Gas hitting $4.00+ really soon (like a week or so)

[Maximus]

Oil dips as analysts warn of bursting 'price bubble'
By Agence France Presse (AFP)

Tuesday, June 10, 2008

LONDON: Oil futures slid on Monday as analysts warned of a "price bubble" that could burst soon after crude rocketed to record heights near $140 per barrel late last week.

Oil prices soared beyond $139 on Friday after a shock jump in US unemployment sent the dollar reeling and Wall Street plunging by more than 3 percent amid fears of sharply slower economic growth.

New York's main oil futures contract, light sweet crude for July delivery, gave back $0.99 to $137.55 a barrel on Monday.

The contract had spiked on Friday by $10.75 a barrel - the biggest-ever one-day jump - after soaring to an all-time high of $139.12.

On Monday, Brent North Sea crude for July delivery shed $1.88 to $135.81.

Brent had hit a lifetime pinnacle of $138.12 and gained $10.15 in value on Friday.

"The extreme price volatility we are now seeing is characteristic of bubbles that are about to burst," said Capital Economics analyst Julian Jessop. "The next big move is therefore likely to be down."

Jessop also argued that the recent jump in the prices of crude was not related to the fundamentals of supply and demand, but to ongoing weakness in the US currency.


"Friday's jump ... provides the clearest evidence yet that the oil market is increasingly detached from fundamentals."

"A relatively minor reversal in sentiment toward the dollar was magnified into a much larger move in oil prices," added Jessop, who also said further highs could not be ruled out.

In contrast, analysts at US investment bank Goldman Sachs warned that prices could reach $149 this summer because of "tight underlying fundamentals of the oil market."

Crude oil began surging higher last Thursday after European central bank chief Jean-Claude Trichet signaled that eurozone interest rates would head higher in July.

Meanwhile, Saudi Arabia said it will "soon" call for a meeting between oil producing and consuming nations to discuss what it called the unjustified rise in oil prices.

Market fundamentals did not justify the rise in oil prices, said the Cabinet of top OPEC producer Saudi Arabia in a statement, adding that it asked Oil Minister Ali al-Naimi to call the meeting to discuss addressing the rise. - AFP

 

[SOA]

The Varying Impact of Gas Prices
Gas prices are high throughout the country, but how hard they hit individual families depends on income levels, which vary widely.

http://www.nytimes.com/interactive/2008/06/09/business/20080609_GAS_GRAPHIC.html?#tab1

 

[SOA]

Senate conservatives block windfall profits tax

Senate conservatives block windfall profits tax

http://thinkprogress.org/2008/06/10/senate-conservatives-block-windfall-profits-tax/

The AP reports that Senate Republicans have blocked a plan to “tax the windfall profits of the largest oil companies. Democrats on Tuesday failed, 51-43, to get the 60 votes needed to overcome a GOP filibuster of the energy package, and bring the bill up for consideration.” Proponents of the legislation “said the huge profits enjoyed by the largest U.S. oil companies should be reined [in] with motorists paying more than $4 a gallon for gasoline and oil prices soaring well beyond $100 a barrel.”

==============================================

for all the rhetoric by some here that everything wrong in this country is caused by those damn liberals. . . . this makes you wonder how much some of our elected politicians are safe guarding us against corporate greed rather than benefiting from it themselves

 

[James]

Because those people are using the tax cuts to invest in small and upcoming companys. Those guys are using those tax breaks to help stimulate the economy.

 

[Wolfman]

Re: Senate conservatives block windfall profits tax

Senate conservatives block windfall profits tax

http://thinkprogress.org/2008/06/10/senate-conservatives-block-windfall-profits-tax/

The AP reports that Senate Republicans have blocked a plan to “tax the windfall profits of the largest oil companies. Democrats on Tuesday failed, 51-43, to get the 60 votes needed to overcome a GOP filibuster of the energy package, and bring the bill up for consideration.” Proponents of the legislation “said the huge profits enjoyed by the largest U.S. oil companies should be reined [in] with motorists paying more than $4 a gallon for gasoline and oil prices soaring well beyond $100 a barrel.”

