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Oil spikes $25 a bbl!

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If its a supply and demand thing then why in the ATL area is gas not $6+ right now? 1 out of 5 gas stations even has any gas, but its still around the $4 mark. The demand is there, but the supply is not. Don't get me wrong I'm not b!tching about "only $4", but the "supply demand" thing doesn't seem to hold water very well.
 
That only explains about $5.00 of the spike. The rest relates to the short squeeze. And if you want all the doom and gloom about the dollar, remember that the housing markets in Europe are collapsing i.e., other currencies will weaken.


Yeah. Like I said, I'm not an economist . . . I just play one on FI.com!

That said, the most obvious HUGE story since last Friday has been the near collapse of the US banking system. $700 billion - $1.3 trillion US taxpayer authorized w/o clear statutory authority ---- UNPRECEDENTED.

So yeah, I think this is the primary reason oil is extremely volatile. Time will tell what the long term effects will be.
 
I'm no economist, but this is EXACTLY supply and demand.

The supply of oil is finite; it is also seen as a commodity that holds it's value, like gold.

The rise in the cost of oil is a reaction due to lack in the faith of the US dollar triggered by the mess that is currently going on in the banking system. Investors are trying to find a safer harbor for their money . . money is going to oil because it's considered a "safe harbor".

Supply is limited, demand is high . . price goes up. And demand just went up due to dollars looking for safe-harbor investments . . price goes up even more.

(As an aside, gold has gone up $73/ounce since the 18th. )

Ergo . . it's not speculation, it's money looking for a safe harbor.


Ummmm.... In your explanation, didn't you just describe price fluctuations due to speculation? Neither the supply of oil nor the demand for oil varied dramatically.
 
You know, I used to like the Wall Street Journal. I really think they're full of crap these days, though. Last week, they ran a piece by their in-house editorial staff stating that the "speculator-based" cause of the price of oil was fully-debunked, and that it has now been proven that the real reason is basic supply and demand.

What a load of crap. It didn't help that their editorial completely lacked any explanation or proof of their sole supply and demand theory.

If the price rose $25 so quickly, how can one rationalize that as supply and demand?


How can they say that? Well, didn't you know? Over 10 million NEW DRIVERS started driving TODAY. Yep. It was crazy, and demand was higher today than ever before! NUTS!!! Complete gridlock. (or maybe that was just at the gas station near my house in GA)


Bye Bye---General Lee
 
If its a supply and demand thing then why in the ATL area is gas not $6+ right now? 1 out of 5 gas stations even has any gas, but its still around the $4 mark. The demand is there, but the supply is not. Don't get me wrong I'm not b!tching about "only $4", but the "supply demand" thing doesn't seem to hold water very well.


That is because the Colonial Pipeline from MSY to CLT is down, and it goes right through ATL. There aren't shortages in the West at all.

Bye Bye--General Lee
 
Yeah but there is here in ATL. So shouldn't the price be higher here?

I think they did not raise it much because of anti-price gouging laws. Oil is scarce because of the huricane. Just a guess. But the jump in oil yesterday, was most deffinately NOT supply and demand.

Good thing W said he would veto the Stop oil Speculation bill.
 
This spike was due to October feature contracts coming due. November delivery still goes somewhere around $104.
 

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