WILL OIL PRICES GO BACK UP ?

Do you think oil prices will go back up - if so why and when will they go back up. Why did oil drop from $ 150 per barrel down to $35 per barrel in 5 months ?WILL OIL PRICES GO BACK UP ?
Will oil prices go up? They already are, up $2 today.





Do you really believe there is some tracking mechanism, some easy answer to why price fluctuates? If that were so, we would all be rich by trading the direction of oil price.





In all free markets, price is determined by supply and demand. Find what makes those fluctuate, and you've answered your question. Just don't limit your answer to anything less than a few hundred reasons.WILL OIL PRICES GO BACK UP ?
Yes prices will go back up. Even T Boone Pickins says we will see $100 oil again this year, 2009. But you should understand WHY the price went up in the first place. Then you can know if it will go up again.





There are really two reasons. And it is NOT as SIMPLE as SUPPLY and DEMAND theory from Econ 101 classes. If you think those are the only factors in play that control oil prices, then you are simple minded. There is a lot more including politics and ego besides greed and lunacy.





Facts first though.





In 2000 - 2002, the price of oil was very low and most oil field owners said that they would shut off their pumps if oil dropped below $12 a barrel because that was the cost to get it out of the ground. Even the big guys said they would suspend their drilling platforms in the deep waters if oil dropped below $15 for the same reasons. Then the 2003 gulf war started that threatened stability in the middle east oil region. Those politics caused a surge and spike in oil prices. At the same time the economy started growing again after the 2000 - 2001 stock market drop. Demand for oil increased gradually.,





By 2006, the economy was rolling along well and the housing market was booming with bad loans and a lot of equity purchases as people pulled equity money out of the banks and spent it like crazy, and then demand for oil started hitting the production wall. IRAQ still was not back to pre-war production levels and pipeline in Nigeria and even Saudi Arabia were being threatened. Global Oil production was almost Maxed out and could not push any more oil to the refineries. China was just starting to grow at 10%+ annually and gulping oil at huge rates. Supplies got real tight and prices were rising.





One company got smart and was buying LONG TERM oil futures contracts, Southwest Airlines. They got their fuel for cheaper than other airlines and posted gains while others started to post losses. Everyone and every industry saw the advantage that Southwest had by purchasing LONG term futures contracts and they all started to do the same. That is when oil prices really started to rise due to speculation and long-term purchases.





People heard about the huge profits every quarter by the major oil companies and suddenly everybody started buying oil futures and options, not just for use like airlines, busing and trucking companies, but also little investors and cities and other countries around the world and prices shot up to $150 a barrel almost.





Then the housing bubble exploded this last summer 2008 and that caused the financial melt down this fall and that made everybody stop speculating because they had no money to do it with anymore.





Supplies started building up as demand dropped off quickly. People had to sell their oil stock and oil futures contracts to pay off losses in the market. The small speculators needed money to just pay their home and normal bills and people stopped using ';extra'; income to invest which forced prices even further down as they sold off their positions.





Global economic recessions have reduced demand and even China has stopped it giant growth rate but is still needing more and more oil every year.





Finally, the price of oil started to make sense again as it past the $45 a barrel mark but it was still at a 100% markup at least. However, now the big majors had been investing in finding oil in the hardest to reach spaces because they thought oil at a $100 a barrel would justify the expense of finding $75 a barrel oil reserves. So now the average costs of $15 a barrel on land for most of their fields and the added costs of the $75 a barrel extreme finds in water average out to around $22 - $30 a barrel cost for oil.





Shew! Okay now add to all that to the undeniable fact that OPEC and specifically ARAMCO (Saudi Oil giant) has stated flat out that they will constantly do whatever it takes to make sure that ALTERNATIVE FUELS are not developed unless it is they that develop it. Yes this is a statement from the head of ARAMCO and the OPEC group for many years.





So every few years, they will allow prices to rise so much that a lot of money is funneled into alternative fuels by the billions. Once that money has been pushed out, they, ARAMCO and OPEC groups will make sure that it gets FLUSHED by letting prices drop way down again to the point where, the justification of alternative fuel investment and sales, that sell for $50 - $75 a barrel, are no longer supported or profitable.





The lower oil prices will be allowed to stay low for long enough that the investors lose everything because they cannot sell their alternatives to compete with lower priced oil. Once the investments and inventions are flushed and gone, ARAMCO and OPEC will play their games again to get as much profit as possible from oil for as long as possible.





There will be a point again in the near future (1 - 3 years) where oil demand will again push the edge of the productions capabilities of all
It depends on supply and demand. Right now, demand is very low but supply is high. In response to current demand being low, production is being cut back. If you think demand will go up, then you think prices will go up, because supply will be going down.
With the economic crisis, the demand for oil has dropped significantly. Oil will probably not be that high for a while, at least untl the economic situation is over and there is a higher demand for oil.
you betcha! oil company are cutting production because the demand has slowed down. This will steady the price of oil. Has the economy picks back up the price will rise with the demand.
Oil will go back up because of one VERY simple concept.....supply vs. demand. As to why the price went down...see supply vs. demand also.
I think it will. I really hope not though !
Yeah it will. We need alternative fuel methods. I'm thinking about a car that burns WOOD!