If people are willing to pay $135 plus for a barrel of oil, why would I or anyone sell it for less?

[RB TexLa]

Use of oil and gas has not gone down by any significant amount, so people are willing to pay $4 a gallon for gasoline. Why would I or anyone else with oil sell it for less than people are willing to pay?

[Tandalayo_Scheisskopf]

1. I would suggest...

That you look at the supply figures that were released today and also the figures from AAA on miles being driven. People are cutting down on driving a lot.

The air around here is a little cleaner, too.

[Imagevision]

7. Tandalayo_Scheisskopf> - my sentiments exactly!

[Speck Tater]

2. For fear that someone else will sell theirs for less, and

you will be left holding a barrel of oil that you can't find a buyer for.

[aspergris]

3. refining issues aside - futures, arbitrage, and hedging

the markets set the 'going rate'. If you don't sell near the market price, they will go to your competitors who will sell at prevailing rates

also, *if* you could get well above the market rate, you could do a sweet riskless arbitrage by selling the spot you own at your price (X+10) and then going long the futures in the same notional value

the different (10) minus commission costs would be riskless arbitrage

arbitrage issues aside, this is how both commercial consumers and producers USE the markets. And how they should - the futures

As a corn example. If i have corn in the field, but not ready for delivery until Sept and I want to lock in the CURRENT price, I go SHORT the corn futures. If corn price goes up from here, I lose money on my shorts, but my yet to be delivered corn goes up in value. A neutral hedge. I neither lose nor gain money

But if the corn price goes DOWN, my futures short goes up in value. I cover my futures short WHEN my corn is ready for delivery, and I have hedged and not lost any money, since the money I gained in the shorts makes up for the drop in price.

this is what futures markets were designed for. and the vast majority of volume in these markets IS the commercials.

The difference in price between spot and futures otoh is largely based on (to some extent) perceived costs of storage vs. delivery, and of course interest rates. that's a bit more complicated than I need to get into. Google Contango and Backwardation for a discussion of that

[EmperorHasNoClothes]

4. I think you're confusing "willing to pay" with "have no choice about paying"

Most people, like us, have reduced their driving, but there's a limit to how much you can do that. You have to get to work, get groceries, etc. The extra money we're spending on gas is coming out of what we would spend on other things.

[taterguy]

5. That just proves you were willing to live far away from the things you need

Hence willing to pay the costs to get to those places.

[JANdad]

8. Right on time...

You should start a train line...you would make a killing with your "Right on time" mentallity....but it would have to be a pedal operated train since your principles will not allow you to burn fossil fuels...

[taterguy]

17. Time isn't holding us, time isn't after us . . .

http://www.youtube.com/watch?v=BUgKb-5u6v4&feature=related

[EmperorHasNoClothes]

9. Wow, ok. I'll just quit my job and move somewhere else then.

Because everyone has the option of living within walking distance of everything they could possibly need. :eyes:

[taterguy]

13. Who said anything about walking?

:shrug:

[readmoreoften]

10. Oh wow. Now it's the fault of people who are too poor to afford urban lifestyle apartments.

Yes, most people don't live in downtown areas of major cities because they're bigots who hate art and culture and love to burn fossil fuel. It couldn't have anything to do with the fact that downtown real estate is owned by the rich. I'd've loved to have bought a home downtown. Too bad I could've cough up the extra $400K necessary to get my foot in the door.

[Imagevision]

6. Because so many less billions of gallons were purchased in July the demand has shrunk because

people world wide are driving less so the supply isn't threatening anymore.

[Rex]

11. Willing to pay means needed for work so one can survive.

Has nothing to do with price gouging, which we are now paying out the ass for. If you have no morals then I suggest you get into the oil racket. I hear they are making a killing.

[Xithras]

12. If a gallon of water can be sold for $100 to a man dying of thirst....

The logic of your thread title has been used to justify gouging throughout history. There is a difference between setting a fair market price and exploiting a necessary resource to the detriment of society.

[lame54]

14. We'll pay $4 when we HAVE to but,...

we are doing a lot LESS extraneous driving - a lot less people traveling this summer which leaves a lot of tourists communities (which rely heavily on seasonal earnings) high and dry

[McCamy Taylor]

15. To sell more of it faster. Because you are afraid that the price is about to bottom out.

Like maybe because the price is artificially high, and the forces that have been keeping it high are about to change would be one possibility. Since market manipulation is said to account for about half of the price of a barrel of oil and since the Republicans will want to drive down oil prices temporarily before the election to make that one less issue that they have to deal with, anyone who is selling oil will drop their prices from here until November---and then raise them right back up again. That is almost a given.

Especially since the people who make money off oil----oil companies and the folks who manipulate the market---want John McCain to win, so they have an incentive to decrease their profits for the next few months in order to reap windfalls for the next four years. Anything they lose from now until November they will more than make up if it helps McCain get elected.

[pampango]

16. It is not a given that gas prices will drop until November then rise afterwards.

In 2004, the last presidential election year, gas prices peaked in May at $2.02, declined to $1.81 by mid September, then increased to $1.98 by the election. (Poor timing by the conspirators I suppose. They should have delayed that increase until the middle of November.) After the election prices went down again, not up, to $1.75 in January, gas prices usually hit bottom in mid-winter.

The only recent year in which gas prices really spiked then declined by election day was in 2005 when it peaked at $3.16 in early September (post Katrina) and then hit $2.41 in the first week of November, but there wasn't a national election that year. Gas prices continued down to bottom at $2.23 in February.

2006 was closer to the conspiracy that you refer to. Gas did peak at $3.00 in August and then decline to $2.19 in early November, but, even that year, gas prices continued down after the election to hit a low of $2.11 by the end of January.

Gas prices tend to peak in the summer and hit bottom in the winter. Since November is part of the way through the seasonal decline in gas prices, there is fodder for conspiracy theorists. It would be even better for these theories if our elections were held in January or February. Then you would really see a bottom in gas prices around election time, followed by a steady increase afterwards.

http://tonto.eia.doe.gov/oog/ftparea/wogirs/xls/pswrgvwall.xls

There are certainly speculators out there profiting (and sometimes losing) from the rise and fall of oil, other commodities, food, currencies, etc., but most of them don't care whether something is going up or down. They can make money no matter which direction it is headed.