Originally posted by Zoom Zoom Diva:
I'm not claiming any secrets on oil company spending. I'm expecting these discretionary items to be legitimate, overt and nothing to hide. Net income does not tell the whole story.



Given the microscope that has been focused on the oil industry for the last couple of years, I tend to think that "creative profiteering" is probably at a minimum. The few 10K statements I've thumbed through do not show anything wild, but it would probably take a team of auditors digging through internal books to flush out the full story. Again, given the oversight (voluntary and otherwise) that the energy sector is going through right now, I feel pretty comfortable that they aren't buying all of their employees $6K shower curtains or in your own terms, grossly inflating discretionary expenses outside of historical values.

Originally posted by Zoom Zoom Diva:
The information I received the Saudi Arabia figures from are direct from the U.S. Department of Energy. I consider that to be a reliable source. Even if Iran pulls from Western markets, if they sell all that oil to China, it's the same thing. If they pull out completely, they will be committing suicide.

Then I find it interesting that OPEC has stated that they are pumping "flat-out" with little capacity left to spare; the "hedge" that Saudi possesses may be far greater that what OPEC is allowing for in their tally...

In any case, the oil that Iran sells ends up in Canada and Mexico from time to time and THEN is piped to the US; the totals that other countries plaster are quite often skewed to a degree this way. Iran is not the only country that serves as a "buffer" for any short-term supply distruptions that may take place, either; it seems like the entire Middle-East plays in this practice (i.e., OPEC).

This creates a domino effect if they start exclusively selling to other markets that consume it and will not resell the product to us; past that, the psychological effect ANY supply removal in this volatile market is going to have a "ripple effect" and one that magnifies itself quickly.

I do not see EITHER country putting a cork in their oil sales, but I can see them potentially trying to destabilize oil prices this way if we start playing hardball with them on nuclear capability (i.e., Iran) or for just being a complete and utter schmuck (i.e., Chavez in Venezuela).


Originally posted by Zoom Zoom Diva:
Venezuela would also be collapsing their own economy if they didn't supply oil. Even if someone else is buying it, it's still on the market. I see the realistic chances of them disrupting real supply to be next to nonexistent. It's all rhetoric.

OK, but if it's being sold on a market that we have no access to (i.e., back-channels or the BLACK MARKET), then for all intents and purposes it's not an available commodity to the US...

Speculators do not respond well towards any sort of supply restriction, real or imagined.

Originally posted by Zoom Zoom Diva:
Again, the hurricanes caused paranoia. Saudi Arabia had even offered to make up the difference in production, but it was the restriction of refining capacity that ended up making the question moot. Added crude wasn't going to do any good, yet the price of crude still went up.

True to an extent, but when setting the price of oil for they day, speculators are not looking at refining capacity as the defining metric of setting price; they are looking at oil supply from available markets as one of the key indicators. Future availability (or the lack thereof) also played a significant part in setting price as well. There was also some very real damage done to many oil platforms out in the Gulf as well, so the distruption was more than just a temporary halting of operations due to people flying to safety; some platforms were sunk or blown off of their moorings...

Originally posted by Zoom Zoom Diva:
Yet the short term oil contracts have gone through the roof, despite no short term oil constraint. That makes no legitimate sense. I could see longer term contracts adding a premium, but it should have no effect on the price today.

The upcoming hurricane season, political instability, the yield of some larger fields being revised downward, ever-increasing demand from Asia...

...I see a lot that is starting to spike the price of crude.

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