Oil Prices Pass Inflation-Adjusted Record Options

[dauss]

Oil Prices Pass Record Set in ’80s, but Then Recede

Capping a relentless rise in recent years, oil prices rose to an all-time record during the day on Monday, then pulled back to close below the record.

The day’s highest trade, of $103.95 a barrel on the New York Mercantile Exchange, broke the record set in April 1980 during the second oil shock. That price, $39.50 a barrel, equals $103.76 in today’s money when adjusted for inflation. Oil closed Monday afternoon at $102.45.

The surge in energy prices is taking place as investors seek refuge in commodities to offset a slowing economy and a declining dollar. Analysts pointed out that financial institutions, such as pension funds and hedge funds, are also buying oil and other commodities such as gold as a hedge against a rise in inflation.

That trend is expected to continue, especially after Ben S. Bernanke, the chairman of the Federal Reserve, signaled last week that he was ready to cut interest rates further to bolster economic growth, despite rising consumer prices.

“When investors lose confidence in the central bank, they tend to look for hard assets,” said Philip K. Verleger, an economist and oil expert. “The Fed’s capitulation on inflation is driving investors to commodities.”

For example, Calpers, the California Public Employees’ Retirement System, the largest United States pension fund, said last week that it might increase its commodities investments to $7.2 billion through 2010, a 16-fold increase, to benefit from an across-the-board surge in commodities such as gold, silver, oil and wheat.

The latest catalyst for the spike in energy prices has been the recent fall in the value of the dollar, analysts said. Currency traders are selling dollars and buying euros to take advantage of the difference in interest rates between the United States and Europe.

The dollar dropped to a record $1.5274 against the euro on Monday following steep declines last week. It also fell to its lowest level in three years against the Japanese yen.

Like many commodities, oil is priced in dollars on the international market. A falling dollar tends to buoy oil prices in part because consumers using stronger currencies, like the euro or yen, can pay more per barrel in dollars without feeling much effect at the gasoline pump.

“The question for oil is where is the dollar going,” said Roger Diwan, a managing director at PFC Energy, a consulting firm in Washington. “That’s going to be the main market mover in the short term.”

Since 2000, oil prices have more than quadrupled as strong growth in demand from the United States and Asia outstripped the ability of oil producers to increase their output.

The rising prices of the past decade failed to dent global economic growth as consumers absorbed the higher costs. Even now, with the United States economy slowing markedly, the trend has now slowed much. Global oil consumption is still expected to increase by 1.4 million barrels a day this year, driven by demand in China and the Middle East.

Still, today’s record is markedly different from the energy crises of the 1970s and 1980s. These were brought about by sudden interruptions in oil supplies, such as the 1973 Arab oil embargo, the Iranian revolution of 1979, or the outbreak of the war between Iran and Iraq in 1980.

Also, the United States economy at the time was much more dependent on oil than it is today. The amount of oil needed to increase economic output by $1 has dropped by 25 percent since 1990.

In the early 1980s, energy accounted for about 8 percent of disposable income in American households. As the economy became less energy-intensive and prices declined, that share fell under 4 percent in the early 1990s.

But as prices keep rising, the share of energy spending has been increasing. It reached more than 6 percent of household disposable income in December.

Other energy futures also rallied on Monday. Gasoline and heating oil futures both jumped to new records. Natural gas prices, which are up 24 percent since the beginning of the year, closed unchanged at $9.346 per thousand cubic feet. In London, Brent crude oil futures rose 38 cents, to $100.48 a barrel.

Gold also reached a record after several days of large gains; it traded on Monday at $989.54 an ounce.

With oil setting fresh records, many analysts expect gasoline to approach $4 a gallon on average this summer. Gasoline prices have been rising sharply in recent days and have hit $3.16 a gallon on average, according to AAA, the automobile club. They are closing in on last year’s all-time record of $3.23 a gallon.

There is evidence that these high prices are finally forcing consumers to cut down on consumption.

