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    Obama...Is He Telling the Truth?

    http://youtu.be/F3alae5zkLQ
    hmmm...Discuss? i have no opinion either way. I can only look at the facts and go from there. I have one problem right now, and that is actually finding facts about why oil prices fluctuate... Im ignorant and am looking to be educated. Anyone who knows please let me get a little knowledge from you!

    #2
    Pretty broad subject, with many many opinions.

    My opinion as brief as possible;



    Analysts say demand is driving price. Global demand is higher, and OPEC has done a poor job of keeping up with demand. They regulate production. Or atleast thats the jyst of what circulates the media/news.


    Demand as a number is probably beind manipulated by speculation. The same barrel of oil is bought and sold a dozen or so times before it actually gets to the refinery. In between each transaction a number that could be interpreted as a "sale" is created, but its the same barrel of oil.

    This is how the perception of "demand" is so much higher, but the same "production" levels maintain the global needs. Enough people, with enough money start buying and selling oil to manipulate numbers, and all the sudden we have what appears to be a "crisis" on our hands because oil "sales" are at record levels world wide, and production has not been incresed therefore the oil must be more valuable.

    Pair that scenario with all the turmoil in the middle east and its a very sellable story. This "crisis" is very believable, so alot of people do and people in the oil trade will continue getting filthy rich for many years to come.
    Originally posted by wed3k
    im a douchebag to people and i don't even own a lambo. whats your point? we, douchbags, come in all sorts of shapes and colours.

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      #3
      "Obama...Is He Telling the Truth?"

      oh I get it, LOL!
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        #4
        Explains why big oil's "profit margin" isn't as big as expected. There's some proxy companies making pure profit before selling to big oil.
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          #5
          Oil is exchanged in the Commodities Market.
          Supply is regulated by OPEC, (Organization of oil exporting countries) and demand regulated by a combination of "reserves" that certain countries maintain, and actual user demand.

          What is missing from this equation (and what you see in the MSM) is refining.

          Iran, for example, exports a lot of oil to other nations. That oil is crude, and is only good for certain industrial uses until it is refined. The US has a LOT of refineries, and deals struck between the government and the refining companies is one reason that the US has lower gas prices that the rest of the world.

          Also, we use more gasoline than diesel, because gas is more refined than diesel. We have the refineries to produce gas, and it is cheap domestically. When we export our refined product out of the country, the oversees buyer assumes the payment of the export taxes, as well as our price offset, and gasoline is much more expensive for the importers.

          The US (and other interests)have OPEC over a barrel, in that most countries that have oil as a resource, don't have the refineries to use it. They MUST export, in order to either get refined fuel, or get paid for their crude.

          (On a side note, this in only one reason I don't think Iran is perusing a nuclear weapon. They would be cutting their own throats in the process.)

          So, The O only has the power to put initiatives and regulations before congress. He cannot tell Exxon (or whoever)that they have to cut profits to provide the people with cheaper fuel. He must put a bill to congress. Creating those regulations, which if passed, would force oil corps to lower domestic price; would upset Nationalities who rely on our refined fuels, because their prices would skyrocket. (Those are a lot of 3rd world countries btw.)

          The "reserves" the US has, which are supposed to be for Military use when shit hits the fan, could be opened to public use. That is within his power; But reserves would then be distributed to filling stations by the very companies that wouldn't cut their domestic prices/profits, and they would not do it as a service to the government, either. So in the end, we would pay either way.
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            #6
            Uhh its like this politics with money involved people are not going to tell the truth.

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              #7
              It's all bullshit and that is my opinion. We aren't fucking dumb unless you buy into the social media. How many years in a row do we see the gas prices go up during the summer? Every single year. I think the amount of people who drive during the summer isn't significant enough to drive the price up that much.

              If they know every summer the demand jumps, why don't they start pulling more before it hits?
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                #8
                Originally posted by zack_odom View Post
                http://youtu.be/F3alae5zkLQ
                hmmm...Discuss? i have no opinion either way. I can only look at the facts and go from there. I have one problem right now, and that is actually finding facts about why oil prices fluctuate... Im ignorant and am looking to be educated. Anyone who knows please let me get a little knowledge from you!
                1) Politicians aren't in the business of telling "the truth."

                2) Economics and market driven factors is complicated. Demand is up (US is traveling more, China and India are expanding by leaps and bounds, and so are several other developing areas). Same supply, more demand = higher prices. That part is pretty simple.

