Originally posted by Zoom Zoom Diva:
The problem is that we have been led to believe and the speculators are profiteering from is that the supply is far more fragile than it is.



Well, the do set the price of gas and oil for the most part and known reserves have been revised downward in many areas...

I'm thinking they are responding to more than just hype, though that is playing into the equation.


Originally posted by Zoom Zoom Diva:
The chances of supply disruption from Iran and Venezuela are extremely small, and Saudi Arabia has said they can easily supply another 4.5 to 5 million barrels per day.

I entirely disagree with you on both points; with the supply-side of the equation tightening due to increased demand in Asia, ANY disruption, no matter how small is going to have an adverse effect. Think back to the hurricanes of last Summer; our Gulf supply of oil is a joke compared to what is pumped out of the Middle-East and other areas. Look at what that event by itself did to oil and gas prices...

Sure, Saudi and other OPEC nations almost surely build in a "fudge" factor when stating peak pumping capacity, but for Saudi alone to be able to counter both Iran and Venezuela (if they pull away from Western markets) is a tall measure. With China pushing Iran HARD on oil contracts, we aren't the only game in town anymore. On top of it all, with the IAEA issue coming to a boiling point and Iran being thrown in front of the UN Security Council for possible sanctions, the risk factor further rises...

Originally posted by Zoom Zoom Diva:
I also love they claim a refining shortage and a crude shortage. You either have enough raw material for the processing capacity or you have enough processing for the raw material. You can't have it both ways.

It's fairly common knowledge that refining capacity is a contraint, but I have yet to hear that anyone has talked about a short-term oil constraint. I have heard and read about how certain large fields have been revised downward in terms of their estimated yield, but that's about it on the crude side.

Originally posted by Zoom Zoom Diva:
I would also be interested to see the margins of the oil companies before discretionary costs. This is a real indicator of their profitability, and they are merely choosing to spend more and reducing their net income.

This is a possibility, but it would require collusion at an international level and among not only the oil companies, but their supply and infrastructre providers as well...

I think it would be tough to keep the lid on such a secret.

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