Monday, November 24, 2008

Oil Help

Okay, I need some feedback here about the price of oil, because I simply don't understand...and as any regular reader knows, I hate to feel ignorant.

• When oil was pushing $50 a barrel, the whole world threw a shit-fit. Fifty bucks was considered a very "psychologically important barrier" to pass, and no one seemed to be in the mood to see it happen.

• Same thing when oil approached $60, then $75, then $100 a barrel. Each "psychologically significant" price was viewed with a combination of fascination and dread, like a bad car accident. And the talk was always, always, about how to get the the price down.

NOW, oil prices have "jumped" to above $53 a barrel...with no shitstorm in sight. In fact, I keep reading the exact opposite emotion in news: relief! Last week it was "we need to find a way to prop up oil prices," and quotes from today's article indicate that "news that the U.S. government will take a $20 billion stake in Citigroup...gave the...oil market a boost" and that talk of an OPEC output cut "is providing some support for prices."

Why were we apoplectic when oil was climbing out of the stratosphere and everyone was complaining about gas prices, only to now be going apeshit when oil is headed the opposite direction? Isn't this what we wanted back in July, and June, and for the twelve or fifteen months before that?!?



Blogger Tess said...

I know I already shared with you my hypotheses, but I will publish them here in case anyone wants to agree/disagree.

I think it's a comlicated issue that may be affected by the following:

1.) The price of food. You (Scott) and I both know that we have MUCH less disposable inclome (I HATE that phrase) in recent months due to the cost of food. This is affecting the entire planet. This means that people working for oil companies in whatever capacity, while yes they were making more money before this crisis, became accustomed to the increase in possible pay. However, the rising cost of food is eating the extra "disposable" income.

2.) (slightly tongue in cheek) GM doesn't want to stop making SUVs. Therefore, they are desperately trying to keep the price of fuel as low as possible to encourage potential SUV buyers to visit their showrooms. However, oil companies became accustomed to the higher prices (that possibly finally rose with inflation in an accurate fasion this time- but I don't know the numbers, therefore making all of my suggestions HYPOTHESES) and are fighting against SUV makers to keep a livable wage.

3.) Because it's no fun when we can't complain about the price of gas. What will it be next- PEACE in the Middle East?! Blasphomy.

4.) Because it's all psychological. Humans get used to seeing certain numbers. As prices of anything go higher, we all freak out at first, but then we all manage to adjust. Gas rose SO quickly that it was startling psychologically. Oil companies became accustomed to the higher prices and based their operations on that profit/income/whatever you want to call it. Now that the price of oil is WAY down from what it was, any "predictions"/plans that had been made go out the window. Hence the panic.

Moral of the story? Never count your chickens before they hatch.

8:05 PM  

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