Crude oil prices dropping worldwide due to abundance of fracked oil etc.
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Thread: Crude oil prices dropping worldwide due to abundance of fracked oil etc.

  1. #1
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    Icon14 Crude oil prices dropping worldwide due to abundance of fracked oil etc.

    Usually when there is the slightest hint of warlike activities anywhere in the world, we get immediate massive spikes in domestic fuel prices, blamed on the rocketing International Crude oil prices - but fracking and shale oil production have changed the markets from fear of oil shortages to a marketing glut that has seen worldwide crude prices fall.

    Fighting across Iraq, Libya, Ukraine and Gaza, and an accelerating economy, should mean higher oil prices. Yet crude is falling. Six years ago, oil soared to a record $147 a barrel as tension mounted over Iran’s nuclear program and the world economy had just seen the strongest period of sustained growth since the 1970s. Now, West Texas Intermediate, the U.S. benchmark price, has traded below $100 for 10 days and Brent, the European equivalent, tumbled to a 13-month low yesterday. What’s changed is the shale fracking boom. The U.S. is pumping the most oil in 27 years, adding more than 3 million barrels of daily supply since 2008. –Lynn Doan, Grant Smith and Moming Zhou, Bloomberg, 13 August 2014
    I would like to think that our motorists would enjoy similar advantages with the slump in crude oil pricing, the advantage to the US domestic market is such that its plain to Americans that advances in fracking techniques was a good thing, with even green proponents in political parties backing away from their traditional and automatic environmental opposition to techniques at the heart of the lower price issue.

    Don't know if our domestic fuel market will get the same effect here, and of course the US is in its summer energy mode, traditionally using less petroleum products or demand for them until the next winter when home and industrial use may effect the market price.

    Will be interesting to see how our Asian market prices react to the slump in world crude pricing.

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    The short heading said "Crude oil prices dropping worldwide due to abundance", and I was pretty sure the logic was counter intuitive. "Yeah, there is an abundance of oil pricing, but that drives prices higher."

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    Un-Fracking-Beliveable.........Right here,in Philadelphia/Yankee-Land,Gas is $3.41-a-Gallon. Not 'too' bad.

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    What the industry giveth in one hand, government excise will taketh with the other.
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    I understoof that the oil cartel is purposely keeping prices low so that the poor bastards that do actually own cars in Oz can afford to drive them, in spite of the incrased levy mooted by Hockeyroo.

    John

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    Quote Originally Posted by Kenfuego View Post
    Don't know if our domestic fuel market will get the same effect here, and of course the US is in its summer energy mode, traditionally using less petroleum products or demand for them until the next winter when home and industrial use may effect the market price.

    Will be interesting to see how our Asian market prices react to the slump in world crude pricing.

    Ken

    well, gosh and jeepers, would you believe it, but crude prices around the world move in the same direction, but over time there are significant swings in the price differentials, due to local supply / demand considerations. eg brent was at one point $25 higher than WTI, yet now is about $5 higher.

    unsurprisingly, Tapis has fallen along with Brent and WTI. in fact, more than the other two. i guess the tightknit cartel, consisting of the national governments of russia, saudi arabia, iran, iraq, venezuela, nigeria, china, mexico, UAE, kuwait, and a host of oil companies operating in a range of markets from completely private ones, like the USA, to the completely controlled ones, all got together around a table and decided what the price would do. well, of course they had to work it out with all the consuming countries of the world too.

    anyway, now they have manipulated Tapis $16 lower over the last 8 weeks, because that helps them soooooo much, it is now up to the supply / demand forces in the refining industry in singapore, and domestic demand, to determine what happens at the pump here.

    Tapis:
    Crude oil prices dropping worldwide due to abundance of fracked oil etc.-crude-tapis.gif

    West Texas Intemediate
    Crude oil prices dropping worldwide due to abundance of fracked oil etc.-crude-wti.gif

    Brent
    Crude oil prices dropping worldwide due to abundance of fracked oil etc.-crude-brent.gif

    other reasons for falling crude prices:
    *slow growth in the USA
    *europe almost back in recession overall, particularly negative GDP from Germany
    *almost all economic indicators out of china indicating a slowing economy.

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    1000+ Posts Kim Luck's Avatar
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    As usual, Alexander's explanation for the shortcomings of the international oil cartels manipulation of the industry are blindly accepted by all his believers.

    When the oil industry next builds a new refinery that will be something to talk about. ( Nothing since 1976.) Likewise the millions of tons of crude oil stored in floating warehouses across the world. (Google "Seawise Giant" as an example.) Do they exist to cushion demand, or facilitate oil price manipulation? They must all be full, that's why prices are dropping!
    Don't it always seem to go that you don't know what you've got 'til it's gone............

