High Gas Prices: Are We Actually Sitting On A Gas Bubble?

uh...how do you figure that?

There will be a gas bubble if cheap solar energy starts to compete along with fuels made by bacteriological processes. There is even one such process on the horizon that sucks CO2 out of the atmosphere, converts it into a gaseous hydrocarbon and eventually into a liquid fuel -- how carbon neutral is that?

Isn't crude cost control by OPEC unlike housing market which control by no one.

OPEC controls supply...however, nobody controls demand, which is the other half of the price puzzle.

I should say the other 255 since speculation is also playing a big role in the price run up.

I'm sitting on a gas bubble; I had chili with beans for lunch.

I know, that wasn't funny but I had to say it anyway. Sorry.

LOLLLLL

Where was that picture taken? California? In the Northeast, diesel is 30% higher than gas.

Yeah I was kinda wondering about that as well. Diesel is almost $.50 more than premium here in the DC area.

Hell if I could buy diesel for almost a dollar cheaper than premium...watch how quickly my chair would spin as jump up and run off to the MB dealship.

Alaska

That was number 2 diesel which is heating oil.

opec sets production amounts, which affect prices by limiting supply. But OPEC isnt the cause of the current price. You have the low value of the dollar mostly to thank for that. Since the dollar has been falling, investors are looking for a way to hedge against inflation, so typically they will invest in commodities. Oil is a good bet for an investor due to increasing consumption, but relatively flat supply. Unfortunately for us this means that investors are buying up millions of barrels of oil and thus further decreasing supply. This further drives up the price, and thus attracts more investors. And so on.

Long story short, yes I'd say we are in a bubble. Eventually ( probably when the dollar starts to strengthen again) some big oil investors are going to start selling and then there will be a race to see who can sell off their stockpiles before the price crashes from the excess supply.

Sounds good tome...

Any idea when the dollar will strengthen?

Are there any other options as to how we can deflate this "bubble"?

Agreed.

1. When the Fed stops rate cuts and

2. People stop defaulting on their mortgages in which they agreed to pay back in return for a home loan. Paying your bills on time...what a concept!

well... Do you happen to know where a vast new source of easily accessible oil might be? That would help.

But easier to do would be to drive less and to help stimulate the economy by buying local rather than foreign products. Yes, I know that everything is made in china, but there are sometimes American alternatives, even if they cost more.

As Holmstar said with oil, the same stragety is used with Gold, which is now approaching 900, here's a relevant article posted today:

http://news.yahoo.com/s/ap/20080515/ap_on_bi_ge/commodities_review_14

Something to keep in mind when talking about true bubbles. . .

Government intervention is not necessarily a requirement for a bubble, but no bubble has EVER occurred without government intervention.

Oil may be look like a slight bubble for sure, but the next REAL bubble is the "Green" movement. Everything is already in place for that. The government intervention already happened, and is just going to keep getting stronger.

i understand ur idea behind the 'Greeeeeeeeeeeeeen' bubble, but......................its something we will rely on in the future, unlike gas :)

i understand ur idea behind the 'Greeeeeeeeeeeeeen' bubble, but......................its something we will rely on in the future, unlike gas :)

Dimitri:

No argument there, but it's still going to be a bubble. And all bubbles pop.

oh no, u are absolutely right, it is a bubble...but it will be sometime before it does 'pop'. Unless that is, this whole green movement is an absolute failure

So what is the reason behind the rising cost of oil over the last 18 months or so?

Since oil is priced in U.S. dollars, you can attribute the increase to the decrease in value of the dollar.

Our currency is broken....like holmstar said....investors are buying up oil futures as a hedge against inflation, which further increases the cost of oil.

Ban Oil futures, and can only sell what you have... That'll stop the speculators

When will the dollar strengthen? When the US Gov. spends its money (or rather other countries money-due to government Bonds) wisely. To make efforts to trim the national debt.

i heard on the news that we have WIPED OUT the savings of all the countries that used to LEND US MONEY to cover all of our overspending.

the fed is in a bind in our current situation. we're experiencing stagflation: slowing growth, maybe even a recession coupled with inflation.