==============================================


for all the rhetoric by some here that everything wrong in this country is caused by those damn liberals. . . . this makes you wonder how much some of our elected politicians are safe guarding us against corporate greed rather than benefiting from it themselves

Crude Oil Cost: $ 3.15 per gallon.
Going to gas company (Distribution + Marketing + Refinery Costs + Profits: $0.27 per gallon.
Going to government (Sales taxes, excise taxes, state and federal, underground storage fee) : $0.67 per gallon.

FINAL PRICE: $4.10 per gallon.

So, the government gets 2.5 times as much money than the gas companies BEFORE any of the gas companies' expenses.

You hear all of the time about the record profits made by oil companies. Well, the government made AT LEAST 3-4 times as much on oil taxes as the oil companies did on oil profits.

Which brings up the point that the Government will have to replace the lost gas tax revenue as alternative energy is used.

 

[Randolphkeys]

A Weak Dollar, Bad Fed Policies and Hedge Fund Speculators

Why Oil Prices Are So High

By PAUL CRAIG ROBERTS

How to explain the oil price? Why is it so high? Are we running out? Are supplies disrupted, or is the high price a reflection of oil company greed or OPEC greed. Are Chavez and the Saudis conspiring against us?
In my opinion, the two biggest factors in oil’s high price are the weakness in the US dollar’s exchange value and the liquidity that the Federal Reserve is pumping out.

The dollar is weak because of large trade and budget deficits, the closing of which is beyond American political will. As abuse wears out the US dollar’s reserve currency role, sellers demand more dollars as a hedge against its declining exchange value and ultimate loss of reserve currency status.

In an effort to forestall a serious recession and further crises in derivative instruments, the Federal Reserve is pouring out liquidity that is financing speculation in oil futures contracts. Hedge funds and investment banks are restoring their impaired capital structures with profits made by speculating in highly leveraged oil future contracts, just as real estate speculators flipping contracts pushed up home prices. The oil futures bubble, too, will pop, hopefully before new derivatives are created on the basis of high oil prices.

There are other factors affecting the price of oil. The prospect of an Israeli/US attack on Iran has increased current demand in order to build stocks against disruption. No one knows the consequence of such an ill-conceived act of aggression, and the uncertainty pushes up the price of oil as the entire Middle East could be engulfed in conflagration. However, storage facilities are limited, and the impact on price of larger inventories has a limit.

Saudi Oil Minister Ali al-Naimi recently stated, “There is no justification for the current rise in prices.” What the minister means is that there are no shortages or supply disruptions. He means no real reasons as distinct from speculative or psychological reasons.

The run up in oil price coincides with a period of heightened US and Israeli military aggression in the Middle East. However, the biggest jump has been in the last 18 months.

When Bush invaded Iraq in 2003, the average price of oil that year was about $27 per barrel, or about $31 in inflation adjusted 2007 dollars. The price rose another $10 in 2004 to an average annual price of $42 (in 2007 dollars), another $12 in 2005, $7 in 2006, and $4 in 2007 to $65. But in the last few months the price has more than doubled to about $135. It is difficult to explain a $70 jump in price in terms other than speculation.

Oil prices have been high in the past. Until 2008, the record monthly oil price was $104 in December 1979 (measured in December 2007 dollars). As recently as 1998 the real price of oil was lower than in 1946 when the nominal price of oil was $1.63 per barrel. During the Bush regime, the price of oil in 2007 dollars has risen from $27 to approximately $135.

Possibly, the rise in the oil price was held down, prior to the recent jump, by expectations that Democrats would eventually end the conflict and restrain Israel in the interest of Middle East peace and justice for the Palestinians.

