This might help those who are interested. Its important to realize that there are many factors and caveats associated with the price of commodities traded in the free market. And it in no way covers all you need to know about the commodity.

I recommend listening to this:
http://www.netcastdaily.com/broadcast/fsn2008-0426-1.asx

or go here:
http://www.financialsense.com/fsn/main.html
and click on the appropriate link in the 1st hour with FS News Team.

Its long but what I wanted to share was in the 27.40 - 37.20 minutes in the broadcast. So forward to that section.

This is not secret information and its common knowledge to those that follow the markets. Don't listen to bubble tv (CNBC) or the regular news about financial markets.

Financialsense.com has an objectively based five hour show every week wrapping up what happened in the markets. I have learned so much listening to them over the years and they have helped me fight my ignorance.

This is one of the sites I listen to every week.

It's all about global warming, . No, I'm just kidding with you, thanks for the link.

LOL

I enjoyed our discussion in that thread.

With a Texan in the white house now what did you really expect?

Can you recap the essence for me? I got tired of it after a couple of miniutes.

One major reason is that oil and gasoline are tied to the US$. And the US$ is losing value (over 17% loss of value to the Euro in 2007 alone).

And therefore everything tied to the US$ seems like it is costing more...because the US$ is worth less.

Where would the USD would be if oil were not transacted in USD?
And if China did not transact internationally only in USD?

quote:

Originally posted by QM:

And if China did not transact internationally only in USD?

It's a good thing so much of China's economy is tied up in the US dollar. If the dollar goes down, so does China's bottom line. It's a nice little arrangement we've got, huh?

Yep and if our Treasury and the Fed bail out all of the bull-excrement made by all the fraudulent home mortgages, 2nd morts and Helocs(Home equity lines of Credit) then they will further destroy the value of our dollar. Commodities across the board are trading higher partly because of the current state of the US$.

Then you have the threat of the oil nations ditching the trading oil in US dollars which would in turn cause less demand for dollars. We went to war with Iraq because Saddam threatened to trade oil in Euros and now Iran is doing the same but only this time with the Iranian Bourse. Hugo Chavez from Venezuela is another example. Wait and see if the last episode with a US ship firing on an Iranian vessel escalates. The Strait of Hormuz for the next round of terror? The next headline you see will be, "Israel preemptively attacks Iranian nuclear program facilities suspected of uranium enrichment. Authorities speculated in 6 months Iran would have had nuclear weapons of mass destruction and a desperate response was forced." You gotta keep putting weapons of mass destruction and nuclear in the headlines.

Geo-political risks cause exponential increases in the price of oil when they materialize. North Sea refinery workers decided to go on strike. Nigerian rebels disrupt oil production once again in their region.

Yes China holds trillions of dollars of our debt and we are at their mercy. All they have to do is start dumping US treasuries and that is when you wake up one morning and say, "What the hell just happened?"

So there are many connections to be made and I am still trying to figure them all out.

quote:

Why is the price of oil and gas going up...

Simply put, speculation and greed!

Angry about the price of gas? Just imagine paying for gas you don't get. Some alert consumers have noticed it over the years: A pump that seems to hesitate a second when the lever is squeezed. Anywhere from 2 to 6 cents tick off before the rush of gasoline starts. That's what happens with a common, hard to diagnose and mostly ignored problem with the "check valve," which is supposed to make sure gas flows at the same time the price meter starts.

But even if your gas pump works, it can still be off as much as $5 for every fill up. Tests by local regulators allow a pump to charge as much as 6 cents more than the gas delivered in a five-gallon test.

Don't blame the gas guys. Even consumer advocates say retailers may be losing as often as consumers and no one appears able to rig the meters. But the small "check valve" at the end of the multibillion dollar industry just wears out, and often goes unnoticed for months.

Regulators' records show short staffing, particularly for financially struggling counties that try to inspect pumps every six months, but too often don't even meet the one-year requirement in states like New York.

Federal standards require all gas pumps to start pumping gas as soon as the price meter starts, said Ken Butcher of the National Institute of Standards of Technology, part of the U.S. Commerce Department.

Bob Wolfram knew something was wrong when the pump he used in Davenport, Iowa, showed he put two more gallons of gas into his tank than the tank holds.

"I was low, but it wasn't negative," said Wolfram, a 54-year-old engineer.

He reported it to a consumer Web site then took it to the government regulators, who acted promptly. But even then, the test showed the pump was only off a quart.

"I just kind of said, `What will they do next?'" Wolfram said.

Correcting the problem depends on alert, well-informed consumers like Wolfram. It also depends on honest retailers who choose to pass along reports to regulators who must confirm the problem before an authorized repair company is called to fix it.

"There's one Mobil owner, he tells clerks that if there's a discrepancy within $5 to reimburse the customer," said C. Todd Godlewski, director of the Schenectady County Bureau of Weights and Measures in upstate New York, the agency that inspects pumps.

