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Sunday, May 15, 2011
Exxon CEO talks about speculation driving up oil prices
I came across this article and it has a short 6 minute clip that I found interesting because it's the CEO of Exxon and he is talking about how speculation has driven up the oil prices when really it should cost about $60-$70 a barrel if we were basing it solely on economic terms. I just thought I'd share this with the class and see what people's reactions were to this because the rise in oil prices have really hurt American's budget the past month. I believe that the US should start looking for natural gas within the US because I don't have the specific article but I remember reading about how the US isn't using their domestic oil fields as much as they should so this could be an alternative solution. Any thoughts?
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Sorry here is the link to it...
ReplyDeletehttp://www.nakedcapitalism.com/2011/05/guest-post-exxon-ceo-admits-that-oil-should-be-60-70-dollars-a-barrel-based-on-supply-and-demand.html
In 2007 oil prices were $140 bbl today they are $100 bbl and yet we are still paying the exact same price at the pump... I am hoping someone can explain that?
ReplyDeleteYeah, I was wondering that same thing, and I honestly cannot think of anything that could explain it.
ReplyDeleteI mean, I don't think there is a big margin from $ bbl and what we pay at the pump? Surely it couldn't be $40 bbl either way.
Maybe the costs to refine crude oil into gasoline have gone up?
Chris, maybe it has to do with Supply and Demand. Global demand has risen the last 4 years, but there is less production do to political unrest in the Middle East. Just a thought...
ReplyDeleteHa Jared I like your comment. In the video the CEO makes a very good point about how the price of oil shot up a day because of the speculators were worried about the unrest in Libya. The political implications make sense; If Libyans take over these oil fields and start charging Americans ridiculous amounts for oil, then we're screwed. However I think these futures markets are getting a little over cautious. If the market price should be around $70 dollars, how off base from the supply and demand price can these people really charge for a barrel? When will the people say "this is enough" and refuse to buy oil at these prices?
ReplyDeletehere's an article about oil reserves in alaska:
ReplyDeletehttp://blog.nj.com/njv_george_berkin/2011/05/drill_baby_drill_--_in_alaskas.html
The article brings up an interesting point about how we should be increasing our green energy, however the truth is that going green is "is hardly a realistic solution for America’s longtime internal-combustion economy."
Drilling in Alaska will take years, but with gas prices continuing to rise and fluctuate over the years, it might be time to start investing in domestic oil.
I don't understand how these speculators come up with these prices. Although global demand has gone up over the last 4 years, I find it realy hard to believe that it has caused that much of an increase in price. Supply and demand absoltulely plays a huge part, but I think the rest is this political game. I think these futures markets are way too cautious, but perhaps thats a good thing? I believe we need to start investing wherever we can in green energy, and we need to start now! Yes, most renewable energy is expensive and may take a couple of years to begin seeing results, but these technologies will create energy solutions for the future (which I think is way more of a concern than our current oil prices).
ReplyDeleteMatt I agree with you 100 percent about the increases in gas prices being a political game. Look how dependent Americans are on oil, let alone the entire world. Every time gas goes up, we talk about green energy and limiting our driving, but we continue with business as usual. This isn't a secret to anyone, which allows speculators to up prices without severe consequences. We do need green energy and alternative fuel sources, but it's one thing to talk about it and another thing to act on it. Seems to be all talk at the moment.
ReplyDeleteI read an article (cannot remember where) that oil conglomerates are going through an exploration and development war. Companies are trying to find the largest, most accessible fields left. I think this may be playing into the speculation of oil prices.
ReplyDeleteI liked this article also because it pointed out how the price of a barrel oil and I think that is indicative of the speculation and politics behind the current situation in Africa. African authoritarian leaders like Mugabe, Gadhafi, formerly Mubarak, and others bleed their countries dry of all resources. We are the most dependent country on oil and I think that we could drive oil prices down by investing in renewable/green energy to incite competition. If other sources of energy become more viable the speculators will have to reassess the price of oil.
ReplyDelete