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#376630 - 06/23/05 06:06 PM
$60 a Barrel!
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Power Poster
Joined: Jan 2002
Posts: 2,706
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U.S. Crude just hit $60 a barrel in NY trading.
How high will it go? Any predictions?
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Beauty is only skin deep...but ugly goes all the way to the bone!
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#376631 - 06/23/05 06:11 PM
Re: $60 a Barrel!
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10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
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That was cruel on a full stomach.
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My opinion only. Not legal advice.
Say you'll haunt me - Stone Sour
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#376633 - 06/23/05 06:24 PM
Re: $60 a Barrel!
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Anonymous
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Is it too late to cancel my driving vacation this summer. Anyone want to buy a Hummer?
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#376634 - 06/23/05 06:43 PM
Re: $60 a Barrel!
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Anonymous
Unregistered
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Well I do own some producing oil wells that I was use to getting anywhere from $50 to 100 bucks ever 2 months or so to now getting a monthly check of around $300.00 so that covers my gas bill for a month....Thank Goodness
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#376635 - 06/23/05 06:46 PM
Re: $60 a Barrel!
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Power Poster
Joined: Oct 2001
Posts: 5,564
Clintonville, WI, USA
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If you think driving vacations will cost big bukamoles, take a look at airfares. Ridiculous! I think I will stay home and use that money for dinner out, a massage, dinner out, movies, oh and a dinner out....
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Member of the National Sarcasm Society - like we need your support!
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#376636 - 06/23/05 06:55 PM
Re: $60 a Barrel!
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Power Poster
Joined: Apr 2004
Posts: 8,990
Cincinnati, OH
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Quote:
If you think driving vacations will cost big bukamoles, take a look at airfares. Ridiculous! I think I will stay home and use that money for dinner out, a massage, dinner out, movies, oh and a dinner out....
I hate to tell you this, but all those things you are going to do instead of fly will go up in price. After all, the ingredients used in your dinner out require shipping, not to mention fuel for the machines used to plant and harvest veggies, slaughter animals, etc. The ticket prices at the movies will continue to inflate, since it takes gas to make those car chases, explosions, etc. Not to mention to transport the films, fly the crew to the exotic locations, and more.
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#376637 - 06/23/05 06:59 PM
Re: $60 a Barrel!
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Anonymous
Unregistered
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Oil will be $85.00 barrel by next spring. Look for oil prices to remain high for 48 - 60 months. Just a little information I picked up from an oil exec on a fishing trip last month.
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#376638 - 06/23/05 07:06 PM
Re: $60 a Barrel!
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Anonymous
Unregistered
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Quote:
Oil will be $85.00 barrel by next spring. Look for oil prices to remain high for 48 - 60 months. Just a little information I picked up from an oil exec on a fishing trip last month.
Was his name Cheney? 
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#376639 - 06/23/05 07:59 PM
Re: $60 a Barrel!
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10K Club
Joined: Nov 2003
Posts: 12,846
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Quote:
I hate to tell you this, but all those things you are going to do instead of fly will go up in price. After all, the ingredients used in your dinner out require shipping, not to mention fuel for the machines used to plant and harvest veggies, slaughter animals, etc. The ticket prices at the movies will continue to inflate, since it takes gas to make those car chases, explosions, etc. Not to mention to transport the films, fly the crew to the exotic locations, and more.
This is flawed economic theory, though also a very popular misconception. Inflation does not occur due to increases in the costs of production; inflation occurs due to too many dollars chasing too few products.
To the extent that a product's major input increases in cost, the price of that particular product may increase also. But, either consumption of that product, or consumption of other products, will drop to compensate for it - assuming the money supply is stable. If the money supply is increasing, then the prices may increase - that would be inflation - but it is due to an increasing money supply, not due to an increase in the cost of a commodity.
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#376640 - 06/23/05 08:13 PM
Re: $60 a Barrel!
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Anonymous
Unregistered
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Quote:
Quote:
I hate to tell you this, but all those things you are going to do instead of fly will go up in price. After all, the ingredients used in your dinner out require shipping, not to mention fuel for the machines used to plant and harvest veggies, slaughter animals, etc. The ticket prices at the movies will continue to inflate, since it takes gas to make those car chases, explosions, etc. Not to mention to transport the films, fly the crew to the exotic locations, and more.
