Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Measure content performance.
Develop and improve products. List of Partners vendors. Oil still plays an important role in the global economy despite the continued efforts to reduce its use and to find alternative green energy sources.
In the early days, finding oil during a drill was considered somewhat of a nuisance as the intended treasures were normally water or salt. It wasn't until that the first commercial oil well was drilled in the Absheron Peninsula, Azerbaijan. The U. Drilling in the United States began in the early s, but they were drilling for brine so any oil discovery was accidental. This site produced more than , barrels of oil in one day, more than all the other oil-producing wells in the United States combined.
Many would argue that the modern oil era was born that day in , as oil was soon to replace coal as the world's primary fuel source. The use of oil in fuels continues to be the primary factor in making it a high-demand commodity around the globe, but how are prices determined? The two primary factors that impact the price of oil are:. The concept of supply and demand is fairly straightforward.
As demand increases or supply decreases the price should go up. As demand decreases or supply increases the price should go down. Sounds simple? Not quite. The price of oil as we know it is actually set in the oil futures market. Under a futures contract, both the buyer and the seller are obligated to fulfill their side of the transaction on the specified date. In the spring of , oil prices collapsed amid the economic slowdown. OPEC and its allies agreed to historic production cuts to stabilize prices, but they dropped to year lows.
The following are two types of futures traders:. An example of a hedger would be an airline buying oil futures to guard against potential rising prices.
An example of a speculator would be someone who is just guessing the price direction and has no intention of actually buying the product. The other key factor in determining oil prices is sentiment. The mere belief that oil demand will increase dramatically at some point in the future can result in a dramatic increase in oil prices in the present, as speculators and hedgers alike snap up oil futures contracts. Of course, the opposite is also true.
The mere belief that oil demand will decrease at some point in the future can result in a dramatic decrease in prices in the present as oil futures contracts are sold possibly sold short as well , which means that prices can hinge on little more than market psychology. Basic supply and demand theory states that the more a product is produced, the more cheaply it should sell, all things being equal.
It's a symbiotic dance. The reason more of a good was produced in the first place is because it became more economically efficient or no less economically efficient to do so. If someone were to invent a well stimulation technique that could double an oil field 's output for only a small incremental cost , then with demand staying static, prices should fall. Actually, there have been periods of time when supply has increased. Oil production in North America was at an all-time zenith in , with fields in North Dakota and Alberta as fruitful as ever.
This is where theory pushes up against practice. Production was high, but distribution and refinement were not able to keep up with it. The United States has built an average of one refinery per decade construction has slowed to a trickle since the s. There's actually a net loss : the United States has two fewer refineries than it did in Wal-Mart rules The retail giant tops the Fortune for the second year in a row.
Who else made the list? America's top Tweeters. This group of companies is all about social networking to connect with their customers. The war over Lipitor. The fight over the cholesterol medication is keeping a generic version from hitting the market. What about al Qaeda's finances? Bin Laden may be dead, but the terrorist group he led doesn't need his money.
The war for Libya's oil. Libya's output is a fraction of global production, but it's crucial to the nation's economy. Don't bet on Canada. Once rates start to rise, things could get ugly fast for our neighbors to the north.
Most Popular. Don't call it the next tech bubble More The mighty Hyundai juggernaut rolls Market Movers US Indices.
More Galleries. Tech Talk. Let me quote from a June 2 article in the Wall Street Journal : "Wall Street is tapping a real gusher in , as heightened volatility and higher prices of oil and other raw materials boost banks' profits The general counsel of Delta Airlines, Ben Hirst, and the experts at Goldman Sachs have all said that excessive speculation is causing oil prices to spike by percent.
In other words, the same Wall Street speculators that caused the worst financial crisis since the s through their greed, recklessness, and illegal behavior are ripping off the American people again by gambling that the price of oil and gas will continue to go up, and up, and up. Sadly, the spike in oil and gasoline prices was entirely avoidable.
The Wall Street reform Act, Dodd-Frank, required the Commodity Futures Trading Commission to impose strict limits on the amount of oil that Wall Street speculators could trade in the energy futures market by January 17 of this year. Almost five months later, the CFTC has still not imposed those speculation limits.
In other words, the chief regulator on oil speculation is clearly breaking the law and is not doing what it is supposed to be doing. Unfortunately, I was very disappointed in both the tone of the meeting and the complete lack of urgency at the CFTC with respect to cracking down on oil speculators as required by law.
Therefore, today I introduced legislation with Senators Blumenthal, Merkley, Franken, Whitehouse and Bill Nelson to end excessive oil speculation once and for all.
I am also pleased to announce that Congressman Maurice Hinchey will be introducing this legislation in the House. This legislation mandates that the Chairman of the CFTC take immediate actions to eliminate excessive oil speculation within two weeks.
0コメント