A Quote by Michael Hudson
High prices can be the result of speculation, and maybe plunging prices can be attributed to the end of speculation, but low prices over time aren't caused by speculation. That's oversupply, mainly by Saudi Arabia flooding the market with low-priced oil to discourage rival oil producers, whether it's Russian oil or American fracking.
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Soaring prices for crude oil, falling production surpluses, wild speculation in commodities, a rush into the precious metals, turmoil in the Middle East, assertive oil producers: it is 1973-74 all over again, and at dictation speed.
Lower oil prices won't, by themselves, topple the mullahs in Iran. But it's significant that, historically, when oil prices have been low, Iranian reformers have been ascendant and radicals relatively subdued, and vice versa when prices have been high.
It costs governments money to keep fuel prices low. Oil-rich Yemen, for instance, devotes 9 percent of its GDP to making sure its people don't riot when oil prices rise.
Speculation in oil stock companies was another great evil ... From the first, oil men had to contend with wild fluctuations in the price of oil. ... Such fluctuations were the natural element of the speculator, and he came early, buying in quantities and holding in storage tanks for higher prices. If enough oil was held, or if the production fell off, up went the price, only to be knocked down by the throwing of great quantities of stocks on the market.
Even if we were to sign peace today, the economic conditions in our country would not improve automatically because it will take some time to reach the level of oil production before the war and the oil prices are likely to remain low for some time as the supply of oil in the world is high and demand is low.
Low oil prices played a part in a major move by Congress voting to end the 40-year-old ban on exporting American crude oil.
Oil now, as a result of the Saudi production, is priced so low that there are not going to be new fracking investments made. A lot of companies that have gone into fracking are heavily debt-leveraged, and are beginning to default on their loans. The next wave of defaults that banks are talking about is probably going to be in the fracking industry. When the costs of production are so much more than they can end up getting for the oil, they just stop producing and stop paying their loans.
What's new is high oil prices and the economy hates high oil prices.
Oil is a special case. Saudi Arabia is trying to drive U.S. fracking rivals out of business, while also hurting Russia. This lowers gas prices for U.S. and Eurozone consumers, but not by enough to spur economic recovery.
Russia does not have a modern economy: it's a petro-power. The only thing it sells that the world wants to buy is oil and natural gas. When was the last time anyone bought a Russian computer? A Russian car? A Russian cell phone? Russia is so dependent on high energy prices that if oil falls below $100 a barrel, the Kremlin can't meet payroll.
I do not remember when I said this [oil production would collapse ], maybe in the heat of the moment, but I do not think I even said it, but I may just not remember it. I was saying that at a certain level of oil prices new deposits will not be explored. That is what is actually happening. However, surprisingly, our oil and gas workers [mainly oilmen] continue to invest.
To economists, prices serve as crucial signals to producers and consumers. In a regulated market, the state sets prices high enough for private companies to cover their costs and earn a guaranteed profit for their investors. But in a deregulated market, prices should vary with demand and supply.
This morning, prompted by increasing concerns about terrorism, oil prices reached a record high as the cost of a barrel of crude is a whopping $44.34. Wow, it seems shocking that a product of finite supply gets more expensive the more we use it. Now the terror alert means higher oil prices, which oddly enough means higher profits for oil companies giving them more money to give to politicians whose policies may favor the oil companies such as raising the terror alert level. As Simba once told us: "It's the circle of life."
You can't tell me you can make any system or country work with low wages and high prices, and high wages with high prices don't mean anything when the prices eat up the wages and don't leave anything over.
Let us rid ourselves of the fiction that low oil prices are somehow good for the United States.
It's estimated that about 30 percent of the increase in grain prices could be attributed to the decision to embrace biofuels, particularly corn-based ethanol. It has done nothing for climate change and the business is in real trouble now with the collapse of oil prices. It's completely dependent on a dollar subsidy and tariff from the government.
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