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    Ah,the 'Seawise Giant',the largest moving Object ever constructed by the Hands of Man. In later years(and many Owner's..)it was known as the Jarah Viking,and later on,Knock Nevis. I love being a Friggin' Tom Boy!

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    Icon10 It might have arrived in our hemisphere sailing ship speed of course!!

    Well apparently we have all been saving heaps on fuel as the average households monthly fuel bill has dropped $10 to $13 since March (in case you haven't really noticed) or the poor opted out of driving... or a flying pig report came out of the Australian Institute of Petroleum....

    Commsec Economists said in a note to their clients they were analysing the new data published by the Australian Institute of Petroleum and the reported with much enthusiasm "pump prices likely to fall further over coming weeks" Love these predictions, the proof of course is in the observations and pocket of the driving public.

    Last week the key Singapore gasoline price fell by $US $5.01 to $US $108.40 a barrel. the lowest in more than two years
    Hallelujah !! Now I figure the reasonable thing would be to lower all imported petrol that is held in storage ready for delivery and sale, after all when the prices go up internationally that already purchased fuel ready for delivery and sale rises by the new International "Market Price" it doesn't trickle up slowly..while they sell of their stocks purchased at the old pricing level.

    Competition based market pricing, then of course there is the much maligned industry so called discounting cycle that convinces motorists that the industry luvs yah, why else would we raise prices in one area and put them down in another - except to convince motorists they were the competing effect driving that so called discount cycle, or as Comsec puts it.

    We noted that petrol prices in some state capitals were higher than a week ago. This was due to those cities reaching the "turning point" in the discounting cycle. Taking out the vagaries of the discounting cycle, the global thematic suggest(s) cheaper fuel prices ahead
    Vagaries of an industry managed cycle? Well I'll be .... its more an overall price management control where the industry can't lose because of its informed sources that computer monitor the process for them. Its all a matter of appearance and propaganda so that the most price conscious motorists are getting some price "relief" maybe, by waiting to fill at the "lower price" and selling the others who must fill at the higher price the "Illusion" that motorists are in competitive control of the pricing cycle.

    Now why is "our" region fuel being priced at US $108.40 refined fuel price, when they use the crude oil per barrel price at $100 a Barrel for the US pricing -how much gasoline is refined from the US barrel of crude and at what price - we seem to have two different pricing mechanisms and volumetrics in this confusing confection.

    It was said earlier that Asian refineries were producing petrol/gasoline at a lower price than the US market mainly due to the competition with the other large refineries in India and the amount of finished product available on the Asian Markets - of course our domestic market buys at a guaranteed premium price as determined by the Government - Perhaps the Australian Motoring Party or Clive Palmers PUP's in the Senate could start an Inquiry in to The pricing structures that bear on fuel pricing in Australia

    Some motorists and especially the poorer ones would like to see that!!

    Ken

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    i think you mean 'yet another inquiry', given that there have been several already. as you know.

    Now why is "our" region fuel being priced at US $108.40 refined fuel price, when they use the crude oil per barrel price at $100 a Barrel for the US pricing -how much gasoline is refined from the US barrel of crude and at what price - we seem to have two different pricing mechanisms and volumetrics in this confusing confection.
    it may be confusing to some, but it is actually quite simple. $108.40 is the price of barrel of petrol from singapore. "our" region uses that price because "our" petrol mostly comes from there and that is what it "costs". the price of crude in the US is different and so is the wholesale petrol price, neither of which have any direct impact on australia.
    Last edited by alexander; 20th August 2014 at 07:30 AM.

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    Quote Originally Posted by Kim Luck View Post

    When the oil industry next builds a new refinery that will be something to talk about. ( Nothing since 1976.) Likewise the millions of tons of crude oil stored in floating warehouses across the world. (Google "Seawise Giant" as an example.) Do they exist to cushion demand, or facilitate oil price manipulation? They must all be full, that's why prices are dropping!
    *noone will build a refinery in australia for the simple reason that they dont make money. just like 'they' dont build car manufacturing plants here either (or operate them for much longer), and that likewise has nothing to do with "manipulating" the price of cars.

    *Seawise Giant was an oil tanker but no longer exists. what has that to do with anything??

    *kim, how can you possibly have missed the previous discussions of this matter? when tankers are hired to store crude oil, it has nothing to do with "price manipulation". the entities which hire ships to store oil, when that occurs, are not oil producers or refiners. they are commodity trading companies. they have no interest in the price of oil being high or low. they have only hired ships to store crude when they can sell the crude for a future date, at a price higher than the today's price + the storage costs + some profit margin which makes it worthwhile organizing the deal. that is normally not the case. it was hugely the case for a short time during 2008, when the spot price fell $100 from $140 to $40, but the forward prices did not match that.

    or just read it here: Oil-storage trade - Wikipedia, the free encyclopedia

    *the only oil producer to store alot of crude in tankers was Iran in recent years. that was not done to "manipulate prices" but because sanctions were making it very difficult for iran to actually sell its oil.

