Three Things I Thought I'd Never See

Urm, maybe you should read your US counterpart?

"Nevertheless, as you well know, crude prices have plummeted from above $145 a barrel in July to a level just above $50. The current price is well below what some OPEC countries -- especially Iran and Venezuela -- need to balance their budgets, so there had been a push for the Cairo session, with at least the two above-named members striving for an immediate third production cut, following September and October chops

Or at least, that was the theory. The difficulty is that some of OPEC's cash-starved members apparently haven't reduced their production as they'd promised."

They wrote an article this week stating how the price of oil is on the verge of being 'fixed' as even the Saudi's have for once, declared publicly a 'fair' price for oil as being $75.

"perhaps more importantly, Saudi officials have taken a rare step in suggesting that $75 a barrel -- about 50% above today's rate -- is a desirable level for crude. The Saudis, OPEC's de facto leaders, have generally avoided advertising what they believe to be an ideal price."

These oil producing economies are also under pressure (esp' the likes of Iran for example) and need higher oil prices to counter the effects of broader world as well as domestic issues.

To speculate oil at $15 is ludicrous and whimsical hope that could only be enacted by huge (US) government pressures that would risk a rift in relations. These same companies/analysts (left) that though CDOs, MBSs and other debt-based securities were a good idea are the source of these predictions ...they hope for oil that low.

The oil producers hold all the cards, the resource is dwindling, the demand is never less than consistent and the situation's win-win. If you don't produce oil now, you can charge more, then, the oil you do produce later, will also be worth more. I know which side of the fence I'd want to be on!

Full arcticle link:

"with the marginal cost of discovering a new barrel of oil widely estimated to be about US$75-US$80 a barrel"

Is there a reference for this?

15$ Ludicrous? Errrr......dude........I was working in 1999/2000 and it went below 10$, many were laid off and the front page of the Economist magazine on December 1999 predicted 5$ a barrel. Ludicrous would suggest absolutely zero chance of 15$ happening.

My current concern, is that we have the oil price falling as the N.Hemisphere heads into winter, a period when demand should be at its highest. Next spring/summer, I would expect the reality of the economic situation to start hitting home and have a much greater impact on oil demand. Combine this with less demand for heating oil..........and I don't think 15$ out of the question.

Cost of average barrel discovered no where near 70-80 US, it depends where you are in the world of course. Less drilling activity will actually bring the discovery costs tumbling. Day rates for rigs could halve....We have only had the oil price above 40$ for the last 4 years....were oil companies making a huge loss before that.....I think not.

Going to be interesting times ahead......

If the cost of oil has fallen so much, why am I still paying the thick end of 90pence a litre at the pump? Rip off Britain right enough, with the cost of fuel being factored into every thing we buy, surely a realistic cut in the price of this would have had more effect on the economy than a 2.5% cut in vat.

What I would like to know about the oil situation

Why is it the the Differential between Diesel and Unleaded now at something like 14p since we had the great hike in oil prices.
My Local Pump is 103p Diesel and 89p Unleaded
From what I remember the differential was less than half this before the increase in oil prices.
Parhaps someone in the know can answer this question

In Singapore diesel is less than half the price of petrol. That is because nearly all vehicles run on petrol. Now look at the UK. In the last few years the use of diesel cars must have jumped several fold. The oil companies saw this as a nice little earner and decided to fob us off with 'diesel is more expensive because the new cleaner diesel costs more to refine'. Pure rubbish, it is blatant profiteering and further proof of rip off Btitain.

In France diesel is about 15% cheaper than normal unleaded.

Face it guys. Here in the UK, we are the only country where our government taxes us on our earnings with income tax, then again when we spend it with VAT.

No: there's VAT and income tax in all the EU countries, the Nordic countries and a whole bunch of other countries from Albania to Venezuela.

Diesel does cost more to refine though. There is a general belief that Diesel is less refined but that`s not true.

