I believe there are two major reasons why oil prices are so outrageous right now... Greed in the form of investor speculation, and fear coming from the environmentalist about global warming and the such.

First I shall cover greed, and show why it is in my opinion causing artificially inflated crude oil prices. I am sure many of you know that commodities can be traded freely in the US economy. The Chicago Board of Trade is one of the most common places to do such a thing. I believe investors/ corpations are buying oil in hope making huge profits. Example, Goldman-Sachs buy 20 million barrels of Crudes oil less than 2 years ago for around 60 bucks a barrel... Fast foward to now, If they sold that oil at todays prices they would make 1,800,000,000 profit... As oil prices continue to skyrocket the speculation grows greater and more and more people are buying into crude oil. This is driving up the prices of oil to obscene levels for consumers adding even more to the hysteria.

What will happen? Well I guess the best way to put it is what goes up must come down. Eventually something will pop this bubble in oil prices and just like the housing market recently, the DotCom bust of the late 90's, or the Stock Market of the Roaring 20's it will all come crashing down leaving many investors with oil they will not be able to sell for even near what they paid for it. Usually it takes something to change the investors from their mode of greed into fear (when they all begin selling instead of buying). It could be anything.. maybe an announcement from the White house that we will begin tapping into our national reserves, or an annoucement of a huge breakthrough in Hydrogen power.

What led me to believe this was happen was when about 3 months ago I heard that Goldman Sachs and other were predicting oil to go up to 200 dollars all barrel and 6 dollar gas. Then not just 2 weeks ago I found out that they and many others were huge investors in raw crude oil... So basically the people investing in it are saying it is going to rise in price... which as I pointed out eariler causes greed and hysteria.

ok, the second thing, the fear of environmentalist. Basically it  comes down to them wanting gas prices to be higher to force people to think about more Green/fuel efficient options... Hybrids, Hydrogen, whatever. This would explain why for the first time I can remember Diesel is much more expensive than Gas... Diesel runs much dirtier.

These would kind of make sense if you were just talking about America, but the problem is world wide. And, yes, I think it may be down to what you're saying, but it's also down to many other things inluding the raise in demand from China, India, etc.

greater demand + same amount of oil = higher prices

Also, you have to remember that oil is a finite source, meaning that it will eventually run out. As this graph (http://en.wikipedia.org/wiki/Image:PU200611_Fig1.png) shows, many countries will have passed their peak production by 2010, meaning that it will all be downhill from there. This modifies the formula to look like this:

greater demand + less amount of oil = much higher prices.

I think it's a better scenario that we go through this panic, and invest in other technologies, rather than leaving it until oil becomes far too expensive, and it becoming too late.

I was reading an article that stated that if oil were to reach $500 per barrel, then it would take 4 days for the country to fall into panic.

What really winds me up, though, is that Gordon Brown stated the other day that "oil has gone from $10 to $130 per barrel in the last ten years". Yet the prices haven't gone up that much to reflect the increase in price. Oil companies are still making nice profits now, so what the hell kind of profits were they making ten years ago?

How exactly do environmentalists increase the price of crude?

I know they(we) may be favorable to taxes on petrol (gas) which may make people consume less and/or make alternatives more viable, but how can they(we) have an impact on crude prices since as you say it is purely set by the markets?(Edit: Which would mean that the only way environmentalists can have an effect on the price is to buy up supply and set it aside so it is not burned. No environmental group has that kind of funding.) The only governments that can have an impact  on the price of crude are the members of OPEC and they have little to no environmental motivations.

For the price of gas, ok, they(we) share some blame. For the price of crude, which is what your thread is about, we share virtually none.

Prove me wrong. EDIT: By "prove me wrong" I mean if you can find some sort of evidence that Crude prices are effected by environmental concerns, I will be willing to correct my stance or provide a counter-argument.

yes I do not beleive that the 99cent gas of the late 90's is possible any more. I believe that the "Natural" price of gas is around 2 dollars a gallon give or take 20-30 cents. And yes I agree with your formula. But I believe that the greater demand is not only from China and growth, but from rabid speculation. This is not the first time this has happened. It just happened with the housing market in the last 5 years. Housing prices rising out of control, and it hit a breaking point and took alot of poeple down with it.

I agree with you on both. I'm sure there are other reasons but you are right about your two points.

China is raising their prices to consumers and oil prices went down today.

Republicans want to allow off-shore drilling again, and people are saying that it would not help the prices. (I'm sure that the investors don't want us to drill)

McCain wants to build more nuclear energy, but the environmentalist don't want this to happen - even though it's the cleanest way to create energy.

i agree with me

lamest bump evar

There is an insane amount of over speculation for sure and it will eventually have to come down.

Especially since truck drivers get paid by the mile, so one day they won't be able to make money anymore and the shipment of goods within countries will cease which will force gas and oil prices down, and if not then a mass starvation will occur as we will no longer be able to get consumer goods such as food and video games (oh no!) and gas stations will all run out of gas since the trucks won't be operating anymore resulting in a massive disaster that could only be fixed with the reduction of oil prices.

http://finance.yahoo.com/echarts?s=gbpusd%3Dx#chart3:symbol=gbpusd=x;range=20010911,20080616;compare=eurusd=x;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

Since September 11th 2001 the US dollar has dropped between 40% and 60% of its value, and a large portion of the run-up in oil prices reflects that change; if the dollar was worth what it was in 2001 we'd be looking at an $85 to $100 barrel of oil, and a $2.50 to $3.00 gallon of gasoline. From there you can associate $20 to $30 in the increase in demand/lack of supply, and potentially another $20 to $30 due to speculation.

In other words, oil prices would be far more reasonable if the federal reserve wasn't devaluing the dollar to bail out investors (small and large) from their risky investments in the dot-com bubble and the real-estate bubble.

This explains it all. 

bump.

oil has fall over 25 dollar in the last 6 business days, looks like I was at least partially right.