This is flawed economic theory, though also a very popular misconception. "Inflation does not occur due to increases in the costs of production; inflation occurs due to too many dollars chasing too few products. "
To the extent that a product's major input increases in cost, the price of that particular product may increase also. But, either consumption of that product, or consumption of other products, will drop to compensate for it - assuming the money supply is stable. "If the money supply is increasing, then the prices may increase - that would be inflation - but it is due to an increasing money supply, not due to an increase in the cost of a commodity.
Sorry, but increasig money supply has nothing to do with inflation. The reason why oil prices are so high is because China is consuming petroleum products like the end of the earth is coming. Fuel, rubber, also steel...they are on a huge expansion and it is scary. The increase in demand for those items is driving prices for those items higher. It's this mentality: I need it more so I am willing to pay more for it.
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#376641 - 06/23/05 08:23 PM
Re: $60 a Barrel!
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10K Club
Joined: Nov 2003
Posts: 12,846
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Sorry, but increasig money supply has nothing to do with inflation.
I don't know if I have ever read a statement that was more obvsiously incorrect.
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The reason why oil prices are so high is because China is consuming petroleum products like the end of the earth is coming.
I agree. But that's not inflation. That is supply and demand.
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Fuel, rubber, also steel...they are on a huge expansion and it is scary.
How is that scary? It's economic growth.
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The increase in demand for those items is driving prices for those items higher.
Yep.
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It's this mentality: I need it more so I am willing to pay more for it.
Mentality? I don't think mentality has anything to do with it. It's just supply and demand.
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#376644 - 06/23/05 08:29 PM
Re: $60 a Barrel!
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Power Poster
Joined: Jan 2002
Posts: 2,706
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#376645 - 06/23/05 08:45 PM
Re: $60 a Barrel!
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Power Poster
Joined: Apr 2004
Posts: 8,990
Cincinnati, OH
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Quote:
Quote:
I hate to tell you this, but all those things you are going to do instead of fly will go up in price. After all, the ingredients used in your dinner out require shipping, not to mention fuel for the machines used to plant and harvest veggies, slaughter animals, etc. The ticket prices at the movies will continue to inflate, since it takes gas to make those car chases, explosions, etc. Not to mention to transport the films, fly the crew to the exotic locations, and more.
This is flawed economic theory, though also a very popular misconception. Inflation does not occur due to increases in the costs of production; inflation occurs due to too many dollars chasing too few products.
To the extent that a product's major input increases in cost, the price of that particular product may increase also. But, either consumption of that product, or consumption of other products, will drop to compensate for it - assuming the money supply is stable. If the money supply is increasing, then the prices may increase - that would be inflation - but it is due to an increasing money supply, not due to an increase in the cost of a commodity.
I hate to tell you this, but if the cost of the raw materials for a product increase, the smart company raises the consumer cost for the product to match, thus maintaining at least some of it's profits. For example, have you noticed that the cost of Coca Cola 24 packs has increased slowly over the last two years? Why you ask? Because the cost of sugar went up slightly and, more importantly, because the costs of transporting the product and paying their employees has increased. Rather than sell their 12 packs for 2 for $5 each, they raised the price to be closer to 3 for $9.
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#376646 - 06/23/05 10:08 PM
Re: $60 a Barrel!
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10K Club
Joined: Nov 2003
Posts: 12,846
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Hey Jokerman, what's it like getting up every morning knowing that you are the smartest man in the world? 
Don't know yet - but I'll tell you if I outlive him.
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#376648 - 06/23/05 10:20 PM
Re: $60 a Barrel!
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10K Club
Joined: Nov 2003
Posts: 12,846
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Quote:
I hate to tell you this,
Either you don't really hate to tell people everything you tell them, or you are a very, very conflicted soul...
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but if the cost of the raw materials for a product increase, the smart company raises the consumer cost for the product to match, thus maintaining at least some of it's profits.
That's true. But that does not equal inflation, which is the result of an economy that is growing slower than the money supply (again, too many dollars chasing too few goods). To the extent the money supply is stable, and the cost of one good or group of goods increases (due to an increase in demand for that product), fewer resources are available for other products, and demand for them declines, resulting in falling prices for those products. The result is that some products increase in price, while others decrease. This is not the same as an "overall general upward price movement of goods and services in an economy," AKA "inflation".
