How do they come up with these absurd oil prices?

Question

Does anybody think this is a bunch of hype about shortage?

How is oil prices REALLY determined?

Answer 1

The absurd oil prices you see and hear about are the current price of futures contract on oil. Which is based on nothing more than speculation of world events to come. Oil has never physically cost $75 or $80 a barrel. If it did we would be in the biggest economic depression imaginable. If you want to know the actual cost of a barrel of oil look at the commodities markets, not the futures markets. All that hype is the media fanning the flames of speculation bc it makes more money for corporations, bc they can justify higher prices based on the speculation even though actual prices have not changed near as dramatically.

Yes it is all hype.

Neither Iran or Venezuela can afford to take oil off the market. That is what we call an incredible threat. Their economies would crumble fast if they did, so we know that are merely trying to get attention and drive up speculation and make more money for themselves.

Prices are determined by supply and demand. What sucks is OPEC controls most of the supply and can therefore resonable control the prices. They currently agreed to cut production back by 500,000 barrels/day bc of a warmer than usual winter and dropping futures prices.

Answer 2

I think the price of oil is determinded, like most products, in relation to demand, and by the retail index, or in simple terms how much the consumer, eg you and me are spending on consumables, and just importantly what we're spending our money on.
However the price of oil is set to keep increasing until it expends itself as a resource, because it's depleting rapidly. No fool has me fooled, that's the reason why all of a sudden we being sold the environmental awareness booklet. If i could make one safe prediction before i die, it would be : that water will surpass oil in terms of what we pay for it. Anyways i hope my answer was a little useful to you.
Ps take care and be well...... Michael

Answer 3

If you're a liberal... George Bush and the evil oil executives.

If you're a conservative... the market.

If you're talking about gasoline I see no reason whatsoever to believe there is a shortage- UNLESS you factor in gasoline with ethonal or other blends that are mandated by different states. There will most likely be a shortage of those different types of gasoline because they require special processing.

Answer 4

Too much Fuel Tax