According to the latest government figures, released Monday by the Energy Department, gasoline demand fell by 1 percent in December 2007 from the previous year. Oil demand was nearly flat last year as well.

Gasoline accounts for about half of the total oil used in the United States. In turn, the United States consumes one in four barrels of oil produced worldwide each day. Most experts believe that the price of oil is not about to drop any time soon. Saudi Arabia’s oil minister, Ali Al-Naimi, said crude prices were unlikely to fall below $60 a barrel because the cost of developing new supplies, from sources such as Canadian tar sands, is rising.

“Therefore, a line has been drawn below which the price cannot fall,” Mr. Naimi said in an interview published over the weekend by Petrostrategies, an industry newsletter in Paris.

Mr. Naimi’s comments came as the OPEC oil cartel prepares to meet on Wednesday and is expected to leave its production levels unchanged.

The oil producing group had suggested last month that it might curb production soon to make up for a seasonal decline in oil demand. But with oil prices at current levels, analysts said members of the Organization of the Petroleum Exporting Countries will find it politically difficult to curb their output now.

Some analysts expect oil producers to trim their production informally to avert an oil surplus in coming weeks. Others say OPEC, which controls 40 percent of the world’s oil exports, faces a “Hobbsian choice” and is being pulled apart by contradictory pressures.

“The market around the fringes is starting to fray,” said Lawrence J. Goldstein, an economist at the Energy Policy Research Foundation. “Yet ironically, you are looking at triple-digit oil prices because the price is being set by non-physical investors.”

Article is a couple days old, but oil closed at $104.52.

[Dogmeat]

GO OPEC!!!! YAY & WOOHOO FOR TERRORIST NATIONS! WHEEEEEEEEEEE!!!!!!

[impala454]

yeah, heard about the $104 sheesh. boo

[Testm0nkey]

man my hybrid is sounding better and better!

[Hartmann]

Man, budgeting for higher prices is sounding better and better.

[Testm0nkey]

budget?! poo im getting that hot fit i saw

[impala454]

man my hybrid is sounding better and better!

The price increases, whether you drive a hybrid or not.

[Testm0nkey]

no duh but if you drive a hybrid it doesnt affect you as much because you arent having to fill up every two weeks. you are saving money

[Oasis]

no duh but if you drive a hybrid doesnt affect you as much because you arent having to fill up every two weeks

I can't believe you actually had to take the time to explain that to him

[Testm0nkey]

i dont expect him to know what a Hybrid is. not his fault!

[impala454]

no duh but if you drive a hybrid it doesnt affect you as much because you arent having to fill up every two weeks. you are saving money

how much it affects you depends on how/where you drive, and how much money you make. when I lived in lubbock I worked 3 miles from home, didnt give a shit about gas prices. now I drive 70 miles/day . still not enough to make me want to go trade in my truck though.

[Testm0nkey]

forget it

[Oasis]

forget it

LOL

[Dogmeat]

no duh but if you drive a hybrid it doesnt affect you as much because you arent having to fill up every two weeks. you are saving money

I see.

I still don't see where hybrids are realistically any more effecient than a highly effecient small-displacement gasoline engine as far as miles driver per gallon of gas utilized.

The recovery of kinetic energy from braking is nice, but how much gas does this concept really save you?

[FORSAKENR320]

budget?! poo im getting that hot fit i saw

ak-47 for me...... lol

[impala454]

Up to $105.97 now
http://www.chron.com/disp/story.mpl/front/5596920.html

gasoline doesn't seem to be going up as bad as this would suggest, but diesel is goin outta sight

[Dogmeat]

Up to $105.97 now
http://www.chron.com/disp/story.mpl/front/5596920.html

gasoline doesn't seem to be going up as bad as this would suggest, but diesel is goin outta sight

Makes me glad I bought a big block

[Testm0nkey]

I see.

I still don't see where hybrids are realistically any more effecient than a highly effecient small-displacement gasoline engine as far as miles driver per gallon of gas utilized.