The use of diesel cars has rocketed in recent years, probably has a higher demand than unleaded now so that accounts for some of the difference(supply & demand). Even if supply can meet demand, it`s normal to want to make a little more from what is in higher demand isn`t it? Profits have to come from somewhere, if less profit is available from petrol then it has to come from somewhere else - part of the capitalist world we live in.

We are in rip-off Britain however

Thanks guys for you response to my question.
I already know that there is a tone of tax on fuel in this country, thats obvious.
What I want to know is where did I miss the differential suddenly rising between Diesel and Unleaded. Before the sudden price hike the difference varied between 3 to 6p now the difference is around 14p. how did that happen?
who made the descision to make the differential so much more? It was a kind of stealth increase masked by the global price of Oil somehow.
How did that happen? and how did we let them (whoever they are)get away with it?
Andy

If it costs $75 now to obtain new supplies, then that pushes up the 'value' of current supplies. The world isn't running out of oil, it is just getting harder and more expensive to obtain as all the easier supplies gradually exhaust themselves. Probably every 10 years, that cost will go up say 50%.

As for diesel price, what happens in the refineries is that they are set to produce certain proportions of different grades of product and it is not easy to change. This also involves plastics so the products are quite wide ranging.

The different grades then go off and get various things done to them and these keep changing as products develop.

Diesel has been improving so this obviously costs more to produce and as the ratio of vehicle engines has moved in the direction of more diesels, the demand for diesel has hit the supply chain more than for petrol.

That all having been said, most of the money goes to the Chancellor anyway. He is the principal rip-off merchant.

Oh and dig and maintain their own roads. Why are obviously intelligent correspondents going on as though the tax take goes into the politicians' pockets? Lorries in particular are paying far less than the damage they cause to road structures, in accidents they cause and delays when they regularly spill their contents. If we could get them off the roads by hoiher fuel taxes, they would go back to the rail network and subsidise public transport, thus solving a whole range of problems.

Mikematejtschuk - of course taxes are necessary. but the tax take is enormous and there is huge waste in the system. A million more civil servants
have been employed apparently, in the life of this government - guess for whom they will vote? A relative works in the NHS - he says the waste and inefficiency he encounters is unbelievable.
Our government, amongst many others, uses high taxes to buy votes.

Why would anyone want to buy shares at the moment when dividends are being axed left right and centre and bankruptcies, nationalisation and take overs for peanuts on thecards? My share portfolio, which I have built up over many years on the buy and hold basis is down at least 80%; the £80k I had in Anglo Irish Bank earlier this year is now worth about £1k and there is still alot of short selling going on. Should I have left it to the experts to manage my money? I don't think so. Nearly 10 yrs ago a financial adviser advised me to invest £6k in an ISA in INVESCO's european funds. A few days ago, that was worth about £5,500 and I haven't had a penny of income from it over that period. Seems to me that the govt's latest ploy might work since anyone who has savings might decide that saving is not worth the candle and go out and spend it on items they would previously have considered too expensive or an unnecessary luxury. Had I not recently had a new knee so confined to barracks , after waiting nearly a year for the NHS to get its scalpel out, I'd be joining them. I am not by nature a gambler and have had it with all types of investment; all I do is lose just when I need money to spend.

As I see things, yes the oil companies are looking to extract every last penny they can and are using the world oil price to hide behind. But this is only the tip of the rip-off; the government too is in no rush to ask the oil companies to toe the line will diesel as they will be the biggest looser.

It will soon become apparent with the hick in diesel especially since the further hike by our sitting government of the excise duty, which commercial users cannot claim back (vat is recoverable) there will be a swing back to petrol engine vehicles. One only has to look at the running costs of a Ford Mondeo, the base petrol model costs 48.9 pence per mile while the base diesel costs 50.3 and to a private user the petrol model cost considerably less to purchase. [Figures from What Car]

I fully expect, when the majority of us drive petrol vehicles again, the price of diesel will become more attractive!

I fail to see how we, the ‘United Kingdom’ can be part of the EU or 'common market' when such a major component, ‘fuel’ which has a cost bearing on everything we consume, is so different

Ooh! What a lot of comments!

