Could oil be taken off the commodities market? Should it?

[Zoeisright]

It seems pretty clear to me that speculation is what's driving the cost of oil, at least at this point. For national security reasons, could we take it off the commodities market?

I know repuke's heads will fall off, but is this feasible? I'm not trying to start a war, just asking a question.

[Horse with no Name]

1. We really need to nationalize it

IF we are going to do what is right and what is just for the citizens of this country.

[KansDem]

2. I agree...it should never have been put in private hands...

Energy, health care, the environment, education, and defense are national security issues and should never have been privatized...

[FiveGoodMen]

4. +1000000

I agree with your point and your list.

[WhaTHellsgoingonhere]

38. +1 Great topic, too

[leftstreet]

5. +1

[slay]

11. Agreed

n/t

[KittyWampus]

16. should all minerals be nationalized? what about extraction?

I say yes. But in that regard, I'm definitely far Left, ideally speaking.

[hack89]

20. We import approximately 60 percent of our oil

we have no control of that oil and its price. I am not sure what nationalization will accomplish - we will still have to buy oil on the global markets. Are you proposing more domestic drilling and refining?

[Zoeisright]

103. Absolutely not. But isn't foreign oil on the commodities market too?

We have to get away from oil - of course, we've had 35 years since the oil embargo to do something about it, but with repukes in charge most of the time, that didn't get done.

What makes me angry is the huge profits oil companies make. Why are they allowed to do that? What about windfall profit taxes? The gas station owner isn't getting rich off the price of oil, but an awful lot of people are. THAT is what needs to be controlled.

[hack89]

105. Do you think the poor people of Venezuela think they get too much money for their oil?

Most oil in the world is controlled by countries, not oil companies. Those oil revenues are very important to many average people in those countries - it gives them hope of a standard of living that their parents could not even imagine. Obscene profits are in the eyes of the beholder.

Oil companies make huge profits because they sell a product that has seen exploding demand. If you want lower oil prices you must either reduce demand (not going to happen soon) or increase supply (more drilling). There is no other way to reduce oil prices.

[TBF]

75. That's the right answer. nt

[Xenotime]

84. Agreed. It needs to be regulated by the government.

[rucky]

3. Does the commodities market serve a purpose?

Is that really how oil is bought and sold, or are these side bets?

[bbinacan]

6. One can buy a futures contract

for delivery of oil at a specific price and specific time in the future.

[rucky]

8. Will they deliver the oil to my house?

[bbinacan]

18. Probably not

unless you have some massive storage tanks.:rofl:

[AlabamaLibrul]

47. Cushing, OK, or a pipeline to it will get you 1,000 barrels per contract. You can also elect to

have the ownership to the oil signed over, with or without a physical transfer if you work it out beforehand and the facilities are available.

:)

[jdp349]

50. Yes actually

[Statistical]

76. You are responsible for transportation but they will deliver it to the destination

specified in the contract. For example WTI oil (West Texas Intermediate) contracts specify delivery in Cushing, OK (major oil pipeline hub).

[lumberjack_jeff]

36. The commodities market is important to farmers. n/t

[former9thward]

7. Oil's price is determined globally not by the U.S.

If the U.S. did not pay the global price of oil it would not be sold to us. Good luck with that.

[Thunderstruck]

15. You can pound on this point all you want but some just will not get it. Just like most

people will refuse to equate any issues with oil being caused by supply/demand dynamics.

[ProfessorGAC]

17. You're Hilarious

The demand has not changed to a statistically significant degree for nearly 3 years. The band of seasonal variation displayed is identical to that of the prior 14.

S/D impact on oil prices is far lower than the marketeers would like you to believe. You've been fished in.
GAC

[bbinacan]

19. More the perception

of what future supply, or lack of, may be.

[Thunderstruck]

23. Where is the hilarious part? Also, could you provide links to the

the band of seasonal variation please?

You mention demand but what about supply and production?

"S/D impact on oil prices is far lower than the marketeers would like you to believe. You've been fished in." Please substantiate and elaborate.


P.S.: I'm glad you think I'm hilarious but this isn't about me and your comment breaks the rule about discussing the topic and not the poster.

[Spider Jerusalem]

61. Demand increased by 2.4 million barrels a day in 2010 compared to the previous year.

Which is only a return to pre-financial crisis demand levels, certainly, but the world was producing flat-out in 2008 when oil hit $147 a barrel. Factor in resource depletion of existing oilfields, and it doesn't take much to see that yes, actually, supply and demand is having an impact on prices (along with market panic at the prospect of spreading Middle East unrest based on events in Libya, Egypt, etc).