The recovery of kinetic energy from braking is nice, but how much gas does this concept really save you?

um getting 60 miles to the gallon in city

[Dogmeat]

um getting 60 miles to the gallon in city

So have you actually verified this or are you just stating some claim from the manufacturer?

Also, what is the 'highway penalty'?

[Oasis]

So have you actually verified this or are you just stating some claim from the manufacturer?

Also, what is the 'highway penalty'?

Wouldn't highway be better? Or is it different with hybrids?

[Mommy]

I'm trading in my truck. Fuck this.

[Dogmeat]

Wouldn't highway be better? Or is it different with hybrids?

It's different with hybrids. When they travel on the highway they utilize the gasoline motor, as highway travel will put it in it's most effecient operating range.

City traffic, they use the electrical motors and recouperate lost energy via energy recovered from braking and other various means.

It's essentially using an electric motor to make up for the inneffeciency of a gasoline motor during stop-and-go traffic by scavenging energy to charge the batteries for these motors wherever they can find it.

My question is, what is the real world miledge you get driving in the city with one of these things. Cathryn claimed 60 mpg, which I find a little tough for me to believe ... That's why I am curious, is this miledge she's calculated herself based on what she's filled up with over the course of a month or so, or is this a manufacturer claim? On the highway these cars typically get in the neighborhood of 30 mpg ...

I didn't think you could double that figure in city driving, I would have expected it to be slightly higher but not double ...

[Testm0nkey]

So have you actually verified this or are you just stating some claim from the manufacturer?

Also, what is the 'highway penalty'?

totally verified. want a picture? i know this because on the prius you have a constant reading of the measurement of your efficiency. it helps you become a better driver thus increasing your mile/gallon. you can toggle between the GPS system and the fuel/hybrid reading on the screen in the console

if by highway penalty you mean a drop from 60 to 45 at the lowest then yeah ... big penalty. what do you get on the highway?

whos telling you they only get 30 highway? they are totally abusing their car or just dont know how to drive. and toyota claims less than 60 in city actually


people who say hybrids are rip offs are totally stupid

[Dogmeat]

totally verified. want a picture? i know this because on the prius you have a constant reading of the measurement of your efficiency. it helps you become a better driver thus increasing your mile/gallon

if by highway penalty you mean a drop from 60 to 45 at the lowest then yeah ... big penalty. what do you get on the highway?

whos telling you they only get 30 highway? they are totally abusing their car or just dont know how to drive. and toyota claims less than 60 in city.
people who say hybrids are rip offs are totally stupid

I have a friend who owns a Prius. I've taken a few trips with her in it and we just read off the odometer vs. how many gallons we put in. We figured ~30 mpg highway @ 75 mph.

This was a 2003 Prius.

I can't recall what the computer figured her miledge was ... I think she's got over 100,000 on the car at this point, I'll have to ask her about it next time I see her.

What amazes me is this car has ben relativley trouble-free.

[Testm0nkey]

virtually all the prius's have been trouble free. i know a guy with a first gen and over 200k miles on the 2nd battery and he hasnt replaced or fixed anything else.

so again why do you all like to shit on hybirds? you just love burning through cash?

[Dogmeat]

virtually all the prius's have been trouble free. i know a guy with a first gen and over 200k miles on the 2nd battery and he hasnt replaced or fixed anything else

Which hybrid do you have?

[Oasis]

I've yet to see a hybrid that doesn't look completely dorky

[FORSAKENR320]

I've yet to see a hybrid that doesn't look completely dorky

DUUUURRRRRRRRR

[Dogmeat]

Actually, the concept of a gas/electric hybrid really picks my curiosity as far as use for the entire US consumer fleet of vehicles go.

I don't see any reason why this concept couldn't be adapted to virtually every kind of vehicle we have, save perhaps for high-performance sports cars.

Theoretically, this would be even better for commercial trucks as well as consumer light duty pickup trucks I think..

