The Price of Oil is dropping rapidly

The bottom line is the consumer get gouged on both ends of the deal. Price of raw material oil rises, prices seen at the pump the next morning. Prices fall.... not so quick to respond to the consumer at the pump.....
 
How come the shorts haven't crushed Lehman Bros and didn't crush Bear-Stearns?

There is more to it than what you plainly see. Think power and politics.

It applies to gas prices and oil prices, too. Those who make and move the money set the price of everything.
 
It's $4.50/gallon in LA, even in the ****** neighborhoods near USC. It's gone up about $.30 in the last few weeks and I don't recall oil jumping that significant over that time. I can't wait to see it plummet $.30 or more now that the cost per barrel is dropping.
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I lean conservative, but I have no doubt we're gettting put over the barrel, no pun intended. There are a lot of people in play on this BS in my estimation, from all ends of the spectrum. I wish we could resurrect Charles Bronson as the vigilante and go medieval on some of these jerks.
 
Yeah, we will see how long it takes the "free market" to lower the pump price of gasoline. Six months? A year? It wouldn't take 6 days to raise it if some speculator bought futures at a higher price.
 
So you believe Hunt has never met with the leaders of the main players in his industry? That there has been no discussion, not even to the level of, "You know, oil prices are going down, but lets just hold on and see where its gonna end up before we make any moves." or "Oil prices are up. We are gonna lose our shorts. We have to raise prices now." Or even more likely, "You know, the big boys haven't lowered their prices yet, so lets come in a tiny bit lower than them. We can make a killing."

You're right. Never happens. Individual refineries are just maverick players that never have any dealings with the other players. Its all heated competition. Nary a price discussion. Just like the various Bells, or the various utilities, or manufacturers of RAM.
 
Let me add. You might ask, "Why don't you think they talk about the standard spread? Maybe they want to start asking a dime more than the "X' minus 'Y' I discussed." They don't need to. Hunt can see the market. They can see the others try to get bigger spreads. They try as well. Each day they try to get as big of a spread as they can. There are millions of gallons of gasoline being contracted for in the market every day. In my theory Hunt is selling gasoline on NYMEX or wherever and then making arrangement for a June 10 delivery somewhere at some differential to NYMEX. It's possible for all refiners to decide collectively not to hedge their production one day or to hold out for a higher price. That would be very obvious to all the traders. Some would get stung for millions that day. Do you think somebody like Goldmasn Sachs trading would sit still for that kind of blatant market manipulation, with an obvious paper trail?

Somebody may be manipulating these contracts but I doubt if it's a refiner. I doubt it.

One of the things I did twenty years ago was work on big litigation and other where fraud was alleged. My job, working with the attorneys, was to find it and prove it. If I were retained to find fraud here I'd go straight to the futures market for products and look for market manipulation. I'll bet the suspicious trading activity would not be from names you'd recognize. But I don't suspect much there. The crack spread doesn't look suspicious to me.

I believe it's essentially all in the $126 per barrel, and the US is not in control of that.
 
Thanks for the info, Tahoe. I still believe there's manipulation going on, but perhaps collusion was a strong word. Its not that I think oil companies and refineries are getting together and saying we're gonna set the price at X. The point I was making was to the increasing price floor on gasoline. The price drop is always smaller than the increase when comparing the price of gasoline to the price of oil. I also know this is no different than any other market. If you manufactured widgets and sold them at a certain price, you'd raise the price almost instantly if the price of components went up. You'd also be slow to lower the price when component prices went down. The big difference is that America isn't dependent on widgets.

fratboy, I'm not really interested in guessing numbers and Hunt doesn't release any to the public, according to their website. If you've got real numbers, post them and we'll discuss, but I'm not really interested in seeing your guesses either.
 
The one group I've gotten suspicious of (without any evidence at all really) is the Russians -- Putin's Kremlin crony billionaires. They really benefit the most from high oil costs and have the money (and complete lack of ethics) to manipulate the oil market. So many of the big oil players really don't want prices this high -- they just don't know what to do with all the money, and the high prices make so many alternatives economically viable.

