Oil Prices Slide More Than $2.50 a Barrel

[FDJ2]

Not quite. Here's a clip from a Forbes article on fuel prices...

http://www.forbes.com/forbes/2005/0509/100.html

If your car ran on unrefined $42-a-barrel crude and got 20 miles per gallon, fuel would cost you a nickel a mile. But add in the cost of turning crude into gasoline and gasoline into miles--i.e., the amortized cost of refinery and car, plus taxes (which pay for the highway, among other things) and insurance--and the mile runs you 30 cents to 50 cents. The IRS lets you expense 37.5 cents per mile for business travel in your own car. The American Automobile Association estimates that it cost an average of 56 cents per mile to drive a new car in 2004. Or to put it another way, driving would be only 15% cheaper, at most, if crude oil were free, or if your car engine delivered 1,000 miles per gallon.

Smacktard, that's somewhat of a poor example for the point I think you are trying to make since it also takes into consideration the cost of taxes, insurance and the car payments to come up with the cost to move the car from point A to point B. Obviously fuel is then only one component of the total cost, so changes in the price at the pump only reflect a portion of all the other costs associated with going from point A to point B. Similarly, if crude oil went down by 50%, you wouldn't expect the CASM of an airliner to drop by 50%.

As your example points out, the price of crude oil only accounts for approximately 15% of the cost to operate a car. The other 85% are insurance, taxes, car payments, maintenance, fuel refinery costs, etc. But let's, for the sake of argument accept that if crude oil were free it would only reduce total costs by 15%. With that assumption, if crude oil were to fall from $50 to $25 per barrel, then that would only amount to a cost savings of 7.5%. That doesn't sound like much, but when your costs are $15B/year, a 7.5% reduction in your operating costs amounts to $1.125B/ year. That's significant.

 

[Focus]

So here we are at the end of June. Oil, at its all time high pushin 60/bbl....Anyone care to speculate where Oil will be by Jan 1, 2006....Let me start by saying once again...I am not an EXPERT, only an investor....With that in mind I predict oil to run up to 63-70bbl by Aug 31st and the US Economy to go into a major recession within the next three months...I hate to sound so pessimistic but the writing is on the wall to me...My money is still in OIL albeit my job is in aviation..

Warning to all...If your in stocks get out NOW!!!!!B/F you loose what you've worked so hard for.. Talk with your company and make sure their hedged BIG TIME...OIL will drop some from here and perhaps IMHO as low as 48 but that would be way low....A Hedge at 50-55 would still be profitable next year.....Oil to 85 by June 06.......See my previous Post on this subject and hopefully you will see that I am spending a great amount of time studying the upcoming WORLD CRISIS in OIL which were now fully into.....FDJ2/CHperplt Good Luck Guys...

 

[lowecur]

So here we are at the end of June. Oil, at its all time high pushin 60/bbl....Anyone care to speculate where Oil will be by Jan 1, 2006....Let me start by saying once again...I am not an EXPERT, only an investor....With that in mind I predict oil to run up to 63-70bbl by Aug 31st and the US Economy to go into a major recession within the next three months .

Probably a fairly safe bet with the summer driving season, speculation, and a shortage of heating oil stocks for the winter.

The big question is the "recession" word. Real Estate liquidity will remain high as long as the price of oil remains high, and this gives many a feeling of wealth. High oil means low long term interest rates, so they kind of off set each other. Recessions are hard to get a handle on, so knowing we are in one will take a year or so.

A recession in the USA will also have a major effect on oil demand. As the USA's economic engine slows the rest of the world slows with it. $60 or higher oil is unsustainable if that happens, and the price will unwind with a thud as speculators head for the hills. The question is all timing.

 

[bestpilot]

Duuude, I'm like totally not diggin da bill for da petrol. It's cuttin into my brewski fundage!!! Baaaaad Kharma!!!!!!!!!!!!!!!!

 

[720degpersec]

Go Bush, we re all counting on you ! (NOT)

 

[FN FAL]

Duuude, I'm like totally not diggin da bill for da petrol. It's cuttin into my brewski fundage!!! Baaaaad Kharma!!!!!!!!!!!!!!!!

I accidentally started pumping with the high test handle today...I normally only use regular un-leaded. By the time I got done, it was almost 37.00 bucks to fill up the car. When I pulled into the station to fill up, I still had an 8th of a guage worth remaining, so it wasn't even a full tank of gas that cost 37.00.

 

[JPB]

If I was in the oil business and at the head of the gouvernment, I too would encourage increasing national reserves, production and drilling.

It is a short term policy.

The price of oil will come down as fast as it came up.

The airline and automobile industry will be a lot better off past this administation.

 

[Focus]

Well People, I was out there on the road this weekend and I have to tell you...I saw alot of other people out there with me..I paid 2.75 / gallon at one of my stops to refuel. that was the cheapest fuel they had. Regular UNL. I will say that when I got home I was glad to see the airlines are increasing their fares.. About time...My money says the speculators keep it comin from here to the end of the year....Thats UP I mean...I really dont think I will be buying a Condo in BelAire anytime soon..Perhaps my cousin JETRO can help me. Na, hes just as stupid as me, silly ole hillbilly. Lets hope were hedged....Ive really stuck my head out on this one...the numbers are there...Lets see how silly I am..For the Countries sake, I hope Im wrong..For my pockets sake I hope Im right. For Pres. Bush' sake well, we'll just have to see. Go Falcons, they need no Fuel.