An electric motor produces peak torque at 0 rpm. Have Chuck explain this to you, I don't know off the top of my head how to. But anyways, a naturally asipirated internal combustion motor typically has a peak operating effeciency at ~2,200 rpm.

If you could come up with a way to utilize the electric motors, producing great torque at low RPMS's, and effectivley overlap the with the power curve of the gas motor so to speak, you could reduce engine load on the gasoline motor quite a bit ..

Electric motors to drive heavy loads is and has been in use for quite awhile now. Steam locomotives use electric motors to power their drive wheels, as do incredibly large mining trucks which can weigh up to 320 tons fully loaded ....

Given these mining trucks have diesel motors the sizes of small homes to produce electricity for the electric motors, but you can see where a compromise might be found for consumer-level pickup trucks

[Hartmann]

What ticks me off is that these fuel price jumps have nothing to do with demand, just investors hedging the market.

[Dogmeat]

What ticks me off is that these fuel price jumps have nothing to do with demand, just investors hedging the market.

How so?

[Hartmann]

How so?

They're buying up futures and driving the price up.

[chook]

Dogmeat's long post pretty much got it. The Highway Penalty thing is that wind resistance is not recouped, so driving long distances at high constant speeds will actually reduce the mpg of hybrids.

The most torque is produced at 0 rpm because there is no back EMF (basically the motor acting as a voltage source) and the most amount of current flows during this time, and current is what causes the magnetic field to propagate. The magnetic field produces force which is torque.

Hybrids are pretty good cars for reliably, just that the nickel used is really bad for the environment when smeltered. Most green car I think is one of the scions, and cheapest for the life of the vehicle.

I'd say get a fuel efficient car for every day use, there are some 30+ mpg vehicles that are 5 star crash rated. If you have a truck, actually use the damn thing, I hate seeing someone with a small penis driving a truck around all jacked up and looking like it belongs off road, but drives the damn thing every day.

[Testm0nkey]

the nickel argument is old and flawed as all hell

[Mommy]

the nickel argument is old and flawed as all hell

how is it flawed? that's something I have read a lot about.

[impala454]

Makes me glad I bought a big block

hells yeah... you prob got one of the last ones. GM has retired the big block

[impala454]

If you have a truck, actually use the damn thing

Yeah that is one thing I think helps a lot. I am always the guy that drives when we all go to lunch. We can cram in six people if someone rides "super-bitch" as we call it (middle front, "regular" bitch is the middle back seat).

[blaarg]

So have you actually verified this or are you just stating some claim from the manufacturer?

Also, what is the 'highway penalty'?

I can verify the new Honda Civic Hybrid at 48 mpg in the city.

[Dogmeat]

hells yeah... you prob got one of the last ones. GM has retired the big block

I didn't buy a 2007, I bought a used 2005 with 29k on the clock ... truck is just like new.

But either way, it fucking pisses me off bad that they discontinued this motor, i fucking LOVE the thing.

Given I don't get as good of miledge on the highway as my dad's 6.0L .... his is a 2008 6.0L that even has the displacement on demand ... but I get better miledge towing a 6,000-lb trailer than he does ... I was getting 8 mpg towing his trailer, he was getting 7 ... and that 8.1 most definatley tows better than a 6.0.

Pisses me off bad GM discontinued that motor, because I sure as hell don't wanna have to pay an $8,000 penalty right off the bad to buy a new truck that actually has a motor I can tow with, then have to pay $0.50 more per gallon to operate the thing.

Face it GM, the 6.0L isn't enough and the Duramax is way overkill. Bring back the big block!

[blaarg]

What ticks me off is that these fuel price jumps have nothing to do with demand, just investors hedging the market.

I thought it was more to do with the fall of the dollar (I have no idea if these two events are mutually exclusive or not). I saw an article about how the price of gas has remained close to steady compared to gold, but has skyrocketed compared to the dollar.