VAT - I thought it was for Luxury goods too, however if you are below 160cm high then your clothes are not taxed (children's sizes mainly) however once your child requires a 160cm (overall height of child) then the VAT man takes his 15% - therefore IF only Non-Essential goods are taxed, technically we adults and all children above 160cm high should be free to walk around naked, as apparently our clothing is 'Non-Essential'! Try explaining that on a Monday morning the the local magistrate!!

VAT is higher in Spain (21% I believe) and its 18% in Ireland, so really we were among the lowest, but the VAT on fuel is not the only tax on it is it? We have to pay a import duty (tax 1) then a Fuel Duty (tax 2) and THEN that VAT - three taxes fro one product - and thats after we have been taxed on the money we earned to buy it with in the first place!

I worked in Local Government - the waste is appalling; the money spent needlessly made me ill -there was a council meeting to set the very first poll tax amount for our area - there were 70 councilors in attendance, all paid £35.00 each for attending (this was back in 1989/90 ish)so hat £2450.00 in attendance fees - then there was the three course lunch for 140 - 70 councilors and a 'guest' each, plus 21 bottles of wine during lunch - total cost for the meeting and lunch £9,000 and change.....the meeting lasted 1 minute 42 seconds.....as documented by the clerk of the meeting.

The sad thing is that these Council meetings were held monthly - at the same cost. Some lasted 2 hours, some 1, some 4, however the point is the same - £9k per MONTH of OUR money - and thats in a small council! there are many instances of pure waste by local councils that I could quote, and this is multiplied throughout the UK - we don't see it, we just see the bills rise - we turn off lights, shop at lower cost supermarkets, don't spend unnecessarily so that we can afford to fund the council meetings and lunches that have to be paid for by Poll tax hikes!
I never thought I would see the day where despite being careful, being a saver, not wasting wherever possible,budgetig carefully and making sre I had 'rainy day money' I am now worried about my home, my job and whether those savings I made sure I kept up with will actually be enough to see us through...

Still awake? Sorry - had t get it off my chest!

One of the reasons diesel is more expensive than petrol is that at the time of the petrol action or just afte brown reduced the duty on low sulphur petrol ostensibly to pay for the desulphurisation.
The diesel duty had been loaded before that on the grounds that diesel being more economical could take a higher tax.This has resulted on long distance users shipping through the channel tunnel just to fill up in france.Most diesel is used for freight ,Rail uses a huge amount but doesn't pay duty so rail freight isn't green and the track maintenance is tax subsidised.The bright spark burning logs is still putting carbon back in the air .You can synthesise diesel from coal ,carbon waste or use plant oils ,about 10% of diesel is from this source .Much of the green fuel idea is based on weird misconceptions.Its more efficeint to turn hydrogen into liquid fuel than store it in a battery ,use a fuel cell or turn it to liquid.
However it should be possible to turn sugar to electicity using sugar as the storage medium but sugar is a food so thats not going to be too popular .

Talking about double or triple taxation on fuel, nobody has mentioned the fact that our National Insurance Contributions are also subjected to income tax! I am amazed that so little comment has been made about this over the years. So in the case of fuel it is triple or quadruple tax, or maybe even quintuple if an earlier writer is correct about import duty!

Up the revolution!

Personally, I'd feel too ashamed to work for the government.
If they really gave two hoots about saving the environment, they'd stop the nonsense about taxing cooking oil at the rate of fuel tax if you use it to fuel your car. Using sugar as a fuel type would work magnificently for the British economy as it's a commodity we can grow all year round, we can export it, it's relatively cheap (in comparison to oil), and it's very easy to convert it to fuel.
Sadly, our government is being run by a man who phones up his chums in businessland to ask them how much duty they want to pay on the goods they import, and who invited the editor of a national newspaper to his daughter's funeral. The man has about as much integrity as a pervert.