A year-on-year demand increase of c. 3% may seem "statistically insignificant" when dealing with abstractions; in terms of actual supply of a finite resource it can be quite significant indeed.

[Zanzoobar]

64. And so...I'd like to hear your solution to an ancient problem

"Wake up, humanity", will not work.

[BeFree]

30. We use 25%

25% share of the market is huge. We can easily effect the price of oil.

Not only the 40% + that we produce, but even the 60% that we import.

First we pass laws here and then use our buying power to keep the world price down, and begin eliminating the outrageous profits. Profits that are in fact a modern day reverse Robin Hood.

[former9thward]

37. Well we have a ideological difference here.

I am not a Marxist. I don't regard profit as the root of evil.

[BeFree]

39. so

You are in the desert about to die of thirst and you'd pay someone all your future earnings for a bucket of water? This after they told you you would be fine out there, they had you covered?

I doubt it.

Any ideological difference that I can see is that my mind follows the: People over profits way of thinking.

[former9thward]

45. Your analogy is so disjointed and poor I don't know where to begin.

So I won't. What I always wonder about is why posters on DU who are socialist post on a board which in theory is based on the Democratic Party. The Democratic Party is capitalist and always has been and always will be.

[BeFree]

48. Clearly

An ideological difference.

Sorry to see that you are not against oil companies making obscene profits from backs of the poor working man. Or have I read you wrong?

[former9thward]

60. And I throw little puppies into traffic for my morning entertainment.

[EC]

9. Yes, it's a major part of our countries security

it should be nationalized.

[librechik]

10. It's only been trade-able for a few years. Take it off the spec market

Things went way down hill from that point on.

"...The oil market was relatively stable until the commodity market was allowed to expand with the passage of the Commodity Futures Modernization Act in 2000. "

http://www.cnbc.com/id/41886211

that cursed act spoiled everything

[safeinOhio]

12. If you buy futures, you

should be able to take possession. If not, you are just a gambler driving up prices and setting up a bubble. If you are a user, like farmer, airline or trucking company it is justified.

[Statistical]

79. Oil has been a tradeable commodity for nearly 80 years in the US.

That is just with commodity exchanges. Prior to standardized commodity contract it was traded for decades prior to that in an over the counter manner.

[texshelters]

13. I don't know about oil

but food, stables such as wheat, soy beans, rice, and corn, absolutely need to be taken off the commodities markets.

Peace,
Tex Shelters

[Xithras]

14. No can do, oil is globally traded.

While the physical act of trading may occur within the U.S., there's nothing stopping those markets from relocating elsewhere. Given the hundreds of billions of dollars involved annually, you can be 100% certain that's what would happen.

The problem with our oil supply is that it's from a foreign source. The U.S. government doesn't have the ability to regulate the activity of foreign oil generators. You can tell the House of Saud, "You're not allowed to trade in the U.S. anymore," and King Saud would simply respond, "Fine, we'll trade in Bahrain instead!"

The U.S. would still end up paying whatever price the oil generators set in that market.

This is the downside of having an energy market that is almost completely dependent on foreign nations. We can't regulate what we don't have authority over.

[erodriguez]

100. Bingo!

[hack89]

21. It is not something we have control over

there will always be a commodities market somewhere because it is a global commodity. Since we import over 60 percent of our oil, we would have no choice but to pay the price the global market has set.

[BeFree]

24. So

We control 40%? Probably even more.

And since we are the largest market (read buyers) then we can have a large stake in the prices that the world pays.

There may be a time of some shortage (no shortage now) if the US decided to take its oil future into its hands, but in the long run we'd be far better off.

As it is now we are being ripped off for the profit of just a few. Are we just supposed to sit back and say: "Oh well. You want us to bend over even more?"

[hack89]

25. How do you plan to set the price of oil?

and how do make countries sell oil at that price? We cannot control a commodity that is not produced in America.

[BeFree]

26. 40% we can should have been controlling

The way economics works is that when a large - lets call it a union of buyers gangs up and places an order, the market bends.

So, we have 40% that we can control via law, and another 60% that we can effect via overwhelming force. Yes, We Can!

