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Permalink Reply by Keith on April 1, 2012 at 13:32

You must remember that much o the oil that's produced is not related to companies that have shareholders in the way we think of them. The Kingdom of Saudi Arabia owns Saudi Aramco for instance. Price increases are due many market based reasons and monetary concerns.

Responsibilies to shareholders don't dictate the price of a given commodity. That responsibility of an energy company is fufilled by finding and producing that commodity efficiently and selling it at the market price.

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Permalink Reply by Hopeful About Natural Gas on April 1, 2012 at 8:04

Seems to me like the price rise is directly connected to Iran and tensions in the Mid East.  There is no fundamental reason for oil to be rising that I know of.  It's fear of war - like in 2008 when the price records were set. Iran again. As soon as the crisis passed the prices fell.

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But prices are not going up as much as they did in the Summer of 2008.  Maybe they will this summer as fundamentals shift and more gasoline is used and then fall again later in the year.  But, overall I still see only Iran as the cause of the price hike and the prices will drop when the crisis is past.  Perhaps someone can enlighten me if I am wrong.

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Permalink Reply by essay on April 1, 2012 at 8:38

iran is just a piece of the puzzle, and as far as i can remember didn't have a whole heck of a lot to do with what happened in '08...  while it's actually a much more significant factor at this point, the rise of the asian middle class (ChIndia) has had far larger, and more permanent, impact.  a couple other important factors include, but are by no means limited to, u.s. money supply and higher domestic consumption from energy exporters.

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Permalink Reply by Keith on April 1, 2012 at 9:19

Essay's right 2008 had many elements working in the same direction. Money supply and inflation, hurricane season, driving season, an artificial bubble economy in the west, Chindia growth and peak oil concerns to say the least.

 

Iran speculation is proper speculation in my view. When soybean speculators see a developing drought in Brazil they buy Soybean futures as insurance. If you see a possible war in an area that provides 20% or so of the worlds oil supply you buy oil futures as insurance.

When the first oil tanker in the Persian gulf gets torpedoed 4 dollars a gallon will look like the good ole days.

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Permalink Reply by Antiqued Rose on April 1, 2012 at 8:51

http://www.bloomberg.com/news/2012-03-13/venezuelan-oil-spill-expos...

South America vs Middle East. What a choice.

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