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Old 05-02-2007, 08:55 PM   #41
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110.9 in winnipeg, I put premium in so it costs me 120.9
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Old 05-02-2007, 09:20 PM   #42
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Supply and demand definitely have something to with it. But, for quite a while now the daily price of oil has been officially set by the commodities market. There is no longer a price for a "wet" barrel, there is only a price for "virtual" barrels. Futures options or contracts. So the final price of oil has influences on it similar to other commodities. It is called speculation.

For instance, last week when the Saudis reported they "foiled" a terrorist attack, people were reminded of the fragility of their country and its supply. The price of a barrel went up $4. "Uncertainty" drives many securites. Nothing can put a chill on your favorite stock like the SEC announcing it wants to have a look at their books. The stock will dive. Then when the SEC adds that this is just a normal audit, the price goes back to where it should be.

The difference with oil is that uncertainty always drives it up, never down. For example, if a storm similar to Katrina would suddenly appear in the Atlantic, speculators will start to buy up contracts, Driving the price up. they are betting the storm hits and hurts production in the Gulf.

The annoying thing for me is this. The oil companies have entire divisions who trade in commodity oil, and make their highest profit margin on oil barrels. The Saudis make $4-500 million profit per day, and can also directly control supply. If you had an obscene pile of cash, wouldn't you invest in what you know and can control? And by doing so, have more control over what your product will sell for?

As far as the oil companies go... when it is not in the interest of a company to produce more for less, it is a free market anomaly.

There'* another name for it, and Teddy Roosevelt handled it the way it should be handled.
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