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Why are oil prices dropping?
An Exxon station gas price sign in Manassas, Va.
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Scott Jagow: No price is dropping faster than oil. Consider this: In July, the price of oil was $147 a barrel. This morning, it's half that -- $72. More from Ashley Milne-Tyte.
Ashley Milne-Tyte: Consumers and businesses started to cut back on their use of oil when prices shot up. It was then that demand began to weaken.
Daniel Yergin is author of The Prize: The epic quest for oil, money and power. He says even before the big run-up in crude prices, the economy was faltering. And now:
Daniel Yergin: The great global economic growth that propelled oil and other commodity prices up for five years is over.
But he says it's not just global demand that influences oil prices:
Yergin: You know, the financial markets have come to be a very important part of the oil markets. And as hedge funds liquidate their positions, as they stop trading commodities, that is clearly one of the factors in the oil price.
Some blamed speculators for driving the price of oil to records. Yergin says many of those traders are less active, and others have disappeared from the market altogether.
In New York, I'm Ashley Milne-Tyte for Marketplace.
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Talking about oil - Production of oil today is 87 million barrels per day. Consumption is 89 million barrels per day. We are using our reserves - Now we have India and China driving cars instead of riding bicycles - High demand and not enough supply = price higher! Now, take in consideration our refineries. In the US there are 150 Refineries, yet, their work capacity is 85% - which claims for 22 refineries not producing anything. Refineries are needed to make diesel, gasoline, and heating oil. This way, America also buys refined gasoline from Venezuela and other places. America uses 22 million barrels of oil per day. America produces 14 million barrels of oil per day. The world produces 87 million barrels per day. The world is using 89 millions barrels per day - Now, take in consideration the developing nations using oil. So, OIL PRICES WILL GO UP for the next seven years. Then OIL prices will go down.
The United States is the world's largest consumer of petroleum. Between 1995 and 2005, the United States' consumption of oil grew from 17.7 million barrels a day to 20.7 million barrels a day, a 3 million barrel a day increase. China, by comparison, increased consumption from 3.4 million barrels a day to 7 million barrels a day, an increase of 3.6 million barrels a day, in the same time frame. So, while there is no alternative, oil prices will go up.
Now, if oil is found in other places, it goes up to make viable for investor to want to extract it from the soil. It is a catch 22 - What is more viable to do? Extract oil from new places, like Sao Paulo-Brazil - Or to try new alternatives? It takes time! Meanwhile, oil prices will go up, and people will buy new, and economical cars, and prices will fluctuate in a way that we can not predict. So, it is ALL specualtion!
Well to be honest with you guys, I have noticed a lot of ignorant mistakes we have made here in America. Its true we are proud of who we are but our mistake as the people of the USA is that we rely too much on the government to make decisions for us. If oil prices keep jacking up in the future and employment sinks what are we going to do? I think we really need to stop this ignorance and think smart and wise. We now have an illegal plant called Hemp (Cannabis) if you watch a video called "Hemp for Victory" on youtube you will see how the government used that plants fibers to produce beneficial resources, but because of greedy, monopolizing companies such as Dupont, Kimberly Clark, etc. We continue to destroy our Mother Earth and suck the life out of this planet with so little time. We really need to think and make the best of it by using that plant and creating fuel off the oils of it, making clothing, rope, paper, and much more off that plant where it grows in a near 4 months compared to a tree that will grow in 20 years. So really think about it do the research that is why I love the internet so much knowledge and information that we can look into to benefit ourselves in resources. Another thing is population growth that will not stop so we have to think clearly on how to consume right. Our founding fathers used Hemp and benefited from it. Remember Hemp is illegal because of these greedy companies and used the term Marijuana to freak people out saying it was a dangerous drug which its not we all know that now, so why does it continue to be illegal? Is it because other say it makes you stupid? Which is wrong as well we all know that it should be taxed and regulated at age restrictions. We all know it is the biggest cash crop in the US wit corn and wheat put together. So you see that it is a benefit and people are just blowing out of proportion because we rely on the government too much. But their is another problem when we the people of America want to make a change and stand up for our rights we get shut down, ignored, and arrested or prosecuted. So what has America become, Socialist, Communist? When I was a kid I was taught different bout USA history and as I am older and have a family to take care of I realized so much of a difference America has become. There is an estimate population of 300 million Americans, so why don't we all (population) stand up and fight for our rights?
So im only 16 so i guess my opinion my not matter as much, but honestly, I hope oil prices go up more and more, I hope they hit record highs within the next few years because it will be a wake up call for the largest oil consumer in the world, The United states, Oil has become the most REDICULOUS and dependent scource we posess, when and where does it end? The people who are looking into renweable energy has made it so unaffordable that it is almost not worth the money. In a way it seems like somebody is trying to keep people from getting renewable energy by basically monopolizing and dominating the Oil market (A.K.A OPEC) and the U.S. and its people, who seem to fear their government and everyone around them more than anything in the world, well that and "terrorist" which is completely blown out of preportion and really are not a big fear at all, but anyway, Everyone knows and sees what is going on, but people are to afraid to say anythng and to scared to stand up against a government who is not all together and not all that strong but people fear change and we simply love what we know. It is because of this that nobody is willing to take the risk of change, what the worst that can happen? A depression? It would not be the first time and probly not the last, people just simply need not to be such pussies, c'mon! were suppost to be one of the top nations and were all so full of ourselfs so why not try to atleast do something about what is going on? I know the countrie is still younge, and so are a lot of people in it, including me, But I am someone who is willing to stand up for what i beleive in, and I'll do it with any crazy bastard willing to stand next to me and do so. The fact is if I don't do something, you don't do someting, and the other 300 million Americans don't even realize are ADMIT that there is an enormous problem going on here, then nothing will happen. The problem does not just exist with Oil, not the prices not the scarcity, It goes much much much deeper than that, it is when you see this that you realize what is really going on, and everyone knows it, and just one person can not go in head first without anyone to back them up. So at what point do we say "I am an America and my ansesters fuaght for this countrie and damnit im going to too!" I dont know honestly, I can't wait to see the day and i can only hope that it will come because if e don' the problem will spread. So im begging you, do something patriotic, start small put a flag in your yard show your proud of YOUR countrie not what those corrupt bastards like the government, insurance companies, Wall Street, and OPEC have turned it in you. Im in, are you?
A world wide oil shortage is real in the next five to ten years based on our current world usage. When will this country face reality and start preparing for the future so we do not end up living in the stone ages. Presently every segment of our modern industrialized econemey runes on oil. We all know what has to be done like conservation and moving to renewable energy. The US needs to tax oil now to support these projects that will keep our children from living like the Flintstones. We can not drill our way into the future however for the short term or the next fifty years we need to keep finding more oil until we no longer need it anymore.
I would like to say one thing to all of the idiot bush supporters that say "oh he had nothing to do with oil prices." Do you realy think a oilfield tycoon dont have his own intrest in mind your just as crazy as he is if you think he didnt. if not why is his buddies companies are growing KBR to name one halliburton closley related to KBR to name 2 the list is long and all in his friends and families favor.
Lifting the ban on drilling did not have anything to do with the current drop in oil prices. The amount of oil made available by the lifting of this ban is a drop in the bucket compared to our own consumption much less the world's consumption. Go look up a map on the web that show how much of our lands/shores were already available for drilling before the ban was lifted...pretty much everything.
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