Raise rates = slows inflations, stifles the already weak economy

Lower rates = stimulated economy, accelerated inflation

My personal opinion, it's going to get worse before it gets better. Remember, 90% of an iceberg's mass is underneath the water's surface...the credit problem we have here in the US is one hell of an iceberg. And how are we trying to fix our debt problem?? The fed auctions off more debt!! brilliant!

Even if the price of oil eventually drops, the taxholes in congress (namely the democrats) are going to make sure the price of gas gets even higher (at least $1.50 more). Here's a link to the next big tax hike the "civil servants" in washington are working on.

http://www.businessandmedia.org/articles/2008/20080515172437.aspx

Part of the problem is the taxes for sure!

No matter the price of a barrel of oil we still have to pay so much for the taxes... :(

federal tax currently .18
state tax .18 (in CA)
sales tax .29 (in CA)

http://www.energy.ca.gov/gasoline/margins/index.html

I wonder where all that tax money goes? And why do they insist on asking for more???

Because that's how the democrats earn their constituencies.

Coprius, until you and Barack figure out a way to harness the power of rainbows we're going to need those oil companies you want to put out of business. If you want to be taken seriously, you might want to stop referencing the hypocritical and thoroughly discredited Al Gore. You know, the guy who lives in a sprawling mansion and flies all over the world while preaching to the rest of us the virtues of "living green". The same guy who made millions indoctrinating school kids with a bullsh*t global warming movie full of fallacies like the infamous "hockey stick graph". The guy who conveniently makes millions of dollars more selling the bogus "carbon offsets" he insists the rest of us buy into.

Seriously, if you believe all the pablum Al Gore spews, you are as dumb as a box full of flourescent light bulbs. He is as green as the female alien Kirk kissed on the original Star Trek.

Wait, she was kind of hot, come to think of it...

But Gore is still stupid. And if you keep regurgitating his garbage, I'm going to believe you are too.

The Prius runs on gas, dummy.

Yeah and al gore invented the World wide web.
Why didnt Al Gore do anything about global warming when he was VP for EIGHT YEARS. Stop listining to that junk.
Talk to the people at Nasa and other credable scientist NOT Al Gore. He is another Democrat Idoit

again with the politics can we do something about this! gore-what and asshole,,,

I AGREE THE BEST THING TO DO IS JUST LET THE PRICE OF GASOLINE GO UP AS HIGH AS THE MARKET WILL PAY FOR IT.

That's why it is 1.50 or so in China

Just came back from vacation in Shanghai,China; asked the cab driver about the gas price, convert it back to American dollar it's about $3.75 per gallon.

The only bubble we are sitting on is the massive oil fields in Montana/North and South Dakota where an estimated 500 billion barrels of oil is waiting to be tapped. But this pales in comparison to the 1.5 trillion barrels under Colorado. The only problem with gas prices in this country is too many politicians are in the pockets of the environmentalists, the corn lobby and the Arabs. There is enough oil in this country alone to supply all our needs for 160 years and enough natural gas to last over 200 years without importing a single drop. If this President wants to go out on a high note he would declare that the rising gas prices are a matter of national security and by executive order begin drilling in Alaska and off the Florida coast where the infrastructure is already in place plus cut the red tape and outlaw the lawsuits from the Sierra Club et.al. and start drilling in Colorado, Montana, etc.
I would imagine if he would just threaten to do this the oil prices would drop like a rock.

There's tonnes of oil in USA. The current high prices in the woorld means that the reserves that the US has is financially viable for extraction..

glad you chimed in , bobus . Anyother world travelers got any prices except Europe where it is stratospheric

metrorail, here I come!

Hey it went over $127.00 a barrel.....

"Shale is too brittle to drill directly through, so the technology to efficiently extract it isn't available...yet."

The project I'm at now has a gentleman that has worked all kinds of refinery projects. He said that back in the early 80s, he was assigned to a project where they were actually refining oil shale. He said the technology has been around for a while, but that it's just never been economical. Input far exceeds output.