Lord Temptation 11,209 Posted March 22, 2016 Share Posted March 22, 2016 5 minutes ago, Economy said: Its not that simple. Opec has hardly done anything this time around since the glut began in 2014 to cut supply to lift prices because they were fighting for market share. In fact only now they are finally talking about the possibility of a productiom freeze but not cut Oil is a traded comodity and its value is in part influenced by investors because u can buy and sell oil and futures contracts Oil investors know that the cost of extraction for most projects globaly is over $45 to $50 a barrel and so every expert knows these prices are not sustainable... With the current prices, there is not enough investment in new fields to meet future demand once existing operating fields dry up so investors know prices WILL go up and they know the oversupply WONT stay around so investors are already lricing in future price hikes today in their trades The cost of extraction DOES matter because it tells unwhether its sustainable or not. If oil prices are below average production costs, you know the comodity is under valued and the oversupply situation will not last It is that simple. You're making it complicated. There is no such thing as overpriced or underpriced. Link to post Share on other sites More sharing options...
Economy 53,144 Posted March 22, 2016 Author Share Posted March 22, 2016 1 minute ago, Lord Temptation said: You sound like a politician. Im not sure what u mean by that but if ur saying i sound like im BSing im not. I never said it was a fair system, im just saying its how it works Cuz for most goods and services companies compete for consumers and that supply and demand dictates prices But with traded comodities like precious metals, oil, natural gas etc speculation plays a role on prices cuz investors literally buy and sell the comoditiy making bets lets put it this way, traded comodities have 2 types of demand. Theres the consumption itself (like oil being burned and used), and the demand from investors buying it to make a bet to sell later maybe the world is still producing more than were burning right now and storage inventories are still rising. But if investors buy enough of the extra and create demand, that too is demand for the comodity and it raises prices even tho in reality the comodity isnt really being used Traded comodities are far more complicated and irrational in pricing than everyday items you buy like a bag of chips Link to post Share on other sites More sharing options...
Economy 53,144 Posted March 22, 2016 Author Share Posted March 22, 2016 13 minutes ago, Lord Temptation said: It is that simple. You're making it complicated. There is no such thing as overpriced or underpriced. Im not making it complicated. Thats just the way it works. I never came up with the system Link to post Share on other sites More sharing options...
Lord Temptation 11,209 Posted March 22, 2016 Share Posted March 22, 2016 6 minutes ago, Economy said: Im not making it complicated. Thats just the way it works. I never came up with the system I guess the analysis comes down to how you view the market. I see the economy as more like an organism than a machine. Textbook economics is a failure. It encourages excessive risk taking an has almost destroyed the global economy many times. It has as much predictive value as a crystal ball. Link to post Share on other sites More sharing options...
calmar 22,824 Posted March 22, 2016 Share Posted March 22, 2016 Well... go Russia, I guess. Link to post Share on other sites More sharing options...
faux 2,190 Posted March 22, 2016 Share Posted March 22, 2016 get dem coins, Putin Link to post Share on other sites More sharing options...
FATCAT 60,978 Posted March 22, 2016 Share Posted March 22, 2016 14 hours ago, Lord Temptation said: Why hasn't the oil price plummeted? Law of supply and demand says that the greater the supply the lower the price. A lot of the gas price, at least here in the US, is tax. Our price/Gallon is about $1.80, and a good chunk of that is tax. I don't know the write up anymore, but when gas was $3 about half of it was tax. This kitten over here (meow) Link to post Share on other sites More sharing options...
Xaylan 1,326 Posted March 22, 2016 Share Posted March 22, 2016 12 hours ago, Rino said: well that's truly rediculous Link to post Share on other sites More sharing options...
Lord Temptation 11,209 Posted March 22, 2016 Share Posted March 22, 2016 6 minutes ago, FATCAT said: A lot of the gas price, at least here in the US, it tax. Our price/Gallon is about $1.80, and a good chunk of that is tax. I don't know the write up anymore, but when gas was $3 about half of it was tax. Yeah that's something I missed. Same here in Australia. Oil companies are like a quasi arm of government. Link to post Share on other sites More sharing options...
Economy 53,144 Posted March 22, 2016 Author Share Posted March 22, 2016 2 hours ago, FATCAT said: A lot of the gas price, at least here in the US, is tax. Our price/Gallon is about $1.80, and a good chunk of that is tax. I don't know the write up anymore, but when gas was $3 about half of it was tax. Plus a discovery doesnt mean new supply immediately this will take years for set up, drilling, infrastructure etc this doesnt affect supply and demand anytime soon Also as far as gasoline ur right, much is tax. And many Countries taxes on gas are even higher than in US particularly in Europe! Link to post Share on other sites More sharing options...
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