We are all impacted by the high oil prices. This is a fact of life and something that we will all have to adjust to in the days, weeks, months and years to come. We long for the relatively low oil prices of $2.50/gallon.
Ironically, the world's largest oil producing nation is starting to long for those prices also. The fear that the Saudis have is that the party may be coming to an end. They believe that these extremely high prices may be pushing us to a pain point that causes us to embrace conservation and alternative energies. These solutions would ultimately lead us to use less of their crude oil and therefore reduce the amount of money that flows into their coffers.
When you combine this with the fact that many people are becoming concerned about climate change and that the Saudis best friends in Washington will be packing up and leaving in 6 months, they are starting to see their "perfect storm". Less pro-Saudi political pull, more concern for carbon emissions, and total frustration over high fuel prices they can only come to one logical conclusion - it is better to have lower prices and long term viability than higher prices and global animosity.
Of course if the Saudis can lower the price of crude in the next few months (prior to the November Presidential election) Senator McCain's chances of winning the White House will improve. With gas prices at $4.00+/gallon the Republican party will have a much more challenging time winning the White House.
It will be interesting how this plays out over the next year or two, but one thing is certain. They will do all that they can to maintain their global position which includes lowering crude prices.
Sunday, June 15, 2008
Tuesday, June 10, 2008
Gas, Geopolitics and Oil Tankers at Anchor
We are at record gas prices. Those of us who live in areas that do not have the greatest public transportation systems are too aware of this phenomena. There are a lot of reasons for the high gas prices and up until a few days ago everyone has basically said that it is because of basic economics - supply and demand or advanced economics - futures trading. There is of course some truth to all of this.
In many past oil crisis there have been times when oil tankers were held at anchor waiting for the spot prices of crude to increase. Of course, a rise in the per barrel price of oil can have a significant impact on the value of a tanker full of oil. With the largest oil tankers being able to transport about 500,000 tons of crude oil and a barrel of oil weighing a little less than 300 lbs. you can see that holding a tanker at anchor for a few days can bring a significant windfall profit if the price goes up just a few bucks.
So the question of the day is - are there oil tankers currently being held at anchor during this global oil crisis - truckers in Spain are blocking access to a major city as a protest against the rising diesel costs. Also, many oil tankers being owned by independent oil companies (Companies in Panama own the largest oil tanker fleet). Are they waiting for the highest bidder, such as China or India for their services?
Tanker transportation costs/gallon of gas are very small - around $.02/gallon. This cost is much less than the taxes per gallon that the various layers of governments impose on fuel. The shipping industry itself has always been a small percentage of the fuel prices. However, there are numerous times in history when this industry was controlled or restricted in order to manipulate the value of the commodity that it transports.
Our politicians will address the oil problem in their usual day late and several dollars short manner such as tax the oil companies more (they already made $40B in profit with gas 30% cheaper than it is now).
With the consumer being at the end of the oil food chain and having little or no say in what happens in our "democracy" in Washington, it is going to be an interesting adaptation of our lifestyles to adjust to the higher oil prices.
In many past oil crisis there have been times when oil tankers were held at anchor waiting for the spot prices of crude to increase. Of course, a rise in the per barrel price of oil can have a significant impact on the value of a tanker full of oil. With the largest oil tankers being able to transport about 500,000 tons of crude oil and a barrel of oil weighing a little less than 300 lbs. you can see that holding a tanker at anchor for a few days can bring a significant windfall profit if the price goes up just a few bucks.
So the question of the day is - are there oil tankers currently being held at anchor during this global oil crisis - truckers in Spain are blocking access to a major city as a protest against the rising diesel costs. Also, many oil tankers being owned by independent oil companies (Companies in Panama own the largest oil tanker fleet). Are they waiting for the highest bidder, such as China or India for their services?
Tanker transportation costs/gallon of gas are very small - around $.02/gallon. This cost is much less than the taxes per gallon that the various layers of governments impose on fuel. The shipping industry itself has always been a small percentage of the fuel prices. However, there are numerous times in history when this industry was controlled or restricted in order to manipulate the value of the commodity that it transports.
Our politicians will address the oil problem in their usual day late and several dollars short manner such as tax the oil companies more (they already made $40B in profit with gas 30% cheaper than it is now).
With the consumer being at the end of the oil food chain and having little or no say in what happens in our "democracy" in Washington, it is going to be an interesting adaptation of our lifestyles to adjust to the higher oil prices.
Wednesday, June 4, 2008
Tenacity = Hillary
No matter what you may think about Hillary Clinton, you have to take your hat off to her tenacity. The lady is as determined as they come. She is like the Energizer Bunny - she just keeps going and going. We could all learn from her. When all seems lost and we are at the end of our rope, tie a knot in it and hold on.
Most candidates follow the rules of their party and would have graciously extended an olive branch and conceded after their opponent achieved the required number of delegates (based on the rules). Barack Obama has the delegates and the support of the party (per the stated rules).
It reminds me of Winston Churchill who stated, "Never give in! Never give in! Never, never, never, never... In nothing great or small, large or petty, never give in except to convictions or honor and good sense!"
Hillary is nothing if not rational and smart. Therefore there must be a good reason that she has not yet conceded. Her conviction is that she will be in the White House, some way and some how. That means that she wants the VP nod.
The definition of tenacious used to be not readily letting go of something or giving up. Of course Websters could change and better define that by just posting a picture of Hillary.
Most candidates follow the rules of their party and would have graciously extended an olive branch and conceded after their opponent achieved the required number of delegates (based on the rules). Barack Obama has the delegates and the support of the party (per the stated rules).
It reminds me of Winston Churchill who stated, "Never give in! Never give in! Never, never, never, never... In nothing great or small, large or petty, never give in except to convictions or honor and good sense!"
Hillary is nothing if not rational and smart. Therefore there must be a good reason that she has not yet conceded. Her conviction is that she will be in the White House, some way and some how. That means that she wants the VP nod.
The definition of tenacious used to be not readily letting go of something or giving up. Of course Websters could change and better define that by just posting a picture of Hillary.
Subscribe to:
Posts (Atom)