"Yes, it can be that much," he said.

A bad valve can also work against retailers, freezing the price gauge for an instant after gas starts. No one's sure who gets gored more, or how deeply.

"Even one penny on the amount of petroleum pumped annually or weekly at a station would be several thousand gallons of fuel, and add that up," Godlewski said. "If you have a meter that is costing a customer, it adds up quite a bit."

The problem compounds the aggravation of record high gas prices. On Tuesday, the national average hit a record $3.51 per gallon, according to a survey of stations by AAA and the Oil Price Information Service. That's nearly 66 cents higher than last year, and rising.

"We'll hear complaints about this quite regularly, usually several each week," said Jason Toews, co-founder of the independent nationwide Web site GasBuddy.com that tracks prices and complaints.

"It's mostly about the principle of it," he said. He said the problem usually only costs a consumer pennies per fill-up, but that's more than enough these days.

Toews discounts the conspiracy theories that blame the problem on retailers or the oil industry. Most retailers, he said, wouldn't know how to alter the pumps to their benefit.

A New York Comptroller's Office audit in 2000 found "many municipalities" statewide failed to inspect their pumps once a year as required (the best practice is two inspections every year) and that meters were corrected during testing, which could mask overcharging. Four years later, a follow-up audit found only partial resolution, partly because of too little staffing.

Bob Renkes of the Petroleum Equipment Institute based in Tulsa, Okla., has heard about complaints, "mostly when gas prices are high." He said meters "get looser over time," which could make them malfunction and start to count pennies before fuel starts pumping.

"I think our industry would love to replace anything that wears down," Renkes said. But the check valves aren't a high priority when the industry is dealing with issues such as preventing identity theft when swipe cards are used, static electricity discharges and the 5 percent of retailers whose old mechanical equipment can't register a price of $4 a gallon.

State and local regulators doubt any but the most ambitious consumers would contact them in case of a problem, even though the phone numbers are on inspection stickers. More likely, consumers fume and wonder if they were cheated, or report it to the manager of the gas station or convenience store.

"That's what's tough about this," said Jessica Chittenden, spokeswoman for New York's weights and measures office that oversees local inspectors. "The two cents or whatever would go to the retailer."

Even when a report is made, and a local inspector is dispatched, the problem might not be fixed.

Chittenden said a faulty valve would likely work sporadically: "It's very difficult to find it unless you are there every day several times a day."

Godlewski, the upstate New York inspector, said he's found pumps off by as much as three times the 6-cent threshold. Because of it, his county this year is tracking pump problems and hopes to quantify it for the first time.

"You ask yourself," he said, "`If nobody said anything ... and it's run like that for six months, how many were taken?'"

___

In the upper NY state area many buy gas at the native reservations where gas is cheaper.
The pumps there are notorious for their innacuracies since they are not subject to state testing for accuracy regulations.

I usually top off the tank when I go buy a few cigars in the local native reservation. It can be a few cents less a litre.

Do I trust the pumps? Not really.
But it looks like a saved a buck or so on a tank.

Now as for what I saved on the small selection of MC, HdM and Bolis. Well there its 50%.

The native smoke shops around here only carry NC's

quote:

Originally posted by QM:
Where would the USD would be if oil were not transacted in USD?
And if China did not transact internationally only in USD?

My thought is that the US$ would be even lower, and sinking faster. And I hate it...but the USA needs to raise revenues (taxes) or vastly curtain expenses (spending). Spending billions of $$ a month on a useless war & also setting up the biggest entitlement program increase since the 60s (prescription drug benefit) without increasing taxes to pay for either of this has created a disaster called "inflation" and (if not corrected) a global financial crisis.

http://blogs.wsj.com/environmentalcapital/2008/04/29/mi...big-oil/?mod=WSJBlog

April 29, 2008, 4:49 pm
‘Middle Digit’: Fox’s O’Reilly Fumes at Big Oil
Posted by Keith Johnson

Solving America’s energy challenges obviously means overcoming a phalanx of obstacles. But the most pressing might be the most basic: understanding how energy markets actually work.

Politicians on the campaign trail clearly, um, struggle with this. Witness their simultaneous enthusiasm for gasoline-tax holidays and calls for a tough cap on greenhouse-gas emissions (which would mean higher energy prices).

O’Reilly: ‘They can charge whatever they want to charge, correct?’

Last Wednesday, Fox News’ “The O’Reilly Factor” set out to determine why oil and gasoline prices are high (as well as what will happen to Hannah Montana). The show called John D’Agostino, the youngest vice president of the New York Mercantile Exchange and an oil-market guru in his own right. Full disclosure: Fox News, like the Wall Street Journal, is owned by News Corp.

