Watching oil prices begin to fall . . .

Read this on MSN today; they are not necessarily all-knowing and right all the time, but I found this article interesting: http://articles.moneycentral.msn.com...65ABarrel.aspx

This is what happens when you simply threaten to open drilling again and go after the "speculators."

Anyone noticing that the dollar is back at at least 6 month highs against the Yen, Euro and the Pound?

The major issue here is that the price is driving conservation, not the other way around. America only cares about hybrids because of the price of oil. We'll use more oil as soon as we can afford it, so the depressed demand isn't going to last very long.

I prefer to look at the glass half full. Sure it may go back up but how about we see where it settles first? And the usage wasn't driving the price; the speculators were.

Usage may not have been the sole reason for the sky rocketing price's but was a factor, just not US consumption. It was China's usage that messed up the supply and demand balance that we had gotten used to for so long.

usage, not speculation

Speculation had always played a part in the oil futures, but this last time you had huge funds dumping money into it like never before. The drive was purely from speculators. We rarely saw 6 dollar daily spikes before. People will soon enough forget and SUV sales will be back to normal.

Totally nailed it.

The underlying situation wont change - reduced demand in the US is (over)absorbed by other countries. There certainly is a lot of speculation in these markets which can drive prices either way but i guess its safe to say that 2$/gal. wont be back too soon.

This is the same cycle I've seen several times going back to the 70's shortage.

Supplies tighten and oil prices take a big jump.
Americans get mad.
Americans start talking seriously about oil alternatives (conservation, more domestic production, alternative energy sources.)
The price of gas drops (not back to where it was, but a significant amount).
Americans, glad gas prices went down, get used to the new, higher price of gas and go on their merry way.

I hate conspiricey theories, but I really think OPEC and other oil produces do work together to see just how much they can jack up the price of oil. When people start talking about oil alternatives, they drop the price just enough to kill the talk.

You cant compare previous shortages with the current situation. If the demand side is not drastically reduced - the oil companies (which they never admitted openly til a couple of months ago) just arent able to supply enough oil anymore, since the supply side cant add enough resources to compensate for wells that run dry in the next years....

I have to disagree. Rack prices really didnt seem to be symbiotic during the last four months. Before if supply was down and demand was up, you would see RBOB jump 20 cents overnight. This didnt happen as much during this period. You saw constant 5-10 cent increases everynight, with what seemed like a 20 cent increase weekly. This is just me observing, so take it for what its worth.

At least now people are waking up to the fact that there was never an oil shortage. It was mostly caused by the speculators buying oil futures, which drove the price of oil up.
Even the experts all seem to agree that they dont see gas going below $3 a gallon, but at least thats better than the $6-$8 a gallon they were forecasting.
Regardless of what the price of gas is, Im downsizing vehicles. Im keeping my truck for when I need to haul stuff, but Im planning on buying a small car and using that as my main means of transportation.
Im looking at buying a Toyota Yaris, unless I can find a Corolla or Matrix for cheap. I stopped off at the dealer after work today and checked the Yaris out. Its actually a lot roomier inside than I thought it would be and at 36 mpg highway and $13,000 well-equipped, how can you go wrong? It sure beats the 18 mpg highway and $35,000 pricetag Id be looking at if I bought another fullsize truck.

I think the whole "oil crisis" was made up by the oil companies - you know the ones that own everyone in the White House - to freak us all out and sign away all rights to offshore drilling in marine sanctuaries. I mean come on look what happened after 9/11. The nation got freaked out and panicked and wrote Bush a blank check to do whatever he wanted. Look how that worked out. He got a free trip into Iraq to finish what his dad failed to do. At that time the TSA could have started doing rectal checks on every passenger at the airport and we would have all bent over, grabbed our ankles and said "this is for national security". Never underestimate the gullibility of the increasingly uneducated, brain dead biggest loser watching celebrity baby infatuated dolts that unfortunately have the right to vote in this country. We are being played. The oil companies want more profit, the best way to do that is go drill their own oil. They will let prices slide back down a little to decrease the urgency of hybrid vehicles for a while, then its back to $5/gallon.
Just one more reason, our empire is on it's way out. All empires end. Good thing my son likes Chinese food

I agree. OPEC is constantly adjusting supply to keep up with demand. They can set the price at pretty much whatever they want.

OPEC and any other oil producing country in this world would be outright stupid if they wouldnt produce at their maximum for the price the market is offering (be it 60 or 120 USD - doesnt matter since they make a enourmous profit margin of such prices).

But even with the maximum production level, prices dont really seem to have dropping over the last years since there is just enough demand.

What additionally kept prices up in the past was a shortage in refinery capacity - by 2009 there will be almost 10 % additional capacity available so at least that should be a problem of the past since there will be no way that oil producing countries will be able to increase there production level 10%.

Not to mention the aussie dollar. It slowly crept up to .99 now it is .87 :(