                3) In the case of oil specifically, we also have politics and supply side economics that affect the price.

                Supply side economics is simple. We control the supply, to artificially change the relationship of supply to demand. Example: If I have 100 people that want to buy my 100 T-shirts, then I have less pricing power than if I had 100 people who wanted to buy my 10 T-shirts. By restricting the number of T-shirts available for sale, I can raise my prices, making myself more money. Replace the T-shirts with barrels of oil, and you have what OPEC does. They try to keep their output as low as possible to maximize profit, while trying not to drive demand away (which could cause prices to fall, having the opposite effect of what they want).

                4)Politically, it gets a smidge more complicated. First, you have taxes and tariffs. This is essentially the government either restricting the ability of the product to reach their market (tariffs) or increasing their slice of the profit pie when you buy gas (taxes). A good example of tariffs would be if the US is trying to keep Japanese imports out, they charge a fee for every Japanese product imported. That raises the price, and makes people less likely to purchase them versus a comparable competitor. This is still in use to some degree, but world trade has greatly reduced this political practice.

                The far more common scenario in most countries is taxation. The governments decide they need more money to overcome their inept, inefficient and self-interest based management, so they increase revenue by passing a "gas tax." What this does is tack an extra few cents onto every gallon of gas you buy. You don't get too pissed off because it is a "small" change (might change the price of a tank by a buck or so), but when leveraged across billions of tanks of fuel, the government reaps billions, if not trillions in additional revenue. They often try to use this tactic to "reduce gas demand" although really, since gas is so essential to the average US worker, they simply put up with paying more per tank. By the time you add in all of the federal, state and local gas taxes, your gas prices would likely reduce by 50% or more if they were all taken away and suddenly disappeared. In some states it would be far more. States like Washington loudly advertise the fact that they have no income tax, but they more than make up for it in other areas of life. California has gas taxes out the wazoo, which is why their gas is drastically more expensive than neighboring states with less ready access to supply.

                The final political tool used is where the oil comes from. If we only use select few suppliers (like the Middle East etc), then we make it harder to lower gas prices. There are many billions of barrels known to exist worldwide, much of which is NOT owned by unfriendly regimes, we simply refuse to use it. Whether it be through ecological ideology, or ecological stupidity is for you to decide. But the reality is that while both special interest groups squabble back and forth, the consumer gets screwed with higher prices.

                Finally, this all comes together to play a huge role because as we get more demand, less supply, and fewer players in the game (who each are more powerful as a result), the price gets more and more volatile. That is why in recent years we have begun to see massive, frequent and unforecast swings in gas prices. If only one country chooses not to export, then it causes a huge shift in the market. Couple that with more countries willing to pay more money, and it becomes a higher stakes game, with fewer players, more risk and less reward for the individual (but more reward for the few players).

                Ultimately, if our leaders don't either start drilling, or start funding alternatives, it is going to be a major contributor to bankrupting our economy, because we can't sustain economic prosperity based on an energy source that is as volatile as oil is becoming. Our current adminstration and the associated political affiliates are fans of supply side economics because they believe they can change behavior through pricing. That is true to a degree, but when people have to have it to do business, it will only reduce demand so much. Essentially, it reduces discretionary use, but does virtually nothing to change major demand trends. IMO, it artifically attempts to leverage the market towards the technology that they desire, but is not otherwise economically feasible (such as hybrid cars being the best example). On the other side of the coin, we have a failure to consider, plan, and invest in an infrastructure that will ultimately provide the economics of oil without the cost of the unfavorable alternatives (specifically, I am referring to hydrogen power). We can't drill oil forever either, because it WILL eventually run out.

                Whether you agree with the current political regime or not, the real problem is a lack of planning on the part of all leadership, and a failure of BOTH sides to act like adults and meet in the middle. Instead, we are left with a bunch of ideological puppets who spew forth stupidity and twisted reality, but refuse to compromise on behalf of the constituents that give them a platform upon which to stand. Ultimately, through economic mismanagment, it will result in our collapse as a country.
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                  #9
                  actually the collapse of this country will happen but it will only be for a short while because the real plan is to fuck the country up (let the people do it) then rebuild everything from scratch.