Now that Obama has pledged allegiance to AIPAC and adopted Bush’s position toward Iran, the high oil price could be a forecast that US/Israeli policy is likely to result in substantial supply disruptions. Still, the recent Israeli statements that an attack on Iran was “inevitable” only jumped the oil price about $8.

Perhaps more difficult to understand than the high price of oil are the low US long-term interest rates. US interest rates are actually below the rate of inflation, to say nothing of the imperiled exchange value of the dollar. Economists who assume rational participants in rational markets cannot explain why lenders would indefinitely accept interest rates below the rate of inflation.

Of course, Americans don’t get real inflation numbers from their government and have not since the Consumer Price Index was rigged during the Clinton administration to hold down Social Security payments by denying retirees their full cost of living adjustments. According to statistician John Williams, using the pre-Clinton era measure of the CPI produces a current CPI of about 7.5%.

Understating inflation makes real GDP growth appear higher. If inflation were properly measured, the US has probably experienced no real GDP growth in the 21st century.

Williams reports that for decades political administrations have fiddled with the inflation and employment numbers to make themselves look slightly better. The cumulative effect has been to deprive these measurements of veracity. If I understand Williams, today both inflation and unemployment rates, as originally measured, are around 12 per cent.

By pumping out money in an effort to forestall recession and paper over balance sheet problems, the Federal Reserve is driving up commodity and food prices in general. Yet American real incomes are not growing. Even without jobs offshoring, US economic policy has put the bulk of the population on a path to lower living standards.

The crisis that looms for the US is the loss of world currency role. Once the dollar loses that role, the US government will not be able to finance its operations by borrowing abroad, and foreigners will cease to finance the massive US trade deficit. This crisis will eliminate the US as a world power.

Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He was Associate Editor of the Wall Street Journal editorial page and Contributing Editor of National Review. He is coauthor of The Tyranny of Good Intentions.He can be reached at: PaulCraigRoberts@yahoo.com

http://www.counterpunch.com

 

[James]

I said that a few pages back, our weak dollar doesnt determine the prices anymore. Inidia and China have booming economies and are able to pony up the money, us not be able to do so does not really matter.

 

[Wolfman]

Good News for the economy.

Bernanke: Danger of downturn appears to have faded
AP Online:

WASHINGTON

Despite a recent spike in the nation's unemployment rate, the danger that the economy has fallen into a "substantial downturn" appears to have waned, Federal Reserve Chairman Ben Bernanke said Monday.

Addressing a Fed conference in Chatham, Mass., on Monday night, Bernanke said a government report last week showing the unemployment rate rising from 5 percent in April to 5.5 percent in May _ the biggest one-month jump in two decades _ was "unwelcome." However, the Fed chief said other forces should "provide some offset to the headwinds that still face the economy."

The Fed's powerful doses of interest rate cuts, the government's $168 billion stimulus package, further progress in the repair of problems in financial and credit markets, a gradual ebbing of the drag from the deep housing slump and still solid demand from abroad for U.S. exports should help the economy over the remainder of this year, he said.

Although economic activity is "likely to be weak" during the current April-to-June quarter, Bernanke said "the risk that the economy has entered a substantial downturn appears to have diminished over the past month or so."

Last Friday fears were rekindled that the country could be headed for a deep recession after the unemployment rate zoomed and oil prices registered their biggest single-day leap.

However, Bernanke said, "Recent incoming data, taken as a whole, have affected the outlook for economic activity and employment only modestly."

Still, soaring energy prices are a double-edged sword for the country. Oil prices closed Monday at $134.35 a barrel, down from last week's high of $139.12 a barrel. They risk putting a further damper on growth as well as spreading inflation through the economy, Bernanke said.

"Inflation has remained high," largely reflecting sharp increases in the prices of globally traded commodities, Bernanke said. "The latest round of increases in energy prices has added to the upside risks to inflation and inflation expectations," he said.