...which brings up my next rant. The fucking dollar dropping. I would bet most of you guys aren't affected tremendously, but it genuinely sucks when you are living in a foreign country and getting paid back home in dollars. I mean, I've been here for a little over two months and seen the amount I'm earning (in Danish Kroner) drop 5% because of the falling of the dollar. Some other people who were here starting a year ago has had it drop about 15% from when they started. Its fucking stupid... Now whenever I get paid I immediately withdrawl my paycheck into Kroner asap to save a little $$$.
</rant>

[impala454]

I didn't buy a 2007, I bought a used 2005 with 29k on the clock ... truck is just like new.

But either way, it fucking pisses me off bad that they discontinued this motor, i fucking LOVE the thing.

Given I don't get as good of miledge on the highway as my dad's 6.0L .... his is a 2008 6.0L that even has the displacement on demand ... but I get better miledge towing a 6,000-lb trailer than he does ... I was getting 8 mpg towing his trailer, he was getting 7 ... and that 8.1 most definatley tows better than a 6.0.

Pisses me off bad GM discontinued that motor, because I sure as hell don't wanna have to pay an $8,000 penalty right off the bad to buy a new truck that actually has a motor I can tow with, then have to pay $0.50 more per gallon to operate the thing.

Face it GM, the 6.0L isn't enough and the Duramax is way overkill. Bring back the big block!

Yeah I grew up around them w/the race cars and such. We have an old 1979 crew cab long bed w/a 454 that I drove in high school. And yeah I sure as hell wouldn't want the duramax right now w/how bad diesel prices are getting. My dad has a 2003 crew cab dually duramax he tows his race car trailer with and it does great with that, but driving around town would be esspensive. I'd love to get an old chevelle or impala and drop a fuel injected 502 or somethin in it.

[impala454]

I thought it was more to do with the fall of the dollar (I have no idea if these two events are mutually exclusive or not). I saw an article about how the price of gas has remained close to steady compared to gold, but has skyrocketed compared to the dollar.

I believe gold has skyrocketed a lot more than gas has. I don't have any numbers in front of me but I recall it being around the mid $750 range this time last year, now its up over $1,000!!??!? Wish I'd have bought some up!

...which brings up my next rant. The fucking dollar dropping. I would bet most of you guys aren't affected tremendously, but it genuinely sucks when you are living in a foreign country and getting paid back home in dollars. I mean, I've been here for a little over two months and seen the amount I'm earning (in Danish Kroner) drop 5% because of the falling of the dollar. Some other people who were here starting a year ago has had it drop about 15% from when they started. Its fucking stupid... Now whenever I get paid I immediately withdrawl my paycheck into Kroner asap to save a little $$$.
</rant>

I don't keep up with it so I could be completely wrong, but from the financial reports I hear on the radio and such, I've heard the dollar is actually starting to do pretty well.

[Testm0nkey]

how is it flawed? that's something I have read a lot about.

i believe i posted the breakdown in some thread awhile back. the infamous nickel plant in Canada people like to bring up produces over 10% of the world supply of nickel which toyota buys about .0000001% of. people like to say how the plant (and somehow they mention toyota in this) is destroying the environment as if their lifestyles and automobiles run on happiness and dreams. the city the plant is in is the largest mining operation in the world. its far from the one plant that also sells to companies like Ford and GM. the other thing i think people misunderstand, the prius battery is not a huge block of glowing nickel or some shit. it just has SOME nickel components.

and the articles that site how bad the plant is - are basing it off 30 years ago when mining was a horrible business. since the 70s environmental groups have thankfully got their way and changed the business
Sudbury is where the plant is

As Canadian Geographic declared recently in giving one Sudbury group an award for restoration, "Once derided for its barren landscape, Sudbury, Ontario, has experienced an environmental makeover since the 1970s. Today, the former industry-blighted moonscape has been transformed."

the prius battery also lasts A WHOLLLLLLLLE lot longer than your average car battery (which is toxic, pollutes, and even in the recycling process is dangerous). so you replace the battery that has some nickel in it rarely. for example, a friend of mine drives a prius with 230,000 something miles on it. hes only on his 2nd battery.

im sure you heard the nickel thing from that pathetic article siting the Hummer as being more green? thats the one most people bring up. besides the writer being blasted for the horrible research (or lack there of) and payoffs by GM, it was not peer reviewed. it was an opinion article that people got into their heads as being scientific.

