Originally Posted by Terraformer' post='635854' date='Jul 30 2008, 08:15 AM

Good for you, I'm glad you're not a Bush supporter. All markets are influenced by politics, and oil (copper and gold as well) is no exception. Recall how, just before the 2004 elections and people were complaining about gas prices, they fell? Prices went up, approval ratings went down, and the converse. Looking at the numbers, Saudi crude production in the five months Apr-Oct was an average 750,000 bpd greater in 2004 than 2003. During a meeting in the Oval Office, according to Bob Woodward in his book that came out a couple of years ago, Bush personally thanked Saudi Prince Bandar because the Saudis had flooded the world oil market and kept prices down in the run-up to the 2004 general election. The relationship with the House of Saud and the Bushes is also well-known and, given their fields, they can manipulate the spigots in favor or in spite of Bush as needed.

It's the big picture I'm talking about, one that I sometimes think economists should endeavor to be more honest about.
That is, money does not make the world go around. People very frequently do not act rationally. And the idea that actors operate purely and consistently according to economic stimuli just doesn't seem true in my personal experiences, nor does it seem true in my reading of current and historical events.

Playing up 'issues' with Iran can mess with prices and speculation as well (along with the Iraq debacle), the fruits of which benefit those who have control of oil. In 2006, we experienced a roller-coaster of sorts in oil prices--all occurring without supply disruption. Perhaps "data" was too strong a word, I admit. I am saying that all of this cannot be so easily and casually labeled as the result of something purely and wholly economic.

Please don't try to suggest that I can 'find a way' to pin Bush on other commodities' rising as well, I am keeping to oil. Again, and given all that this administration has done to lie and manipulate this country, all that I am saying is that this severe, sudden (and within 8 years is sudden in this context) increase of oil futures seems awfully shady to me, and does not completely fit into a nice box of supply and demand. Fundamentals about supply and demand do not explain this--what are they? Oil prices are all about risk and speculation, truths which politicians in power coupled with friends that have oil lead to a very persuasive suggestion that this is not simple economics at play.

Originally Posted by Terraformer' post='636008' date='Jul 30 2008, 12:46 PM

Actually, I did have facts (in the form of statistical data and historical facts) directly related to the issue. You see conjecture and assumptions, I see possible connections.



If you care to read what I wrote, I agreed that growth had something to do with prices. My contention was that that relation does not represent the sum of the result, that there are other considerations at play than pure economics with respect to the surge in oil prices.

My only problem with your comments is your complete inability to admit that the price of oil has any other explanation than economical rationalizations of supply and demand. The world didn't just suddenly lose its oil reserves to the levels that would normally require such a jump in prices (and thus oil profits) in so short of a time.

You see black and white; the rest of us live in the world of gray. I suppose we'll just have to agree to disagree on this.

Originally Posted by kscarrol' post='636040' date='Jul 30 2008, 01:35 PM

Indeed you did present some data, you somehow used 4+ year old production data to try and explain today's price increases and the relationship between Bush and Saudi. What happened then has little to do with today because Saudi no longer has that ability to throw more barrels at the market. That is not conjecture or seeing "connections". It is black and white reality, no gray here.

No the world didn't just lose it's reserves. The key is production not reserves and you simply ignore that production has not kept up with demand growth. Four years ago when Saudi increased produciton to push down prices, they had the spare capacity of light sweet oil to do that. The only spare capacity they have today is heavy sour oil which no one can refine into products like gasoline or deisel. Effectively they have no spare capacity. That leaves no margin for error and when Nigerian rebels blow up pipelines and take 300,000 bbl/d off the market, there is no way to make that up. There used to be four years ago.

Originally Posted by Terraformer' post='636069' date='Jul 30 2008, 02:31 PM

Some childish attempt at snark? Run along, now.