The Fed is paying close attention to the extent to which consumers, investors and businesses believe prices will rise in the future, he said. If consumers, investors and businesses believe inflation will continue to go up, they will change their behavior in ways that aggravate inflation, turning it into a self-fulfilling prophecy.

The Fed "will strongly resist an erosion of longer-term inflation expectations, as an unanchoring of those expectations would be destabilizing for growth as well as for inflation," Bernanke said.

Bernanke spoke Monday evening to a conference on understanding inflation and the implications for Fed policymakers in setting interest rates. The forum was sponsored by the Federal Reserve Bank of Boston. His comments on the economy's outlook were fairly brief and were part of a larger, mostly academic speech.

Last week, Bernanke sent his strongest signal yet that the Fed's rate-cutting campaign was probably over for now because of growing concerns that soaring oil and other commodity prices _ along with a weakened dollar _ are aggravating inflation.

To help brace the economy, the Fed dropped rates in late April to 2 percent, a nearly four-year low, continuing a rate-cutting campaign that started last September.

Many economists believe the Fed will hold rates steady at its next meeting on June 24-25 and probably through much, if not all, of this year. However, some believe inflation could flare up and force the Fed to begin boosting rates later this year or next year.

Inflation forecasting is important to Fed policymakers when determining the best course on interest rates. Even with extensive research over the years, much remains to be learned about both inflation forecasting and inflation control, Bernanke said. And there are areas where additional research could prove helpful.

Policymakers and analysts often have relied on information from commodity futures markets to help shape inflation forecasts, Bernanke said. In recent years, though, information from futures markets has "underpredicted commodity price increases ... leading to corresponding underpredictions of overall inflation," he said. The "poor recent record" on that front raises the question of whether policymakers should continue to use this source of information and, if so, how, Bernanke said.

Despite the recent record, Bernanke said he didn't think it was reasonable to ignore information about supply and demand culled by futures markets. However, it does seem reasonable, he said, to treat such information as highly uncertain.

Working to make economic data timelier and more accurate also would be useful to policymakers trying to divine inflation's direction. Moreover, it would also be helpful for policymakers to know more about how people's inflation expectations are influenced by Fed interest rate actions, Fed communications and economic developments such as oil price shocks.

"Much evidence suggests that expectations have become better anchored than they were a few decades ago, but that they nonetheless remain imperfectly anchored," Bernanke said.

__

On the Net:

Federal Reserve: http://www.federalreserve.gov/

<<AP Online -- 06/11/08>>

 

[Wolfman]

Algae: 'The ultimate in renewable energy'

Some types of algae are about 50 percent oil, suitable for biodiesel

U.S. government is once again experimenting with algae as fuel source

Scientists say there may be hundreds of thousands of species not yet identified

Algae have extraordinarily diverse sex lives

By Marsha Walton
CNN
ANTHONY, Texas (CNN) -- Texas may be best known for "Big Oil." But the oil that could some day make a dent in the country's use of fossil fuels is small. Microscopic, in fact: algae. Literally and figuratively, this is green fuel.

"Algae is the ultimate in renewable energy," Glen Kertz, president and CEO of Valcent Products, told CNN while conducting a tour of his algae greenhouse on the outskirts of El Paso.

Kertz, a plant physiologist and entrepreneur, holds about 20 patents. And he is psyched about the potential algae holds, both as an energy source and as a way to deal with global warming.

"We are a giant solar collecting system. We get the bulk of our energy from the sunshine," said Kertz.

Algae are among the fastest growing plants in the world, and about 50 percent of their weight is oil. That lipid oil can be used to make biodiesel for cars, trucks, and airplanes. Watch how pond scum can be turned into fuel »

Most people know algae as "pond scum." And until recently, most energy research and development projects used ponds to grow it.

But instead of ponds, Valcent uses a closed, vertical system, growing the algae in long rows of moving plastic bags. The patented system is called Vertigro, a joint venture with Canadian alternative energy company Global Green Solutions. The companies have invested about $5 million in the Texas facility.

