BoatBanter.com - View Single Post - Unwanted diesel and jet fuel cargoes are backing up outside Europe's ports

Califbill

wrote:
On Thu, 29 Oct 2015 10:39:24 -0400, Keyser Söze
wrote:

On 10/29/15 10:34 AM, wrote:
On Thu, 29 Oct 2015 10:15:48 -0400, Keyser Söze
wrote:

On 10/29/15 10:11 AM, wrote:
On Thu, 29 Oct 2015 09:44:46 -0400,
wrote:

It appears that the world is awash in more petro distillates than it
can consume or store. Ships in transit have become the storage of
last resort and that can't last forever. This will continue to
translate into lower prices at the pump but there is only so much
elasticity in demand as prices come down. Eventually the oil
producers will have to decommission some of their wells or pump less
agressively.

http://www.reuters.com/article/2015/10/26/oil-diesel-glut-idUSL8N12N36520151026

There is an interesting effect where diesel prices come down faster
than gasoline since diesel fuel gets produced as a byproduct of
gasoline distillation, but the demand for diesel increases more slowly
as prices come down. That creates a temporary production imbalance
and lower prices for diesel.

I have $3.599 (reg u/l) by labor day in the pool.

Don't forget the "annual" gouge price increases for Memorial Day and
July 4th Weekends.

I think this may be a bit more strategic. The saudis are selling oil
at lower than their production cost and I doubt it is out of the
kindness in their heart.

How would we possibly know what the Saudi's "production costs" are,
since they own their own oil and use cheap imported labor for the real
work in their country? Plus, they have strong political reasons at the
moment to keep the prices low. Oil pricing is just another corporate sham.

The financial rags have been talking about this for a while. Oil
production costs are not a state secret.
I agree it is a manipulated market but the biggest manipulators are
the Saudis and the gulf states. Everyone else is just hanging on and
hoping it will stop.
Since the Russians are one of the countries hurting the most and they
support Assad, it does make some immediate sense but the oil producers
also like the idea of stifling alternate energy programs, Keystone and
fracking.
This is also the classic behavior of a drug pusher. The first one is
always cheap.
When gas is $2 a gallon, people are more likely to buy an SUV and not
a Leaf. Once they own it, they are hooked.

Years ago when oil was $2.50 a barrel, we paid Saudi's $0.25 a barrel.
Estimated production cost at the end of the pipeline at the wharf was
$0.10. Their costs have gone up its inflation, but not much more than
inflation.