Just wanted to get some people's opinions on this article a guy I know posted on FB today. The point of the article was to say that oil production isn't directly correlated to gas prices. Do you think that is misleading. Obviously if everyone shut down their rigs the price of oil would sky rocket...so, is the price not correlating with production merely because of speculation and traders or do you think it has more to do with the demand for oil through different economic cycles not really addressed in the article?
I certainly don't think drilling is going to answer all of our energy needs, but I don't think it's not necessarily going to hurt them. If we take a more robust approach to our energy policy and ramp up drilling, along with nuclear and various forms of alternative energy wouldn't that have a substantial impact on the demand for oil and then, eventually, the price? I realize it's hard to have a definitive answer because as emerging markets grow it's hard to determine how much of our waning will be offset by their need, but I just wanted to see what everyone's thoughts are about the accuracy of the analysis in the article. What say you?
http://www.ajc.com/news/nation-world/fact-check-more-us-1392738.html
Regards
The article is correct. Newt Gingrich is an idiot.
Long term problems can't be solved by politicians with short term solutions.
And all this unrest about Iran can't be helping global oil prices.
Monetary policy
^ Also if we emptied every last drop of our reserves, we wouldn't see a drop in prices.
The only solution I see is Natural Gas.
http://research.stlouisfed.org/publications/es/article/9179
"Speculation was the second-largest contributor to oil prices and accounted for about 15 percent of the rise. The effect that speculation had on oil prices over this period coincides closely with the dramatic rise in commodity index trading—resulting in concerns voiced by policymakers. Just as interesting as the rise in the price of oil was its sudden collapse in the second half of 2008. This was driven by the financial crisis and was manifested in two ways: a sharp contraction in demand, due to the global recession, and a decline in commodity index trading, due to diminished risk appetite in financial markets. Oil inventory demand played a smaller role in the oil price buildup, though this demand accounted for a large share of the spike from mid-2006 to mid-2008. And oil supply contributed the least to both the boom and bust in oil prices. On balance, the evidence does not support the claim that a sudden explosion in commodity trading tectonically shifted historical precedent: Global demand remained the primary driver of oil prices from 2000 to 2009. That said, one cannot completely dismiss a role for speculation in the run-up of oil prices of the past decade. Speculative demand can and did exacerbate the boom-bust cycle in commodity prices. Ultimately, however, fundamentals continue to account for the long-run trend in oil prices. "
The article is correct in the view that new exploration takes years, however you can not write off new drilling having any impact of gas prices. The timing of this story is just suspect. Gas is about to creep over 4/gal nationwide and the president comes out and says, whoops it's not my fault. But it's insanity to assume that increased supply will not have a downward pressure on oil prices. Besides the less transport you have to do of said oil will lower the price automatically.
Thorium...though that's kinda like saying "legalize marijuana"
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