"A pond has a limited amount of surface area for solar absorption," said Kertz.

"By going vertical, you can get a lot more surface area to expose cells to the sunlight. It keeps the algae hanging in the sunlight just long enough to pick up the solar energy they need to produce, to go through photosynthesis," he said.

Kertz said he can produce about 100,000 gallons of algae oil a year per acre, compared to about 30 gallons per acre from corn; 50 gallons from soybeans.

Using algae as an alternative fuel is not a new idea. The U.S. Department of Energy studied it for about 18 years, from 1978 to 1996. But according to Al Darzins of the DOE's National Renewable Energy Lab, in 1996 the feds decided that algae oil could never compete economically with fossil fuels.

The price of a barrel of oil in 1996? About 20 bucks!

Government scientists experimented with algae in open ponds in California, Hawaii, and in Roswell, New Mexico.

But that involved a lot of land area, with inherent problems of evaporation and contamination from other plant species and various flying and swimming critters. Darzins said NREL switched from algae research to focus on cellulosic ethanol. That's ethanol made from plants like switchgrass and plant stover -- the leaves and stalks left after a harvest -- but not edible crops such as corn and soybeans.

Valcent research scientist Aga Pinowska said there are about 65,000 known algae species, with perhaps hundreds of thousands more still to be identified.

A big part of the research at the west Texas facility involves determining what type of algae produces what type of fuel. One species may be best suited for jet fuel, while the oil content of another may be more efficient for truck diesel.

In the Vertigro lab, Pinowska studies the care and feeding of algae for just such specifics. She said even small changes in the nutrients that certain algae get can help create a more efficient oil content.

And she said a knowledge of algae's virtues goes way back.

"Even the Aztecs knew it was beneficial; they used it as a high protein food," said Pinowska.

The other common commercial use of algae today is as a health food drink, usually sold as "Spirulina."

I'm too sexy for my pond

And who knew that single celled plants could be such "hotties" when it comes to sex? Kertz said it's a real "algae orgy" under the microscope.

Some algae reproduce sexually, some asexually, while many combine both modes. In some green algae the type of reproduction may be altered if there are changes in environmental conditions, such as lack of moisture or nutrients.

Intriguing details like that keep Kertz and other scientists searching for more and different algae. While dusty west Texas may not be the best hunting grounds, he said he is always on the lookout for samples in puddles, streams or ponds.

Locating algae processing plants intelligently can add to their efficiency. Locating algae facilities next to carbon producing power plants, or manufacturing plants, for instance, the plants could sequester the C02 they create and use those emissions to help grow the algae, which need the C02 for photosynthesis.

And after more than a decade hiatus, the U.S. government is back in the algae game. The 2007 Energy Security and Independence Act includes language promoting the use of algae for biofuels. From the Pentagon to Minnesota to New Zealand, both governments and private companies are exploring the use of algae to produce fuel.

But Al Darzins of the National Renewable Energy Lab said the world is still probably 5 to 10 years away from any substantial use of biofuels.

"There's not any one system that anyone has chosen yet. Whatever it is has to be dirt, dirt cheap," said Darzins.


Find this article at:
http://www.cnn.com/2008/TECH/science/04/01/algae.oil/index.html

20,000 gallons of oil per acre per year. This looks interesting!!

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[Wolfman]

Republican Plan to Lower Gas Prices


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[Maximus]

Oil prices tumble $20 in biggest weekly drop ever

Jul 18 05:38 PM US/Eastern
By ADAM SCHRECK
AP Business Writer

NEW YORK (AP) - A stunning sell-off dragged oil prices to their biggest weekly drop ever and gas prices at the pump slipped by the more than they have at any point since February, giving consumers a rare breather in a year of record fuel prices.
The national average for a gallon of regular fell by the most since February, AAA data show, and could ease further in the days to come.

