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Oily questions

  • If oil prices has started to hit usage everywhere, including the US, then why isn’t the slowdown hitting the oil futures prices? Why is oil price at $142 today, when the US driving stats show drops of 4% and nearly all countries have slowed down usage?
  • Isn’t speculation apparent in that there are now pension funds and long only commodity funds contributing to nearly 1.9 trillion dollars worth of commodities, of which nearly 70% is oil? What will happen if these speculators, which include banks, are told to put up more cash as margin or scale down non-delivery positions, an extremely likely even should prices rise any more?
  • If this is all demand and supply like everyone seems to say, why are there at least 14 Iranian oil tankers carrying 2 million barrels each sitting idle in the persian gulf?
  • What happens when China stops buying crude for diesel that it is stockpiling for the Olympic games in August? China has taken the price of diesel way beyond petrol, when it is in fact easier to produce than petrol (less refining required).
  • When people say we have reached the peak of supply, do they not realise that the current prices will push people in looking for supplies where it was earlier unprofitable to do so? And that supply will suddenly materialise out of nowhere because a lot of countries have hidden their sources, and some haven’t even explored areas which they know may contain oil but it’s been too expensive to get at? And the thought that countries like India have a MASSIVE amount of oil under rocky beds like the deccan plateau, which is likely to be able to fuel the world for the rest of our lifetimes, but are too bloody expensive to explore?
  • The problem with power has always been that it could not be stored in large enough quantity for a long enough time. With battery technology scaling up it is likely to reach the point soon where power can be stored in manageable sizes; then excess power which is currently lost can be reused. Won’t this reduce the need for oil dramatically over time, and consuming units like cars, motors and mechanical equipment have attached batteries to store unused power? (Note: this is not very close by)
  • What happens if the US opens up the strategic reserve, canada and alaska decide to forego environmental issues and open up the gigantic reserve and russia explores a lot more in the arctic? And that exploration is allowed in the antarctic belt? It will not just destroy oil prices, but absolutely kill Saudi Arabia, UAE, Nigeria, Iran and a whole host of smaller hostile countries like Libya, Columbia and Sudan. That would be a good consequence?
  • What will happen if, as part of the worldwide slowdown, the demand for the output of the crude refineries (i.e. petrol, diesel etc.) drops tremendously, and the pension funds are left holding assets now selling at half price? Who suffers?

There are no correct answers. But there may be more questions.


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