[hack89]

27. How did that work for Bush?

Since you are arguing that we should use military force to secure oil at reasonable prices.

[BeFree]

29. Bullshit

Where did I say use the military? Why make shit up? WTH?

hack wrote:
"Since you are arguing that we should use military force to secure oil at reasonable prices. "

[hack89]

31. "another 60% that we can effect via overwhelming force." nt

[BeFree]

32. No "military" in those words

Here is the overwhelming force: "...a union of buyers gangs up..."

So what made you think you could throw that word in there?

What if a tree falls on your car? Would that be an overwhelming force or the military?

I am absolutely dumbfounded by your contriving.

[hack89]

33. But there is no union of buyers - just one very powerful country

You accept then that American exceptionalism and our standard of living justifies America bullying the rest of the world to get what we want? How is really different than what Bush believed?

What if they don't give us the price we want? How will you punish them? Withhold food? Destroy their economy? Increase their level of poverty?

[Name removed]

35. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Name removed]

40. Deleted message

Message removed by moderator. Click here to review the message board rules.

[BeFree]

46. Its ecnomics 101

You would not ask such questions if you knew?

""What if they don't give us the price we want?""
Then they don't sell the oil. And we might have to use less foreign oil, which, by golly, all the presidents since Carter have been wanting!!

""How will you punish them?""
Punish them for not taking our money? They would be punishing themselves if they wouldn't take our money.

""Withhold food? Destroy their economy? Increase their level of poverty?""
We've already done that. And not just for oil. Besides, our military keeps the peace for many countries. Are they going to give that up?

Unlike your crooked assertions about bush, the real idea is negotiations leading to finding a fair price and then closing the deal. It happens everyday, around the world on millions of other goods.

It's part of economics 101, hack

The question is: Can we save our economy, avert increased poverty right here at home, not by stealing oil, but by eliminating obscene profits and regulating the price of the raw material?

Yes, We can!

[hack89]

49. So there is no room for supply and demand in your world?

instead of accepting a lower price, the oil cartel will simply reduce production to keep prices high. Why do you think OPEC considers oil prices too high? Remember 1973? They have used oil as a weapon before - there is no reason to believe that they will simply roll over and accept your "fair price". It is much more likely that they will fight lower oil prices with every weapon they have.

How much pain do you think the US public would accept when oil prices go through the roof due to an oil shortage?

We can't regulate the price of a commodity that someone else owns. Obscene profits are in the eye of the beholder. Economics 101 says get the best price the market will bear.

[BeFree]

53. Ok

So fuck the little guy? Damn him? Screw him over? Too bad for the little guy? Great for the oil companies? The little guy is just an addict and they can fuck him over as much as he can bear?

Some of us seek solutions in a world such as this. Why? For the humanity.
If you don't think there is a problem, well then, thanks anyway.

As for me, I'd like to see the oil barons, with their mansions and their fancy lifestyles, be the ones who are fucked. Not my fellow working man.

[hack89]

68. It is not a solution if it is not grounded in reality

I didn't say there isn't a problem - but I honestly don't know what the solution is.

When you lose arguments in the future, why don't you reflect on your ideas and try to refine them instead of attacking your questioners?

[jdp349]

54. You actually have to take econ 101 before you use that line

First off, there is no such thing as a shortage in an unregulated market unless there just isn't any of the good in question. Price is determined by the intersection of supply and demand. Buyers get get priced out of the market as the price converges on their individual marginal utility. The thing about oil, being an essential energy source is that demand is incredibly inelastic. The modern economy just can't run without it, that's the reality.

Without even getting into the sheer absurdity of the United States uniformly withdrawing from the market anytime in near future all that would happen is the demand would shift to the left and prices would go down. Everyone but us would benefit from the lower prices and as we tried to reenter the market we'd simply drive the prices back up to their original equilibrium levels.

Your use of the term "fair" is laughable. it maybe "unfair" from the buyers perspective but from the owner of the commodity they want the best price. Ideally they'd charge as much as they possibly could.

Very rarely do I see so much bad thinking in one post.

[BeFree]

55. Where is there a shortage?

Do you think the market is now a free market?

"The best price" is a price that is fair to both parties. Do you think the price today, with a built in profit margin of above $40 a barrel is the "best price"?