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For example, have you noticed that the cost of Coca Cola 24 packs has increased slowly over the last two years?
No, I haven't. I don't buy Coca Cola 24 packs.
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Why you ask? Because the cost of sugar went up slightly and, more importantly, because the costs of transporting the product and paying their employees has increased. Rather than sell their 12 packs for 2 for $5 each, they raised the price to be closer to 3 for $9.
WAIT - I thought we were talking about 24 packs, and here you are changing your argument without warning... Talk about your intellectual dishonesty!!!
Seriously, I have no argument with the idea that an increase in energy costs will affect the prices of other products. But to say that that effect will always be an increase is inaccurate.
BTW, the source of this misinformation is generally politicians, who prefer to blame oil-producing nations for our troubles, rather than themselves and their appointees (politicians and the Fed are responsible for inflation through their fiscal and monetary policies).
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#376649 - 06/24/05 12:43 AM
Re: $60 a Barrel!
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Platinum Poster
Joined: Jun 2004
Posts: 737
Midlands SC
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I just have accepted this: Everythingis going up, but my pay.   Gas, food, etc.
I agree: Everyhting is going up except people's pants. They have to come down every so often!
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#376650 - 06/24/05 08:05 AM
Re: $60 a Barrel!
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Platinum Poster
Joined: Oct 2004
Posts: 733
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Inflation explained,
M*V = P*Y
Where M equals the Supply of Money, V equals velocity of Money, P = the GDP deflator, and Y = real GDP. This equation must equal. PY will equal nominal GDP. Velocity is simply the rate at which money circulates in the economy. Economists generally assume that Velocity is constant, which is generally a pretty close approximation to reality. Therefore we can now say that a change in the supply of money will cause a proportionate change in nominal GDP (PY), since the equation must equal.
We now can explain what determines the economy’s OVERALL level of prices. We will use three building blocks:
1. The factors of production and the production function determine the level of output (Y), i.e. the productive capability of the economy determines real GDP. The factors of production are labor and capital. In the short run capital is fixed and labor is somewhat. Therefore for a given time period, say a month, real GDP is already determined because we can’t change anything. So Y is now a constant.
2. The money supply determines the nominal value of output, (PY), why? Because V is constant.
3. The price level (P) is then the ratio of nominal GDP to real GDP, i.e. The GDP deflator (a type of CPI for the entire economy)
Now this means that as the Fed changes Money supply (M) and because V is fixed we will have a change in nominal GDP. Since the factors of production are fixed for our purposes real GDP is thus already determined and the only thing that can change with M is P, prices. So as the supply of money goes so does the level of prices.
I won’t get into details, but some firms can pass along changes in the prices of their inputs to consumers and some can’t, it depends on their demand elasticity. Basically that is a percent change in prices may cause a larger or smaller percent change in quantity demanded depending on the slope of the demand and supply curves. This Leads to increased or decreased revenue and profits. Things like income changes, and substitute availability, blah, blah, blah determine this. Think about it, if gas keeps going up in price and your income stays the same what else are you going to do about. Maybe drive a little less, in the long run buy a more fuel efficient car. Point is you might decrease your consumption but not by a lot, you’ll have to take that increase in prices and like it. So in that effect gas suppliers can pass along a good deal of their increased cost on to you.
Anyway it’s late, jokerman, anyone else, if you see a mistake or have an opposing view please point it out. Anymore questions please post them, even though it took me a couple of minutes to write this I think that if we all knew more about how our economy worked then our government couldn’t get away with half of the stupid crap it does. It’s amazing how many people use our ignorance against us to push their own agendas.
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"Well, if your going to open a bakery I suggest that you hire someone with some baking experience"
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#376651 - 06/24/05 02:37 PM
Re: $60 a Barrel!
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10K Club
Joined: Nov 2003
Posts: 12,846
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No mistakes, but I don't really see a conclusion. What I would add is, because we know that an increase in M causes an increase in nominal GDP, Jokerman is right.  Good explanation of elasticity. I know my number of miles driven has dropped significantly since gas went to $2/gallon. Make a concerted effort to bring my lunch to work instead of going home, try to stop on the way home instead of making a separate trip. Of course, my wife says this is because I'm "tight" - next time, I'll point out that it's actually because I'm "elastic".
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