IN ADDITION the new prius battery has even less nickel then before and the upcoming revolutionized prius wont have ANY nickel and even more efficiency and power.

in the end the negative environment impact of the prius and hybirds are far less than the benefits to the consumer and the environment. (the argument against this idea is mostly just by dumb americans who dont know any better hohoho)

[impala454]

What will be funny to me is when the ice age comes and we'll have to all switch back to extremely dirty fuel just to keep some warmth in. New hondas will have 500hp V8s with dual 4 barrel carbs.

[Dogmeat]

What will be funny to me is when the ice age comes and we'll have to all switch back to extremely dirty fuel just to keep some warmth in. New hondas will have 500hp V8s with dual 4 barrel carbs.

fuck carbuerators.

i hate them.

I hope I never own a vehicle of any kind with a carbuerator on it.

I've been dicking with carbs for my entire life......now what I do on my fuel injected sled now?

I drag a fucking mouse to adjust my fuel curve.

How much more simple could it possibly be?

[Oasis]

I believe gold has skyrocketed a lot more than gas has. I don't have any numbers in front of me but I recall it being around the mid $750 range this time last year, now its up over $1,000!!??!? Wish I'd have bought some up!
I don't keep up with it so I could be completely wrong, but from the financial reports I hear on the radio and such, I've heard the dollar is actually starting to do pretty well.

I bought gold at $315. Heh heh heh.

Too bad I only bought 3 oz of bullion

[impala454]

fuck carbuerators.

i hate them.

I hope I never own a vehicle of any kind with a carbuerator on it.

I've been dicking with carbs for my entire life......now what I do on my fuel injected sled now?

I drag a fucking mouse to adjust my fuel curve.

How much more simple could it possibly be?

haha yeah I know, was just tryin to think of the dirtiest grungiest stuff for my example

[Testm0nkey]

What will be funny to me is when the ice age comes and we'll have to all switch back to extremely dirty fuel just to keep some warmth in. New hondas will have 500hp V8s with dual 4 barrel carbs.

well the coming ice age is speculative just like you think global warming is. you have to at least admit that. but even if it was an ice age itd be really stupid to switch back to dirty fuels to warm the planet. then itll be hey great its freezing cold out but we dont have any more fuel!

[Dogmeat]

well the coming ice age is speculative just like you think global warming is. you have to at least admit that. but even if it was an ice age itd be really stupid to switch back to dirty fuels to warm the planet. then itll be hey great its freezing cold out but we dont have any more fuel!

The coming ice-age is not speculative, it's a scientific fact the Earth WILL undergoe another ice age.

MYYYYYYYYYYYYYY Jesus says so, and he's way better than yoooooouuuuuuuuuurrrr Jesus!

[impala454]

well the coming ice age is speculative just like you think global warming is. you have to at least admit that.

I never thought global warming was only speculative. I simply don't think it's man made. All I will believe is the numbers put in front of me. If the number says the planet is warming, then I guess it's warming. If they show the planet is cooling, then I guess it's cooling. I don't need to listen to a bunch of asshats who aren't scientist try to convince me why. If the numbers keep showing cooling, I wonder what Al Gore and his congregation will have to say?

but even if it was an ice age itd be really stupid to switch back to dirty fuels to warm the planet. then itll be hey great its freezing cold out but we dont have any more fuel!

Yes, I'm aware it would be stupid. It was a joke.

[Testm0nkey]

omg! im really trying to not start another global warming debate

[impala454]

just go post it in the global warming thread