OPEC cuts oil production by 1.5m barrels a day

[tasdrouille]

Originally Posted by Arminius

Oh boy....

Beutel: Crude Could Hit $20 A Barrel - Oil and Gas * Energy * News * Story - CNBC.com

It goes up, it goes down, fluctuation is the name of the game. What matters is the long term. I've been steadily buying for the last three years, and I'll continue to do so.

[trebuchet03]

Originally Posted by Matt Herring

id like to hear an explanation for the current cost of gas at the pump. imo it starts at the source of the oil...and a barrel that costs the same amount to refine as it did a year ago or 2 years ago ends up being $2 or $3 more now.

Here's a simple explanation.... It's in your head.

Here's why

1 Year
1 year ago, 1 barrel of light crude for October was a tad under $90.
1 year ago (to the day), 1 gallon of regular fuel, according to AAA, was $2.849.
Today, 1 barrel is trading ~$65 - today's average is $2.668 and falling (according to AAA).

Two Years ago....
1 barrel of oil was ~$60
1 gallons of fuel was about $2.15 (gasbuddy historical charts)

To note about two years ago.... There was a large selloff in the fall of 2006. Traders thought there would be another Katrina -like event that would drive prices up as refineries went offline as they did during/after Katrina. It became obvious that wasn't going to happen, and a lot of people unloaded, crude and fuel fell more than the usual end of summer trend.

Inflation Adjusted
~$60 in 2006 dollars = ~$63 in 2008
$2.15 in 2006 dollars = $2.28

Three years ago
1 barrel was ~59 (~$63 adjusted for inflation)
1 gallon of gasoline was about $2.45 ($2.68 inflation adjusted)

A quick read at the charts... The very last time oil was at $65/ barrel (not inflation adjusted) was about 7/2007.... And gasoline was about $2.95 (maybe a little less, the chart line is thick ). If someone could explain why we paid a little more more a year ago at the same prices, I'd appreciate it


Sources
http://www.fuelgaugereport.com/
Gas Price Historical Price Charts - GasBuddy.com
Tom's Inflation Calculator


I'm going to say this clearly. I am not defending anyone, any organization, any company...

I'm just tired of hearing complaints like this (cost of barrel versus fuel cost). Don't take it personal, you're neither the first or last person However the barrel gets to whatever price it is - we're still paying out the ass fairly consistently within a reasonable tolerance (not enough to call shenanigans). IF we really were paying $2-$3 more now than we were two years ago... That would mean I was paying $0.50 to -$0.50 per gallon of gas two years ago... I clearly remember that wasn't the case


People have these hunches in their guts because their tired of paying so much (I don't blame them) - but these are gut feelings, so all evidence points to supporting that feeling regardless of merit :/


Feel free to poke holes, but as common courtesy, I ask whomever is responding cites sources

[Matt Herring]

Treb-

I'm not assuming cost of barrel relates directly to cost at the pump at all so I don't want to give that impression. If you read my initial post it related to OPEC calling an emergency meeting because oil prices had dropped from $150 to $60 a barrel and their attempt to reduce production...therefore decreasing supply. By the same point, they increased production when the cost of a barrel was $150. Most of the feedback I've seen on ecomodder is sympathetic to OPEC (including in this thread).

I understand how OPEC works and when I hear emergency meetings being called because they feel the cost of a barrel of oil is stable at $70 that also means they feel gas prices at the pump (not taking into account home heating fuel, etc.) is stable. Another ecomodder agreed in this thread that OPEC is only trying to stabilize barrel price and I responded that $2.50-3.50 a gallon is disturbing if that's what stable means.

No hard feelings here...just an opinion as to where our oil comes from and who controls it.

[trebuchet03]

Matt,

Gotcha - I reread your posts with that in mind, and see what you mean

Another ecomodder agreed in this thread that OPEC is only trying to stabilize barrel price and I responded that $2.50-3.50 a gallon is disturbing if that's what stable means.

$2.50+ is likely where "stable" is (whatever stable means)... Only recently (past few years) has the actual inflation adjusted value gone up significantly. At today's prices ($2.668 - not reflected in the plot below), adjusted to 1979 dollars - that's $0.84 cents per gallon.... Which is only 20 cents (1979 $) higher than what we paid for about 15 years (1986ish through 2003). {20 cents is worth 63 cents in 2008}



Why did it go up the past three years - only to almost completely return to status quo? Interpret at will