[jdp349]

56. Best price for who?

I think you're confused. The market for oil futures, IE barrels of crude oil approaches the conditions of a free market. You have a homogenous fungible good with no individual buyer wielding much monopsonistic power and supply best described as monopolistic competition. As one who resides in a net importer of oil, would I like to see the prices go down? Yes of course. But I'd hardly say that the prices are "unfair", they are just suboptimal from my economic perspective as an individual.

[BeFree]

57. Thank you

There is no free market in oil. It is tightly controlled by monopolies, as you've said.

And you also backed what I was trying to get across to hack: that if we (US) became a monolithic buying power we could wield greater influence on the price.

So... do you think $40 a barrel profit taking by future traders is anywhere near fair to you?
Of course not. That is why we need to wrest control of oil prices away from the capitalist pigs. That's what this thread, at its finest, is all about, yes?

[hack89]

69. You need to read closer

he said that as long as America participated in the market, we could not force prices lower.

[jdp349]

71. No that's not what I said at all

you obviously have no formal background in economics and thus this discussion is not worth my time. Monopolistic competition means that OPEC can artificially drive the price up somewhat, but cannot set the price to its true profit maximizing rate. They have SOME monopoly power, they are not a monopoly.

$40 a barrel profit? From what? Just buying oil futures? Again you're confused and have no idea what you're talking about.

I'm out.

[BeFree]

73. Awwww

The same oil that has been in the ground for a million years and was sold for a dollar a barrel just 50 years ago is now selling for 110. The same oil. We are being ripped off.

Will we do anything about that? Not according to some here. They actually are trying to say its ok we are being ripped off. That we should just roll over and give even more to the capitalist pigs who have manipulated the market for their sole benefit.

:puke:

[Statistical]

81. Use less oil. Demand is rising faster than increased supply,.

You may not be willing to pay $100 a barrel but many people in the world will happily do so.

Cheaper oil is beneficial TO YOU however ANY access to oil is a massive productivity booster to many in the third world.

[Hutzpa]

102. How are people around the world willing to pay

for higher oil prices? says who? the people that wants oil prices to increase?
Try again.

[Statistical]

80. Of course it is.

An iphone has a 80% gross profit margin. Demand supports that price.

You may think $40 profit in oil is "too expensive" but to a newly started agricultural co-op in china $200 oil is cheap. Dirty cheap. The amount of productivity gain they can get from even $200 oil is off the charts.

The amount of profit margin doesn't determine a price. The amount of aggregate demand relative to supply does. Supply isn't going up by any material amount and will eventually decline. Demand is only going to increase. There are huge portions of the world without mechanized labor. They can see a significant gain in productivity and prosperity by using oil (oil driven machinery) even at $200 a barrel.

[BeFree]

92. Yeah, I know

I should just sit down and shut the fuck up.
How dare I complain that the capitalists are fucking me over? Right?

[VoteProgressive]

22. +1

[SoCalDem]

28. Everyone who "buys" oil just needs to prove that they have the storage

refining/distributing capacity for all the oil they "bid" on.

The FUTURES market where it all just gambling, is the problem we have here..

Wall Streeters pushing buttons on keyboards, driving the prices ever higher as they "win bets" along the way..:grr:

[Initech]

34. I'd be curious to know what oil prices were before W took office.

[Hutzpa]

42. $1.10 I think without googling. n/t

[Initech]

43. What about crude prices?

[Hutzpa]

77. The price of oil before Bush took over from Clinton

was $.89 compared to $4.03.

Found this; http://www.bloggerbible.com/bill-clinton-gas-prices-vs-george-bush-gas-prices/

[Spider Jerusalem]

59. Wrong thing to be looking at

Are you aware that global demand for oil has increased from a level of c. 69 million barrels a day in 1995 to around 87 million barrels a day at present? Are you aware that China and India both have been industrialising and adding millions of new passenger vehicles a year? What effect do you think this might have on demand and consequently price? It has nothing at all to do with Bush, and everything to do with the basic economics of supply and demand (since the physical constraints of supply of a finite, limited reseource mean that suddenly there's no overhead margin of spare capacity to cushion demand and thus price).

[cherokeeprogressive]

62. For what it's worth...

On the The New York Mercantile Exchange four days before President Obama was inaugurated the price for a barrel of crude oil was $36.51

http://www.nyse.tv/crude-oil-price-history.htm

[reformist2]

41. We could restrict the commodities market to just producers and consumers.

In other words, take the foolish speculators out of the game.