Russia, on the other hand, needs all the cash it can get to build itself up into a world power. It's the world's #1 producer, but it has few reserves compared to most OPEC countries.

So who knows? Just a thought that I've had recently.
 
If there's a problem my money is on speculators in the futures market who are skilled at panicing tight markets or markets where the fundamentals are moving strongly and they know hoe to exaggerate them. This will be some George Soros or Paul Tudor Jones kind of guy who may not know oil from water but knows futures markets, squeezing shorts, gunning stop losses and so on. I believe the refiners, particularly the big names, and the names you know, are far away from that. Even farther away is some slow witted distributor operating on a shoestring with his eight trucks hauling gasoline to retail stations. But he at least has enough sense not to expose himself to big price swings, and while he may be a little greedy here and there, you are talking about a penny or two a gallon.

But the big thing to come back to is spreads against the futures market. There are lots of markets. Start with the big world markets - New York, Rotterdam and so on. Then look at regional markets, the big pipeline terminals and such. Then look at local terminals, And finally retail stations. If there is something funny you'll see it somehow. Maybe prices of gasoline go nuts in Rotterdam and spread to New York. Maybe all pipeline terminals west of the Rockies start shooting up. If you have a theory you have to see some driver. "Big Oil" doesn't control ****. The world financial are in control. So you have to contend those markets are being manipulated or you have to contend the local markets are out of sync with the world financial markets. To argue that distributors in Alabama are colluding and that's why the prices in Rotterdam and Singapore, which are in line with Alabama, are up is a loony position. New York and Rotterdam are the drivers, not the guy in alabama with eight trucks or the refinery in Alabama in collusion with refineries all over the US. I just don't see it.

Here's the conspiracy: People in China and India are conspiring with their neighbors to start riding cars instead of bicycles.
 
Our house view at my company is that bubble is going to burt soon and we see Q3-Q4 oil at 83 dollars. Not sure that's cheap but still better yay
 
HIHK,

Does your company believe there is something going on different than specuation in a tight market? Who is doing the speculating?
 
I find it interesting that Americans almost always want to put the blame on someone else when it comes to gas prices. Its big oil's fault. Its those damn Arabs. Its the speculators. its the refiners. Its the government's fault. Now, here is the truth: we are all at fault. We waste more energy than a lot of countries consume. We've not altered our lifestyle significantly so that we use energy more effeciently. We love to drive our overbuilt suv's and trucks when most never see a dirt road. We build 4,000-5,000 sq feet houses for 3 people to live in. If anything, we've over-indulged in cheap energy. Now that we have competition for consumption, it time that we alter our lifestyles to reflect the realities of a limited supply of carbon based fuels and become smarter in how we utilized these resources. Personally, I'm more willing to pay $5 per gallon for gas than I am for paying $250.00 for a ticket to a football game. Wake up America - you sound like a bunch of junkies bitching about the price of dope. The pusher is only selling what you're buying.
 
I would not expect a drop at the pump to be immediate. The gas station owners will want to recoup some of their lost profits.

I believe they would normally make about 10-13 cents a gallon. Lately, it is around 4. I heard the amounts on the radio a few weeks ago and don't know how accurate they are.
 
fondren-

i dont have numbers to share. you are the one saying collusion, manipulation etc are going on. I was just trying to get a handle on the size of the rent you think is being earned.

also, i'd like you to chart out front crude vs gasoline and prove that the uptick in Gas prices are 'immediate'. i am not sure that is the case. i suspect it is mostly anecdotal and a bunch of selective memory.
 
Okay make believe you are a gas station owner and you paid X for the gas in your tanks. You are already purchasing gas to replace what is being pumped out and that price for gas has now decreased by 20% but you still have all that gas at the higher price. Do you really think the gas station owner is going to automatically drop their price and start lossing money. No in fact they are going to wait for the first station around them to decrease their prices. That's the reason prices don't tend to decrease as fast. Price increases happen more quickly because the station owner is trying to make more money off the cheaper gas to cover the more expensive gas.
 
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