Korean Job Discussion Forums

[itaewonguy]

Ok seriously can someone explain to me why OIL is rediculously expensive?
airlines have to raise prices, gas stations are raising prices..
blar blar blar..

but why? why is it so expensive? and who is GETTING filthy rich off this?

I mean 20 years ago it was considered expensive in my country,
50 years ago it was expensive,
but all I ever hear from the MEdia is well its expensive becuase we are running out of oil... thats BULL SH*T!!!!

so can someone please tell me why its so expensive, and why doesnt the the governments of the world do something about this.. because this is the most important commodity in thw world and we all NEED it..

4 years ago the price of oil was 40 bucks a barrel, still expensive in some parts of the world.. but now its just been doubled!!! so the profits have soured now.. right?
WTF is going on here..

[Ya-ta Boy]

Could a steady and rapid increase in demand + political uncertainty in major producers like Iraq, Venequela and Iran have anything to do with it?

[khyber]

But how is it that demand increase rapidly in the last 2 years?
Has it just been an extraordinary time?


OPEC has this to say:

[Ya-ta Boy]

[Kuros]

Refining facilities have decreased while demand has grown. There was a major fire at a Texas oil refinery in 2005, which burned the entire thing down. A few weeks later, Katrina also destroyed some refineries as well. The current refining facilities are working at maximum capacity, but oil companies as far as I know have not put any new refineries into commission, possibly because they are investing in alternative energy sources.

[Octavius Hite]

First off to get yourselves familiar with this industry you should definitly check out the Putlizer-prize winning The Prize by Daniel Yergin, its the history of Oil from its modern discovery in the US circa 1855 to the first Gulf War.

Its not just one thing but a combination of events and circumstances that have led to this:

1. India and China are growing at a breakneck speed. These countries are growing at better than 10% a year on average. China is already the largest consumer of all raw materials in the world except oil, where it ranks #2. And don't forget that China is building a huge highway network to rival the US interstate system, thats 300 million new drivers in the next 10 years, at least.

2. Its not just China and India. Look around you. Countries such as Thailand, Russia, Poland, Ukraine, Vietnam, etc are growing their economies and trying to build themselves American style worlds. There are literally dozens of 3rd world countries moving into the developed world and that requires energy.

3. We are finally, if not fully, realizing that there is an environmental price associated with gas and that is starting to get factored into things such as higher ethanol blends, less sulfur, hybrid engines, etc.

4. Political uncertainty. Most of the oil that the developed world uses is trapped in the ground under the middle east, not our great friends these days. Other oil is in just as dangerous places: Sudan, Nigeria, Russia, Venezuala, Vietnam, Kazhakstan, etc. These places are no less dangerous than Iraq or Iran, we just haven't given them time to devolve in mahyem, but many of them will.

5. Inefficiency. I just cant believe that in countries like Canada and the US people are out buying GMC Yukons and Hummers. Its stupid and the stupid people who buy them deserved to get robbed by the gas companies. Now people will say but I need a Hummer, its Canada. BS! I am only 24 but I can remember getting to and from school, hockey, etc in a regular car. Noone needs a Yukon or a Hummer, they want, so they should pay.

6. Finding gas is harder and more expensive to find. Its not that we're out of gas, its that all the new gas is deeper and harder to get at. It means that we must spend more money and time innovating ways to get at. Despite what wingnut Bill O'Reilly says, Brazil's new found energy independence is not based soley on Ethanol, but on the new deep ocean drilling techniques they have developed, they spent 30 years and hundreds of millions of dollars developing this technology, now we must do it also (or just licence it from the Brazilians!).

I understand that many people are angry but here's a thought maybe this is good. I find it interesting that now its right-wing leave the market alone people who are now calling for Bush et al to do something. There are some things to remember.

1. High gas prices are good because now people will be forced to change their habits. Take the subway or the bus. Buy a hybrid. Take your bicycle. People in the developed world wouldn't choose to do this before now the market will force consumers hands and help save the environment and get the west out of the middle east! God bless Adam Smith!