So is it time to declare the energy bubble popped?

Experts won't go that far just yet.

"It's too early to say we've seen the worst of it," said Tom Kloza, publisher and chief oil analyst of the Oil Price Information Service in Wall, N.J. "We would be Pollyannish if we believe one week represents a trend."

Still industry experts who just days ago thought there was more juice left in oil's meteoric run, are reconsidering.

"If this is not the bubble's implosion, than it's a reasonable facsimile," analyst and trader Stephen Schork said in his daily market commentary. "Time will tell. Nevertheless, for the time being we no longer care to hold a bullish view."

Light, sweet crude for August delivery fell 41 cents Friday to settle at $128.88 on the New York Mercantile Exchange—well below its trading record of more than $147 a week earlier.

The average price of a gallon of regular gas fell about a penny for the day, to $4.105, according to auto club AAA, the Oil Price Information Service and Wright Express. Diesel prices dipped three-tenths of a cent to $4.842 a gallon.

Some analysts said a nationwide average of $4 or even lower could be in the offing—almost unthinkable in a summer when there has seemed to be no relief at the pump—although they cautioned that there is no guarantee prices will stay low.

"We're going to see some relief from that relentless march higher," Kloza said.

Gas may be getting just a bit cheaper, but major changes in how Americans live and drive are already in motion.

Car buyers have been fleeing to more fuel-efficient models. U.S. sales of pickups and sport utility vehicles are down nearly 18 percent this year through June, while sales of small cars are up more than 10 percent.

While slashing production of more-profitable trucks and SUVs, automakers have been scurrying to build their most fuel-efficient models faster.

Toyota Motor Corp., which hasn't been able to keep up with demand for its 46-miles-per-gallon Prius hybrid, said last week it will start producing the Prius in the U.S. and suspend truck and SUV production to meet changing consumer demands.

Ford Motor Co. and General Motors Corp. also have announced plans to increase small car production, and GM has said 18 of the 19 vehicles it is launching between now and 2010 are cars or crossovers.

Some brave traders used the week's pullback in oil prices as a chance to buy barrels that suddenly seemed to be on sale. But oil analysts were advising investors to beware.

"Buying here is an opportunity if you are a deep believer in $200 (a barrel), otherwise we think that caution would be better applied," analyst Olivier Jakob of Petromatrix in Switzerland said in a research note.

If oil buyers sense that the slide was overdone, you'll probably notice at the pump quickly.

"If (oil prices) rebound, you're going to see a quick reaction at the gas station, because their profit margins are so stretched," AAA spokesman Geoff Sundstrom said. "They may be very fast bringing prices back up."

In other Nymex trade, heating oil futures fell 5.23 cents to settle at $3.6915 a gallon while gasoline futures edged up 0.73 cent to $3.1709 a gallon. Natural gas futures rose 3.3 cents to $10.57 per 1,000 cubic feet.

In London, Brent crude futures for September delivery rose 88 cents to settle at $130.19 on the ICE Futures Exchange.

 

[The Voice]

I said that a few pages back, our weak dollar doesnt determine the prices anymore. Inidia and China have booming economies and are able to pony up the money, us not be able to do so does not really matter.

Yeah and if our economy goes in shambles, so does theirs. They simply rely on us that much.

 

[Wolfman]

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[RchfldCavRaised]

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Cant have it both ways...

Either Obama is a junior senator who has accomplished absolutely nothing in his few short years, or he is a junior senator responsible for everything that is wrong with todays economy and gas prices

That commercial is a weak attempt to just associate Obama with whats frustrating Americans the most right now.

"if your upset that gas prices are the way they are, just blame teh guy who according to us, has never passed a law or done anything constructive other than sit on a fence his whole time in office... its his fault and ou should blame him!"

Works for the ignorant who are being spoonfed their opinons (see Wolfman aove)

 

[Wolfman]

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