The supply of oil will come to an end. If you can't understand that then I suggest you study Geology; then compare the results with total world ownership/usage of all motor transport and you'll see what happens to the oil.
So what should you do?? forget high speed and get an electric car. If the journeys too far go by train. You will have to get used to it some time!

Price at the Pumps? Lest anyone forgets - the Chancellor put another 2p on a litre on 1st Dec - and that won't go down when they get around to putting VAT back up again. Most of what we pay goes to the Government, so I'm not expecting petrol to get too much cheaper any time soon (in fact never)

Slightly off topic but we do like to digress...

Burning wood accounts for a huge proportion of all Carbon release. It's possible to see millions of wood fires in India, for example, by satellite at night. However, it categorically has not been proved that man made CO2 has warmed the planet.

The reason we see no Hydrogen fuel cell cars is... the cost and availability of Platinum. A very scarce resource needed as a catalyst in the cell. In any case, the energy needed to extract the Hydrogen has to come from somewhere, so unless you take it from nuclear power or renewable energy, you still have the same problem.

A couple of astute Fools have it right about the diesel. This particular fraction from crude has a high demand, for all sorts of uses including plastics etc. It's bound to be more expensive than petrol.

As mentioned elsewhere, the failing of falling oil prices is that UK citizens won't see the benefit. Even at $0/barrel, petrol would cost 70p/litre.

I must have a quick pop at all these pseudo environ "mental"s.

1/ Wood burning is not only sustainable, but carbon neutral if you are replanting trees. Trees absorb CO2, so planting & burning them is equalled out. Duh! The world may be sootier, but such programs are beneficial to birds, goblins, fairies, & all other woodland dwelling creatures.

2/ Climate change occurs throughout the year. My ancestors called them "seasons".

3/ For something to be scientific , it must be measurable, but more importantly predictable! Being unable to predict accurately next weeks weather, makes claims of temperatures in 60 years laughable. Those who believe this may wish to go & live with our woodland friends mentioned above.

4/ Excise & taxes on cars & petrol exceed the amount spent on managing the entire transport system by £40 billion. This literally pays for almost every single person & their family not working & on benefits. Scrap the car & petrol & they might get nowt. I suppose we could bring back sedan chairs to carry people to work, & there would be a need for lots of people ploughing in the field, because oil based machinery couldn't be used, nor cows & horses - well they're positively greenhouse gas factories.

5/ Fruits, cereals & vegetables don't grow very well in the winter in the UK. A lot has to be imported.

6/ We don't actually make anything in the UK anymore. It has to be imported.

7/ The golden age of the sail is dead.

8/ Trains are still comparatively more expensive & much slower than they were 100 years ago.

9/ Who wants to be on a solar powered commuter train in the UK.

10/ We do have tons of sugar(beet). This crop has the best yield in the country. This could be turned into ethanol, or other fuel.

11/ Unfortunately, the government would tax it at the same rate as we have now, so the best thing to do is to drink it - & reduce our carbon footprint firstly by getting banned from driving, & then by prematurely meeting the great whisky dragon in the sky, after a spot of drunken Hari Kiri-Oke.

12/ It's Ok, the great whisky dragon is a man made myth, & so is man made global warming.

The price of Diesel overtook Petrol back in the days when the government ordered the removal of LEAD from Petrol and made it greener. Use the cleaner Unleaded Petrol and we will Tax you less,they said and since then nothing has changed.
There, that that should put most of the wild theories above to sleep.

JohnTheTruck is partly right about the link between unleaded and the price of diesel. There was some government BS about particulate emissions from diesels making it a less 'green' fuel, but the scientific argument about particulates causing cancer was very vague and there are now particulate traps and diesel catalytic systems making diesels extremely clean. Main problem we have is that most ministers are unscientific morons. They don't make a science degree a compulsory part of the requirement for ministers who have to make technical decisions. John Prescott, the pie-scoffing half-wit, is a perfect example of a politician clueless when relying on his own knowledge and making statements and promises based on a fairytale world.