    *the "floating warehouses" as you put it, are, for the most part, serviceable oil tankers, and can be used for storage or transport depending on what is required. it is not possible, therefore, for them to be "full", as the supply of possible storage is much larger than is ever used in that way. that said, if the oil storage trade is profitable enough, it can tie up enough VLCCs to affect shipping rates. conversely, prevailing shipping rates also affect the profitability and viability, of the oil storage trade.

    seriously, this is all very well known among people who have bothered to enquire on the subject.
    Last edited by alexander; 20th August 2014 at 07:29 AM.

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    see how the consumer is being roasted alive by the oil industry in australia...

    Financial results for 2012-13

    Profits in the Australian downstream petroleum industry across all products in 2012‑13 were $775 million or around 0.9 cents per litre. The profit result for the downstream industry for 2012‑13 represents a real increase of 85.6 per cent compared with the previous twelve months when profits were affected by significant losses in the refinery and total supply sectors.

    In 2012‑13 Australian refineries recorded a net loss of $107 million after incurring a real net loss of $609 million in real terms the previous year.
    [no prizes for guessing why noone has built an oil refinery in australia recently]

    In 2012‑13 net profits in the retail sector of the downstream petroleum industry increased to $535 million across all products and services, up 18.9 per cent on the previous year in real terms. Profits from convenience store sales were up 17.1 per cent in real terms to $205 million.

    In 2012-13, net profits on petrol products increased 21.8 per cent in real terms to $297 million. In terms of cents per litre, unit net profits on petrol products increased 21.7 per cent during 2012-13 to 2.4 cpl.
    ACCC Petrol Report shows prices still high despite global weakness | ACCC

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    oh this mornings news is just too funny!
    the ACCC taking court action over the use of prices from Informed Sources.

    that would be the same Informed Sources the ACCC has also been paying for data for some years and using it to display daily average price movements for fuel in our major cities. updated each afternoon.

    that information is very useful for anyone who gives a stuff about petrol prices as it allows you to know when the bottom of the cycle is in place. recently, the ACCC has ceased presenting that information, and now we know why - so it cant be embarrassed in court for paying for and using the data it claims is the basis for price collusion. even though it isnt actually alleging collusion as far is i can see. needless to say, the tv news makes out this is some secret industry-only source of information and failed to mention that it is available to anyone who pays a subscription or that the ACCC was a customer too.

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    "that would be the same Informed Sources the ACCC has also been paying for data for some years and using it to display daily average price movements for fuel in our major cities. updated each afternoon."

    So you can prove that the ACCC has been using that data and not it's own? I and the rest of us would be delighted to know who the mole is in the ACCC that keeps you up to date with their internal machinations..... or are you just making all this up to complement your predilection for the big end of town?
    Don't it always seem to go that you don't know what you've got 'til it's gone............

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    Icon13 Key to a made up discount cycle operated by the sellers?

    Hah a pre-emptive strike by alexander

    Use of informed sources to enable rigging say a "discount cycle" that is totally controlled by the oil industry and marketing, and by means of the informed sources, the industry can pinpoint at what time and in what region it changes the pump price to create a high point in the industry marketing cycle [and for how long as they might require it] and of course the same informed sources can be used to lower a pump price.

    But if the low price is what fuel should be selling at or even lower, the high price is an artificial confection.

    The so called discount cycle is like the rim of a spinning top, it will wobble down on one side, but rise on the other, informed sources is a computer check on the so called discount cycle, and this close check means that the price points are monitored and though it might be concealed or disputed at some point the so called discount cycle will be ended and that is not a decision of motorists or competition, but one of product sold and dollars and cents of profit maintained.


    The motorist is a dupe when told that the discount cycle represents "True competition in the fuel market" rather that the industry controlled cycle it clearly is.

    As was pointed out in earlier "Discussions" on this forum that in other countries use of informed sources is illegal, though in Australia price surveillance of a product is not of itself illegal, but how an industry uses that information can be quite illegal and the previous Labour Government claimed it would bring in legislation to make the use of this information contrary to the best interests of motoring consumers illegal, I think they started towards that in 2006 according to the material that I linked.

    It seems now that the ACCC has taken action to protect the interests of motorist consumers. The proof of course is in how competent the ACCC is in mounting its case against those operating informed sources and the industry that is making use of it. The industry has been caught out manipulating retail pricing in it own interest in the past, and much of that either depended upon whistleblowers or direct evidence of collusive practices, and use of what might be loosely termed industry muscle to make petrol retailers toe the line.

    So lets wait and see what they turn up for the courts.