[hack89]

44. So when the market moves to another country, what then? nt

[reformist2]

74. Good point. We would need an international agreement.

[hack89]

86. And why would oil producers have any reason to agree?

they want prices as high as possible. Some countries depend on high prices to keep their people out of poverty - Venezuela comes to mind.

[Statistical]

89. And roughly 95% of oil is owned by nation states not oil companies.

Exxon, BP, Shell which are called "Super Majors" only control about 5% of oil production in the world. The overwhelming majority is controlled by exporting countries. Countries like Venezuala, Sudan, etc that rely on oil money.

Big picture. US consumes 24% of oil in the world, and only produces about 5%. Of course we wan't lower oil prices but many countries are in the exact opposite situation (exporting significant amounts of oil, and consuming far less).

[reformist2]

91. Actually, oil producing nations would prefer more stable prices.

There are dozens examples of countries that have gotten burned by volatile commodity prices.

[hack89]

96. But we still have conflicting desires

we want it stable with low prices, they want it stable with high prices. And they have most of the leverage.

[BOG PERSON]

51. let's take coffee, cocoa, tobacco and wheat off the commodities market while we're at it

you know, for national security reasons.

[Zoeisright]

104. Straw man!

Look it up.

[BOG PERSON]

52. you know what else costs too much?

au pair salaries. somebody really needs to do something about that.

[Spider Jerusalem]

58. Why does that seem clear to you?

Speculation is not driving the cost of oil. Global demand being at the limits of global supply is driving the cost of oil. The world produces about 85-87 million barrels of oil a day. Of this some 72 million is crude oil (the black stuff that comes out of the ground in Texas and Saudi Arabia); the remainder consists of "natural gas liquids and condensates" and shale oil/Canadian tar sands oil/etc. Of this c. 87 million barrels a day the US uses 20 million; of that 20 million the US imports 11 million (US domestic production from all sources is c. 9 million barrels a day, of which c. 5 million are crude oil.) With the recent political unrest in Libya, Libyan oil is off the market for now. Which means that suddenly there's a 1.2-1.6 million barrel a day shortfall in available global oil supply. The US may only import 2% of its oil from Libya; that doesn't matter, because other countries import far more oil from Libya and are now turning to other sources on the global market to supply their demand - sources that the US does import from (along with pretty much every other oil-importing country). Result, the price goes up.

Saudi Arabia have said they'll make good the production shortfall from Libya, but thus far they have not shown any signs of being able to; their spare capacity is in heavy oil which is harder to refine and which most Western refineries are not set up to handle. (The higher costs of refining heavier oil are part of why fuel prices are higher in California and on the West Coast; a lot of it is Alaskan oil which is a heavier grade of crude and thus is more expensive to process).

"Speculation" is an easy thing to blame when you don't want to face up to the unpleasant reality that the American way of life is about to undergo a forced change and that no, you can't continue to live 40 miles away from work, and drive a car that only gets 20 miles to the gallon, and expect that you'll be able to have cheap fuel to be able to afford it.

And America imports over half of its oil and has no control over global markets. (Nor should it, quite honestly.)

[buzzard]

63. America has some control of oil imports via NAFTA

Sorry this is cut and paste to tired tonight for anything else.

http://www.ifg.org/analysis/wto/cancun/usoilvm.htm


Energy in other International Trade Agreements

Most relevant are the rules established by the United States for Canada under the existing North American Free Trade Agreement. NAFTA is widely considered to be the "state of the art" in trade deals because it goes more deeply into restricting government powers than any other agreement to date. As Maude Barlow, explains in a IFG Special Report "The Free Trade Area of the Americas," NAFTA removed Canada’s control over its vast energy resources by the following measures:

Established rights of foreign companies to invest in the energy sector;
stripped Canada’s National Energy Board of its powers and dismantled the "vital-supply safeguard" that required Canada to maintain a twenty-five year surplus of natural gas (the US maintained its 25 year reserve for national security purposes);
imposed a system of "proportional sharing" that guaranteed Canadian energy
supplies to the US, in perpetuity;
lifted requirements for export applicants to file an impact assessment;
banned export taxes (a major source of government revenue Exports: $39.4 billion (f.o.b., 1993 est.) petroleum and petroleum products 92% The petroleum sector accounts for roughly 75% of KSA budget revenues. (www.geographic.org)
banned preferential pricing for domestic customers;
As a result, Canada’s exports to the US more than quadrupled in a decade while oil exports doubled (ibid., Barlow). Now, President Bush is preparing to deepen access to Mexico’s energy resources via expanded NAFTA talks. The US has also introduced this energy policy framework throughout the hemisphere, covering Venezuela, Colombia, Ecuador, via the so-called Free Trade Area of the Americas (FTAA). Building acceptance of this agenda in regional trade fora is important for introducing the topic, and similar agenda, at the global level in the WTO.

