves by some Asian countries to cut fuel subsidies could clip usage further. Prices could also fall with a significant rebound in the U.S. dollar, after weakness in the greenback sent speculators into oil.

"These are institutional investors who have said we have looked at all the things we can invest in and we decided it's commodities," said Sarah Emerson, director of Energy Security Analysis Inc.

"They are buying and holding and then buying more and holding more, and the physical market doesn't discipline them," she added.

Investment under commodities indexes has ballooned from around $70 billion at the start of 2006 to $235 billion in mid-April, about $90 billion of which has come from fresh financial flows with the rest coming from gains in the underlying commodities, according to Lehman Brothers.

"Professional speculators are seen as the bad guys and pension funds are seen as the good guys, but it's pension funds that are the bad guys," said Olivier Jakob of Petromatrix.

Edited May 30, 2008 by J-Ro

[johnsvt]

J-Ro I have a friend that has been saying what you just quoted for months.

[hrybls]

When spot oil is up more than $12 in 2 days I figure this thread should be brought to the top, just in case no one is paying attention.........

[UWSkier]

Oh to be an oil Sheikh...

[LSVSharks]

So the analysts can increase oil prices now!!!!! What next - I fart and oil will go down because of an increase of "natural gas" LOL

NEW YORK - Oil prices shot up nearly $7 a barrel Friday, extending big gains from the previous day and racing toward an all-time high after a Morgan Stanley analyst predicted prices could hit $150 by the Fourth of July.

Light, sweet crude for July delivery jumped $6.27 to $134.06 on the New York Mercantile Exchange. Earlier, the contract rose as high as $134.68.

Friday's surge builds on a $5.49 gain Thursday, which was the biggest single-day price increase in the history of the Nymex crude contract. That spike came as the dollar fell in response to comments by the European Central Bank suggesting the bank could raise interest rates.

Prices pushed sharply higher Friday after Morgan Stanley analyst Ole Slorer said he expected strong demand in Asia that could drive prices to $150 by July 4. Shipments from the Middle East are mimicking patterns seen in the third quarter last year, when Morgan Stanley based its "oil price spike" predictions on Atlantic Basin draws, he said.

"We made the same call using the same parameters, but now we are starting from much lower inventory levels," Slorer said Friday.

"Asia is taking an unprecedented share" of Middle East exports to build up stocks, Slorer wrote in his report.

Meanwhile, U.S. gas prices at the pump continued to hover just shy of an average $4 a gallon, easing only 0.3 cent from Thursday's record. Drivers are now paying an average of $3.99 for a gallon of regular gas nationwide, according to AAA and the Oil Price Information Service; in many parts of the country, consumers are already paying well over $4.

Pump prices are bound to rise even further if oil sustains its advance. Retail diesel slipped a penny overnight to $4.76.

The dramatic reversal in what had been a weakening oil market began Thursday after ECB President Jean-Claude Trichet suggested the bank could raise interest rates and the euro climbed against the dollar. When interest rates rise in Europe, or fall in the U.S., the dollar tends to weaken against the euro.

Many investors tend to buy commodities such as oil as a hedge against inflation when the dollar is falling. Also, a weaker dollar makes oil less expensive to investors dealing in other currencies, and analysts believe the dollar's protracted decline has been a major reason why oil prices have nearly doubled in the past year.

The euro strengthened against the greenback Friday.

"Oil fundamentals had recently started to reassert themselves with worries about demand destruction, but Mr. Trichet chased them away and re-invited financials to the party," Olivier Jakob of Petromatrix in Switzerland said in a research note.

Earlier this week, Federal Reserve Chairman Ben Bernanke indicated that more interest rate cuts are unlikely in the U.S., sending the dollar higher and pushing oil prices lower.

Oil's decline from the record $135.09 hit May 22, though, has come largely on concerns about slackening demand, and the factors that slashed the prices by more than $10 are still present, analysts noted. They said they were uncertain whether Thursday's trading could be the start of a new surge higher or just an exception.

"The underlying oil fundamentals are, however, unchanged," Jakob said, pointing to worries about falling global demand.

In other Nymex trading, heating oil futures rose 21.54 cents to $3.8962 a gallon while gasoline prices rose 12.32 cents to $3.4577 a gallon. Natural gas futures rose 24.8 cents to $12.767 per 1,000 cubic feet.

In London, July Brent crude shot up $5.65 to $133.19 a barrel on the ICE Futures exchange.

___

Edited June 6, 2008 by barefooth20skier

[UWSkier]

Of course they can. All the speculators need is some report to point to to drive up the prices. The investment shops such as Morgan Stanley have a vested interest in keeping the hype going. They're making money in their energy portfolios hand over fist. Notice it's always an analyst from an investment house releasing these reports? It's never an independent analysis.

[hrybls]

Now up $9.26 today.........gulp

[UWSkier]

Now up $9.26 today.........gulp

Thank God we're in this war for oil. Can you imagine how much we'd pe paying if we weren't taking all of Iraq's oil?

[Guest J-Ro]

Down $11 Tues and Wed, then up $12 Thurs & Fri? Yeah it's all supply/demand.

[hrybls]

Down $11 Tues and Wed, then up $12 Thurs & Fri? Yeah it's all supply/demand.

The gas station's seemed to be a bit more busy on Thurs, Fri. So maybe it is.

[68Slalom]

Now up $9.26 today.........gulp

Thank God we're in this war for oil. Can you imagine how much we'd pe paying if we weren't taking all of Iraq's oil?

You got that right

[68Slalom]

If the weather holds out from here on I'm going to start riding my bike in 2-3 times a week