    Anyway this is a pretty good report from the SMH on the ramifications of the case.. ACCC pursues petrol chains over price information sharing

    The consumer watchdog has begun court proceedings against petrol retailers including BP and Caltex alleging they have tipped each other off over their prices.

    The consumer watchdog has accused big petrol station chains BP, Caltex, Coles, Woolworths and 7-Eleven of using website Informed Sources to co-ordinate fuel prices and says it is concerned the practice led to higher costs to motorists.
    Australian Competition and Consumer Commission chairman Rod Sims said that by sharing petrol price information in close to real time, the retailers and Informed Sources reduced competition.

    ‘‘The ACCC alleges that the arrangements were likely to increase retail petrol price co-ordination and co-operation, and were likely to decrease competitive rivalry,’’ Mr Sims said.

    ‘‘Given the importance of price competition in petrol retailing, the ACCC is concerned that consumers may be paying more for petrol as a result.’’

    Informed Sources provides subscribers with petrol prices from the service station chains, delayed by half an hour.

    Mr Sims said the retailers used the site as a ‘‘near real-time communication device in relation to petrol pricing’’.
    ‘‘In particular, it is alleged that retailers can propose a price increase to their competitors and monitor the response to it,’’ he said.
    ‘‘If, for example, the response is not sufficient, they can quickly withdraw the proposal and may punish competitors that have not accepted the proposed increased price.’’

    Woolworths said it would ‘‘strongly defend our use of Informed Sources for the benefit of our customers’’.

    Richard Goyder, the chief executive of Coles owner Wesfarmers, declined to comment.
    Caltex said it ''strongly rejects the allegation that the OPW service is in any way illegal'' and will defend the action.

    Informed Sources has been under investigation by the ACCC since May 2012.

    ‘‘We are concerned at companies in a market having access to real-time information that can allow them to quickly tell whether their competitors are responding to what they're doing,’’ Mr Sims told the Senate estimates committee at the time.

    ‘‘The idea that just because the information's available to everybody is in our view not sufficient.’’

    It had long been under ACCC scrutiny, with the regulator’s head, Graeme Samuel, saying in 2008 that it was ‘‘as close to being illegally collusive as we can find, but it is not illegal’’.

    Last month, the ACCC failed to renew its contract to receive price data from Informed Sources, sparking speculation that the regulator was preparing legal action.

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    Icon14 The bottom line is to make profit - but is it legal?

    Quote Originally Posted by Kim Luck View Post
    "that would be the same Informed Sources the ACCC has also been paying for data for some years and using it to display daily average price movements for fuel in our major cities. updated each afternoon."

    So you can prove that the ACCC has been using that data and not it's own? I and the rest of us would be delighted to know who the mole is in the ACCC that keeps you up to date with their internal machinations..... or are you just making all this up to complement your predilection for the big end of town?
    Kim, had I been in charge of the investigation arm of the ACCC, I would also have subscribed to the subscription Service of informed Sources, if only to establish the nature, the quality and the likely source/extent of the data and then use that to test against the reality of the market place, is it being operated subject to competitive marketing, or manipulated marketing, then target the connective material and effect of the material as it is actually being used.

    Anyway more power to their arm and of course there is no embarrassment in subscribing, you would expect it!!

    Rest assured that the ACCC will have data of their own and programs for comparison in their compilation of a brief of evidence.

    In some worlds cartels would never admit to cartel activity if they can invent a fancy name and spin the event as one protecting the interests of consumers even if the action done also protects their profit line - one mans arbitrage is another's "shoring up profit"

    Regards

    Ken

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    Paid $1.41 at the pump today down from $1.59 last fill. Interesting to see if it's a cycle of a trend. It the lowest I have seen it in recent memmory.
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    The majority of fuel in Australia is shipped into Australia each week from singapore etc and is fuel not accepted by the EU and other countries like Japan etc due to its poor quality so its sold here and lands for around 3 cents a litre. this is why it not being produced here as its not worth the effort. In melbourne the tanks need to be empty by Wednesdays when the new shipments are arriving at holden dock so this is main reason for discounts in Australia to ensure storage tanks are reduced to receive new shipments, previously production was altered if sales were slow. On arrival its tested and additives are added to make it at least appear to be on spec and then sold to an unsuspecting population. we have had others over the years blow the whistle but people did nothing so the saga continues and we still go and vote for a party member instead of waking up. Remember also foreign companies are excempt from paying tax here because of Menzies introducing the double taxation Act of 1953 in exchange for his knighthood. which is why we are in the position of being milked by foreign corporations who have milked millions in blackmail from government i.e. us by threatening to leave unless millions were made available to them remember the banks getting bailed up after they cried bankrupt and then a few months later post mega million dollar profits which of course no tax is paid.
    Last edited by niks; 21st August 2014 at 08:55 PM.

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    Icon8 Rear-ended....AGAIN! And forever more....

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