[taught_me_patience]

66. good post. n/t

[Hutzpa]

82. So reading from the statistics you have provided

it is safe to say that since 1995 the production of oil have only increased by 18 million
barrels, that is the difference between 67 million in 1995 and 87 million today. So my question
is what is this demand that the speculators are talking about that have created this
enormous burden on the worlds economy that we have seen the increase of prices on commodities worldwide?

It is safe to say nothing more than speculators and analysts have been the catalyst of the increment
in oil price because if we try to use economics as the way to provide evidence that supply and demand
is the reason oil is skyrocketing I think that is a losing argument for them, now you begin to see the
reason why they have changed the argument to oil shortage which in itself is another propagated lie,
because oil is being discovered every single day from different parts of the world so there is no reason to
use that argument as the reason behind the increment in oil prices.

The bottom line is, countries like Libya, Saudi Arabia and the rest of the oil producing network have
put in place Europeans and Americans that will do their bidding for them in order to create the
environment we have now which is professionals arguing in favor of maintaining the high prices of oil.

[Spider Jerusalem]

87. ....

18 million barrels a day increase in production, yes, but a decline in spare capacity to increase production (Saudi Arabia could pump more to drop the market price if there were imbalances 20 years ago; they can't do that now).

And if you can seriously ask "where's the demand" then you haven't been paying attention; you ARE aware that China and India have been expanding their economies quite significantly? China's GDP has increased by an average of 8-10% a year for the past 15 years or so; India's by about as much over the last 8 years. Were you aware of that? Do you know what it takes to do that? It takes energy and raw materials. A growing consumer class in both countries with the money to buy cars, etc, are driving up demand for oil and represent almost all of the new demand growth.

[Hutzpa]

101. Yes, They Can

Did you see the 60 minutes interview in 2009 with the Saudi oil Baron?
Do you know that they have so many reserve that they have to monitor them
with computers from miles and miles away.

The increase of GDP imo does not make for high increase in prices, China and
India has the population to offset any increment of oil prices. So please do
not use that argument. The more the population grows the more you produce,
unless you are trying to make exorbitant profit then you control the flow of
goods so that it creates demand that in turn creates higher prices.

Controlling the flow of goods is what increases demand not production.

[fishbulb703]

65. Lets try taking alcohol off the "commodities market"... wth are you talking about?

[cliffordu]

67. I would. IMMEDIATELY.

[mmonk]

70. I'm an investor and I would be for that.

When speculators run it up, we all suffer collectively.

[Hubert Flottz]

72. Let's pay for our two oil wars with a windfall profit tax like Obama...

PROMISED.

[Statistical]

78. There are international commodity markets. London is a major commodity exchange.

China has started their own commodity market. The oil exporters in the ME have expressed interest to have oil commodity market in the ME.

Outlawing commodity trading in the US would be about as effective as outlawing the internet.

Oil is CHEAP. Even at $200 a barrel it is insanely cheap when you consider how much energy it has. The developing world is catching up in terms of energy demand. A Chinese peasant would love ANY access to oil (and heavy machinery) even at $200 per barrel the productivity gains from mechanized labor would be a massive increase in prosperity.

America simply has too high of an energy footprint. We waste insane amounts of energy on the most trivial of uses. We are ill suited for rising energy prices.

[Hutzpa]

83. You sound like a speculator

justifying the reason behind oil increase is another way to maintain the increase in
oil prices. China did not start using oil yesterday, they have been using oil since
the beginning of civilization just like any developing world, using that as a
justification for oil increase in my eyes does not hold water.

[Statistical]

85. China oil consumption has TRIPLED in last 20 years.

and it is still less than 10% of what the US uses on per capita basis.

That growth is accelerating not slowing down. While Chinese oil consumption is 3x higher than it was 20 years ago it is almost 2x higher than it was just 6 years ago.

http://www.indexmundi.com/china/oil_consumption.html

At that growth rate China will add an entire US worth of oil demand to global market in little over a decade. Imagine an entire second US consuming oil.