                  Basically it wont be what america is based on but it will still be america as a thought not trully what it was in its glory (1920'S)

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                    #10
                    Originally posted by owequitit View Post
                    1) Politicians aren't in the business of telling "the truth."....
                    Man. when you respond to a question you definitely do it well! Im thankful to you for the info. Your response showed how little I truly know about the way that the oil market works. I really appreciate the response, and the quick education. I get really disheartened by the way that both sides of the congress/senate seem to just point fingers and do absolutely nothing lately. It could just be that I notice it more than I used to also. Wow. Thanks to all that replied. A successful post imho.

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                      #11
                      Of course he is this is America!
                      ]

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                        #12
                        Originally posted by zack_odom View Post
                        Man. when you respond to a question you definitely do it well! Im thankful to you for the info. Your response showed how little I truly know about the way that the oil market works. I really appreciate the response, and the quick education. I get really disheartened by the way that both sides of the congress/senate seem to just point fingers and do absolutely nothing lately. It could just be that I notice it more than I used to also. Wow. Thanks to all that replied. A successful post imho.
                        Glad scotty can't see my posts... Not that I disagree with what he's saying I just like to do my research on things http://www.cnn.com/2012/02/28/opinio...ion/index.html
                        ]

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                          #13
                          This is interesting to watch: http://www.youtube.com/watch?v=WKunHXtQYuo
                          '93 H22A 5SPD SE - MRT - DIY-Turbo Sizing

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                            #14
                            Speculation seems to be an issue as well. Stuff like that is so disgusting to me. If Demand is really down and supply is really up, then the system is truly broken and skewed by the need for profit...Is that really the case? It does not make any sense why Oil companies get subsidized when they have made trillions over the last ten years or so...Am I looking at this the wrong way though? Im not trying to make any political statement really...Im just curious why these things happen.

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                              #15
                              Originally posted by zack_odom View Post
                              Speculation seems to be an issue as well. Stuff like that is so disgusting to me. If Demand is really down and supply is really up, then the system is truly broken and skewed by the need for profit...Is that really the case? It does not make any sense why Oil companies get subsidized when they have made trillions over the last ten years or so...Am I looking at this the wrong way though? Im not trying to make any political statement really...Im just curious why these things happen.
                              You are looking at it the wrong way IMO. First of all, the very foundation of this country is free market. However, to a degree, the government HAS to protect certain, vital functions. While it is popular to lambast the oil companies for everything, the reality is that they don't get subsidized just because. If they are being "subsidized" it is because if they were to fail, the entire economy would collapse. It would make the current situation look like a fart bubble in a lake. Oil is absolutely essential to our national function, and thus must remain available. Same with banks and money. The system is much intertwined and interdependent than the average person understands. The banks weren't "bailed out" in 2008 because Bush was a corporate puppet. They were bailed out because if the financial system had systematically failed (which is what WOULD have happened), then our whole country would have collapsed. As unpopular as the bailouts were, it was far cheaper than the alternative, and those in charge knew it. We actually learned a lesson from the Great Depression where the mentallity was "tough shit, go ahead and fail." The problem was that as they started to fail, it created a chain reaction that ruined the entire economy.

                              Don't kid yourself, the government isn't paying for the oil companies to make money. They are positioning themselves to prevent the system from failing and collapsing the economy. They also probably make more money in taxes when the companies are profitable than they actually give back to the oil companies.

                              Speculation is part of life in the commodities markets. It is a necessary evil. All "speculation" really is are educated guesses (mostly about what the price will do in the future). Because we are still unable to predict the future, we have to "guess" as to what the price will be in some set timeframe (3 months, 6 months, a year). These guesses are based on assumptions about what will happen. It is essentially forecasting. The problem with forecasting is that there are too many variables to accurately predict what is going to happen, and thus the speculation is often wrong. 9/11 is a good example. It pretty much wrenched ANY commodities forcasts, in some cases for more than a decade now.

                              Speculation isn't nearly the war mongering, money bagging racket it is cracked up to be. When you plan a purchase in the future, you are in fact speculating. It is easier to do the shorter the term, the lower the amount, the less price volatility, and the more data you have. That is one reason the oil futures are so shaky. There is so much volatility in the underlying system, that it is much harder to predict what will happen. Also, a smart investor is going to bet in a conservative fashion that is less likely to cost them. In 9 out of 10 instances, the price goes up, so high side speculation is more prevalent. There are some investors that don't know what they are doing, and they invest short term trying to make it rich quick, but they typically lose their asses when the bubbles bursts (see tech boom, and housing boom).
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