Why are oil prices so high when US stockpiles are growing?

[rhino47]

I noticed this watching bbc world news.

http://news.bbc.co.uk/1/hi/business/4492321.stm

[rkc3]

1. Oil went down 4% today. Will gas prices go down 4% tomorrow?

Not likely.

[rhino47]

4. My point exactly.

It wont go down in three weeks either.Price of oil goes up and same day gas goes up.Price of oil goes down the price of gas take 3 weeks go down(if it does at all)

[Bluzmann57]

2. Because Exxon, the bush family and the Saudis

need more money. Like I need a hole in the head. A guy called Ed Schultz's show and said the oil companies got by just fine on $30.00 a barrel. I guess he was wrong.

[Taxloss]

3. Large stockpiles minimise speculation

because they reduce the risk of short-term shortages. But the stockpiling of oil may drive prices up as it means more oil is being bought. This is resource hedging.

[rhino47]

6. So we are buying more oil to defend against peak oil?

Grab all the oil so the when the chinese demands starts to explode we will have the corner?

[Taxloss]

10. These stockpiles aren't that large compared to world output and demand.

Sure, they're very large, but they can't meet national demand for a prolonged peiod. They are a short-term strategic measure.

However, there are good reasons why it is wise to stockpile oil. For a start, you might be getting a bargain if prices continue to rise, but remember that that bargain decreases every day with the cost of storage (which is high), unless the price of oil rises faster.

A stockpile could guard against a limited national oil crisis - for instance if there was a natural or man-made disaster at an oil refinery in the US that severely disrupted supply. Or a similar crisis in the Middle East. But the stockpile would not last long.

The US cannot "grab all the oil". For a start, there's nowhere to put it and no way to ship it. Remember that the amount sold and where that is sold and the price it is sold at is not by and large set by the US. That's OPEC's decision, and Chinese money is as good as Uncle Sam's.

[RummyTheDummy]

14. Chinese demand starts explode?

It's already exploded. The key difference is their government will do something about it whereas ours will still be handing out tax cuts for Hummers for the foreseable future.

[kysrsoze]

5. Actually, why are US stockpiles growing only when oil prices are so high

Bush et al didn't see the need to replenish them until prices shot up.

[rhino47]

7. I never thought of that.Good question.

[TexasLawyer]

12. Bingo--

and why is the US pumping the maximum amount possible per day into the Strategic Petroleum Reserves?

SPR is filled to a historically high level. And this is US oil, taken in kind as royalty payments from companies working federal oil and gas leases. It's already here (no import needed) but it is being taken off the market.

[Tace]

8. Demand Is Beginning To Outstrip Supply Globally

Crude production is at full capacity. Demand continues to grow.

[Skink]

9. See supply side works...

:puke:

[kysrsoze]

11. Reaganomics at its "best" (according to some people)

[goforit]

13. GReeeeeeeeD

[LucasD]

15. goforit nailed it on the head

I think Saddam's supply of oil was keeping the global
value of oil too low for the Idiot In Chief and friends.

Remedy? Invade, control the oil, control the prices.

Greed.... GREED! My only solace is that when these
sorry excuses for humans die, they can't take their
stinking money with them. :woohoo:

[rhino47]

16. No but thanks to * their kids wont be paying their share of taxes on it .