2. The west is NOT entitled to cheap gas. I have been watching American news (NBC and FOX) for the last two weeks and people go on like the constitution protects speech, religion and cheap gas, sorry thats just not true. Its about time that we all learnt the lesson that just because we have the biggest bombs or best army or most money doesn't mean that we get everything dirt cheap while exporting nations starve and go broke (Iraq, Libya, Venzuala, Mexico, etc etc etc).

I personally am for higher gas prices, let the market fix our wasteful nature and we will all be better off.

[itaewonguy]

[Ya-ta Boy]

[AbbeFaria]

[mindmetoo]

[Octavius Hite]

You guys should check out this past sunday's Meet the Press, it was all about oil and Yergin was on along with a bunch of other old stogie white guys.

There is no doubt that companies are making billions of dollars. But so are many of these countires. In Kuwait their welfare state is legendary, it makes the Swedes look evil. Everything in Kuwait is free (Healthcare, dental care university, etc etc) Similar situations exist in UAE, Qatar, Bahrain. Even in Canada we see the government getting rich, as is Russia. However other places are a disgrace. Nigera comes to mind, there they have billions of wealth created every month but the vast majority of the people there are dirt poor. This is why there is rebellion in Nigeria and that is why we now pay 75$ a barrel. Instead of pushing for some regime change in Nigeria and Equitorial Guinea to ensure fair uncorrupt leadership that will bring prosperity and wealth, thus stability, to Africa we (the west as a whole not just the US) prop these tin-pot dictators up with weapons sales (which is where most of the oil wealth goes) and the cycle of despair continues, hence the rebellions continue hence the instability in the market.

So there are plenty of people geting rich but there are also plenty of people getting very poor, this was the exact cause of the revolution in Iran (again check out Yergin's book), and it seems to me that while some countries turn into "narco-states" like Columbia and Afghanistan others turn into "petro-states" which seem just as bad.

[fiveeagles]

[AbbeFaria]

On a related topic, how many of those "don't by gas for a day, this is been sent by a professor of economics at Wack-Off U. It will work, send this to 8 people and they send it to 8 people and soon it will be a million..." blah blah blah.

I've gotten three in the last few months. Two from my mom because she believes that crap.

��S��

[mindmetoo]

[Octavius Hite]

Sorry Fiveeagles i will explain the Ethanol/Deep drilling confusion. For the last 2 weeks resident nutbar (and civilly liable sex offender) Bill O'Reilly has been going on and on about how next year Brazil will be energy independant. He gives the impression that it is all due to Ethanol and Brazillian sugar cane, and thats a lie. While ethanol plays a key role in the Brazil market it is not the key, the key is the new huge deep drilling rigs of the Atlantic coast. They are part of pioneering Brazillian technology to go after that hard to find oil and gas and now the Brazillians are going to reap the rewards. I believe (and this is mentioned in this week's Meet the Press) that this new attention to Ethanol by the Bush Crime Family and the very short-sighted congress is more an attempt to protect their huge Sugar/agricultural subsidies for midwest and southern farmers than it is to gain energy independence otherwise they could import Ethanol from Brazil or the Carribean.

As for the claim that it is the lefties and Greenpeace's fault that there has been no new refinineries built in America well, thats a bum rap. I'm not a huge fan of the politics of Greenpeace (although I do agree with their mission) the lack of new refineriess has more to do with the NIMBY phenomon. NIMBY (Not In My Backyard) people (sometimes backed by Greenpeace and the Sierra Club) are a force to be reckoned with. No one wants to live next to a refinery it destroys communities and property values. Ask Bush if they can build a refinery next to his Crawford ranch and see what happens, we now live in a world where no one wants one of these things around and people can organize and throw enough legal roadblocks up to stop them.

Also. again on this week's Meet the Press, Yergin made an interesting point that while no new refineries have been built in some time, refining capacity (which is what really matters) is up 15%. So this not enough refineries line seems to be a bum tale, told to help get big oil more government subsidies to build new refineries and use emminent domain to steal property.