The Price of OilAbout a couple of months ago I noticed that the price of oil has fallen more than twise. However delighted about the news I was curious about the reason behind such sudden drop in price. Naturally I was expecting there will be more people like me, interested to know the reason behind such sudden drop, but judging by the lack of explanation in the media, nobody gives a fuck. A real shame too, the reasons are plenty and all are interesting.
What we are being told , simplified is : "global economy is in recession , oil prices drop". Well yeah , but ...
The price has fallen 2.5 times in the last 3 months. What's up with that ?
Now, seriously, oil broke through
$110 on March 12, 2008,
$125 on May 9, 2008,
$130 on May 21, 2008,
$135 on May 22, 2008,
$140 on June 26, 2008 and
$145 on July 3, 2008. On July 11, 2008, oil prices rose to
$147.27 following concern over recent Iranian missile tests.
And today ... fuck , what day is it .., 18th of November 2008 , the price of oil is
$54.56.
Drill, baby, drillDoes anyone remember all the hype about the price of oil never going back, talks about "peak oil" about developing economy of China and India and how ( some ) fat americans will never be able to drive their outrageous oversized ugly motor vehicles , like they used to ?
Does anyone remember american politicians , mainly republicans, pushing for drilling oil in Alaska, driven by big oil lobbying groups and expressing their disgust for democrats for not allowing them to do that, while americans have to suffer ? ( STFU in shame they all had to. Ha ha.)
Does anyone remember George Bush dancing with King of Saudi Arabia, pleading him to increase production ?
I agree that was funny , but anyways...
Does anyone remember Angela Merkel, a very influential figure in European Reich, smiling silly, trying to push her initative for carbon tax amid the soaring oil prices, probably realizing how near the fate of being eaten alive she really is ?
And of course mysterious and cute smile of Vladimir Putin, observing the beginning of good days for Russia.
Things were fucked up. People everywhere were extremely sad, counting their finances in anticipation of inevitable autumn and beginning of the harsh heating season. Only a miracle would save them.
Of course nobody expected the miracle to happen. If anyone in July would tell me that the price of oil will drop to $60 from $140 in three months, I would swiftly tell them to get the fuck out. I mean, peak oil, China, India, trouble in the Middle East, that would never happen. Now fucking way. Period. Do I look like a moron , to believe in miracles ?
The Oil HoardingYou would think that the price of oil falling more than twise was explained by every second person driving a vehicle in the whole world being fed up with it and leaving their cars and trucks on the side of road and walking away chanting repeatedly : "I am mad as hell and I will not take this any longer ! ..." But no, this didn't happen.
What happened is once again international bankers, hedge funds and otherwise shady good for nothing people who do not actually produce anything, but play other people with their massive funds are once again to blame for this one.
Oh those nasty bankers and speculators ! You see, as long as the price of oil is going up and price of dollar is going down, it makes a very good sense to buy futures contracts for oil deliveries with your dollars. And so, as the dollar was going down and price of oil was going up, it was even more inflated by the market or bankers and hedge funds buying off futures contracts for oil deliveries, VERY ARTIFICIALLY driving oil prices up. This shit went through 2007 and first half of 2008.
A few politicians in United States wanted to investigate that problem of oil hoarding and speculation, but every time they tried to question people supposedly accountable for it, these people responded with the most innocent faces and "We ain't done nothing wrong" remarks.
While the most corrupt assholes were saying that the reson behind oil prices is not enough oil and pushing for more drilling , as if oil companies did not have enough conserved oil fields not being put to use , waiting for a rainy day.
The miracleWhat really happened is that on July 11, 2008 oil prices were at $147.27. The game was up as the most speculators started to realize it was the absolute top and the OIL BUBBLE will not actually expand any further.
Oil prices declined by more than $20 over the next two weeks, settling around $125 a barrel on July 24, 2008.
A strong contributor to this price decline was the drop in demand for oil in the US. Miles driven there in a month were down in March-May 2008 compared to 2007, with the 4% decline in May being the largest drop in history.
Holy fucking shit ! High oil prices actually made americans drive less, while the oil was still overpriced, because of speculators , banks and hedge funds still buying oil as a valuable commodity still expecting the oil to rise in price.
At the same time the vicious
"Credit Crunch" ( sounds awfully like breakfast cereal ) was about to hit the international finacial system, which meant that every rich fucker associated with banks and finacial institutions was about to become very short on cash to be buying oil.
And so, oil further dropped down to around $112 a barrel, on August 11, 2008, and
on September 15, oil price fell below $100 for the first time in seven months. On October 11, oil fell as much as 8.89$, or 10.17%$ to 77.70 USD per barrel as global equities slide. Oil traded below $70 on October 16. And today, November 18, oil is priced at $54.56.
ConclusionThere you have it.
First off, a very interesting fact is that according to some articles in the media global demand for oil fell 5-10% , because of high oil prices. Something that I was told by many people would never happen. I was told that carbon taxes and gasoline VAT would never make people reduce consumption and will only hurt them. Apparently not.
Secondly, at the global demand falling some 5-10%, the OIL BUBBLE has collapsed on itself and the price of oil went from $147 to $54. And I take my finger and boldly point at the speculators and hedge funds as the ones to blame for the high price of oil everyone had to pay for a long time now.
Thirdly, isn't the whole mechanics of the process exciting ?
1. You take your money and put in the bank.
2. Bank invests your money for profit giving it to a hedge fund or speculators.
3. They buy off oil seeing that everyone else doing it and the price of oil goes up.
4. Russia, Iran, Saudi Arabia and large international oil companies gain huge profit. Speculators and hedge funds get some of the profit as they sell oil futures contracts at higher price. Banks get their share of the profit made by hedge funds and speculators.
5. YOU PAY FOR ALL OF IT, STANDING THERE IN DISBELIEF, ASSRAPED BY YOUR OWN FUNDS.
Oh well , finally wrote what I wanted to write about for several months now.