Demand for oil is increasing. Annual production of oil is stagnant.

"China did not start using oil yesterday" A dubious claim. The AMOOUNT of oil China uses is what matters.
http://www.businessinsider.com/china-just-grew-its-oil-demand-by-10x-the-rate-of-global-supply-growth-2010-4
China oil consumption rate is growing at 10X (yes ten times) the rate of global oil supply growth. Supply is barely growing (despite record high prices) but demand is exploding. Still the vast majority of China is stil not yet industrialized. They can continue to grow their demand for decades and still have pockets of the country without modern sources of energy.

[Hutzpa]

88. What effects does China's economy has on the United State?

and please don't tell me about importing and exporting so that's the effect.

[Statistical]

90. china buys oil from the world market as does the US.

US consumes 24% of all oil produced in the world, yet only produces 5% of it.

If China is willing to pay more for oil than US is countries will sell to China. Why would they sell to the US for less? Why would anyone sell a product for less?

So China growth in oil consumption puts upward pressure on oil prices. Now it isn't just China. Dozens of developing nations have had oil consumption explode over last 20 years but China is the most recognizable.

Production has flatlined and more people around the world want oil, and want more oil. Price are going to go higher MUCH MUCH MUCH higer.

Oil likely will be continually above >$200 by 2020. If you are young enough you might see $400 oil in your lifetime. Oil is extremely valuable and as long as other countries want to consume more and more the price will rise.

[Hutzpa]

93. I understand that argument

but China does not produce oil, China does not have oil, the United States does, we have oil
in the Gulf of Mexico, Alaska etc that is being drilled and found every single day that was
before the BP disaster, we can speculate all we want about how China is going to consume more
and therefore will be willing to pay more, I called that hogwash because when you look at China's
history of doing business you know that there is no way China will pay the astronomical amount
being paid by the United States for oil, no way, just not possible.

All that talk about China having more people and that their economy is growing is just another
sand in our eyes just to continue the over pricing of a commodity that is in demand.

[Statistical]

94. China is paying the same price for oil.

Oil exporters charge contracted rate.

For example Venezuala can get $100 per barrel from other countries, they aren't going to sell to China for $90. Why would they? Nobody would.

"All that talk about China having more people and that their economy is growing is just another
sand in our eyes just to continue the over pricing of a commodity that is in demand."
No it is called rising global demand without an equivalent rise in global supply.

[Hutzpa]

95. Which brings me to another question

Why would the oil producing nation charge China less for oil than they would with the
United States? Why shouldn't the United States pay less for oil as you have already seen
from reading other posts that we consume between 25% to 40% more than any nation? some
will say it's supply and demand, I say it is exorbitant profit whereas one nation is
easier to manipulate than the other, one nation has it's own elected members working
overtime to bring down the government for political reasons, the other not so much.

[Statistical]

97. They don't charge more or less.

Everyone pays the same price for oil. Oil isn't any cheaper in Europe, or South America, or China.

Oil exporting nations have no reason to cut China a deal. Demand is rising. China "pays to play". If China doesn't want to pay market prices then oil exporters will sell oil to the other ~90% of world who is paying market prices.

"exorbitant profit". As a consumer you can say that but if you lived in Venezuala or the Middle East or Africa where your standard of living is much lower and your nation relied on oil sales (90% of all oil in the world is owned by nation states) to provide needed services maybe you would think oil is TOO CHEAP.

I mean it is hard for someone in Venezuala living on $2 a day to really be concerned with Americans "woes" about oil being too expensive.

[Hutzpa]

99. Absolutely

yes I can see why the people of Venezuela, the Middle East and places in
Africa that drills for oil will get upset if they are not getting the benefits
of their raw products. I can also see leaders like Qaddafi and the Saudi Kings
scheming all the profits for themselves and their families and close friends,
then pointing finger at the United States that their (America) policies are
bankrupting them while at the same time using that profit for their family and ilks.

Did you know that Qaddafi's sons just spent 100 million dollars in Hollywood to
invest in movies for 5 years, where did they get that money from? their people
of course but we tend to look the other way as that amount of money will
probably make its way into either the Republican or Democratic party, so I
understand that.

[hack89]

98. How can China not pay those prices?

if they refuse to buy, it simply lowers the price for the rest of the world - fewer buyers for the same amount of oil. Of course the oil producing countries could simple cut back on production to keep prices up. The only country they hurt is themselves