The video segment is not available on the website. But the transcript of the interview is an enlightening window into the extent of populist outrage at Big Oil:

BILL O’REILLY: OK, now look, in my town out on Long Island, gasoline has gone up 75 cents a gallon in about a month, a month and a half. Why now? Why this point in time?
JOHN D’AGOSTINO, FORMER VP OF NYMEX: Well, a couple of things. One is crude oil has been high and stayed high.
O’REILLY: Now, who’s driving that? Is that the greedy sheiks and Hugo Chavez?
D’AGOSTINO: No, no, no, I don’t know about that. What we know for a fact is that we have a weak dollar. We have global demand that’s staying put, no matter how much the price has gone up.
O’REILLY: We had that last year. The demands have gone up globally since last — but let’s — wait a minute. Let’s walk through it so everybody understands what we’re talking about.
OPEC sets the price for a barrel of oil. And they keep raising it and raising it and raising it. Dick Cheney went over there and tried to say, “Hey, give us a break.” They gave Cheney the middle digit. All right? So they can — they can charge whatever they want to charge, correct?
D’AGOSTINO: Well, OPEC sets the supply for what they can produce. The price of oil is actually set in exchange at trades in New York and in London, as well.
O’REILLY: Is there a guy who says $121 a barrel?
D’AGOSTINO: No. There’s a huge market. It’s filled with hedgers. It’s filled with speculators. It’s filled with moms and dads, average Americans. It’s a big market that sets this price.
O’REILLY: Somebody has to put the $125 a barrel on the barrel. Who does it?
D’AGOSTINO: They’re taking it from this market. They’re just like…
O’REILLY: Who is “they”?
D’AGOSTINO: The producers. They’re looking at this, just like when you decide how much a share of IBM is worth. You look at the settlement price in the New York Stock Exchange.
O’REILLY: The CEO of Shell or the CEO of ExxonMobil say, “We’re going to pay $125 a barrel.” Is that what they say? I thought it was the sheiks and Hugo Chavez saying, “We’re going to charge you $125 a barrel.”
D’AGOSTINO: No. They’re all looking to the exchanges or the free markets to set that price point. The free markets right now are saying the price of crude oil is about 120 bucks a barrel. It’s been going up. It continues to go up.

Energy isn’t like the tech bubble, or a bad stock investment, or other markets more familiar to the retail investor. There’s an emotional component that complicates valuation, Mr. D’Agostino says. He says the energy industry needs to do a better job spelling out the basics of why the U.S. is where it is.

Of course, that’s the same counterattack Big Oil has been launching—especially during earnings season—to persuade the public and politicians it’s not a cabal of profiteers. Refiners, in particular, are hard-pressed to convince Americans their earnings are squeezed with gasoline above $3.50 a gallon.

Many congressional Democrats, including Sen. Clinton, are calling for windfall taxes on the oil industry, moratoriums on market speculation, and investigations into how the energy markets work. Sen. McCain’s gas-tax holiday idea contrasts with his half-decade of work crafting ambitious curbs on U.S. greenhouse-gas emissions.

“There’s a very important and thoughtful debate to be had on energy policy,” Mr. D’Agostino told us. “But to get there, there’s got to be a basic level of understanding which just isn’t there yet.” Breaking down the role of hedge funds, speculators, commodity flights and the role of the dollar is like teaching calculus, he says. “Let’s get 2 + 2 down first.”

http://www.cnn.com/2008/BUSINESS/04/30/iran.oil.ap/index.html


Iran dumps U.S. dollar for oil trade


TEHRAN, Iran (AP) -- Iran, OPEC's second-largest producer, has stopped conducting oil transactions in U.S. dollars, a top Oil Ministry official said Wednesday, in a concerted attempt to reduce reliance on Washington at a time of tension over Tehran's nuclear program and suspected involvement in Iraq.

Mahmoud Ahmadinejad, Iran's President, has called the dollar a 'worthless piece of paper.'

Iran has dramatically reduced dependence on the dollar over the past year in the face of increasing U.S. pressure on its financial system and the fall in the value of the American currency.

Oil is priced in dollars on the world market, and the currency's depreciation has concerned producers because it has contributed to rising crude prices and eroded the value of their dollar reserves.

"The dollar has totally been removed from Iran's oil transactions," Oil Ministry official Hojjatollah Ghanimifard told state-run television Wednesday. "We have agreed with all of our crude oil customers to do our transactions in non-dollar currencies."

Iranian President Mahmoud Ahmadinejad called the depreciating dollar a "worthless piece of paper" at a rare summit last year in Saudi Arabia attended by state leaders from OPEC countries.

Iran put pressure on other OPEC countries at the meeting to price oil in a basket of currencies, but it has not been able to generate support from fellow members -- many of whom, including Saudi Arabia, are staunch U.S. allies.
Don't Miss

* Bush pushes 3 nations on nuclear issue
* Iranian official calls Barbie 'destructive'
* Iran to discuss pipeline with India, Pakistan

Iran has a tense relationship with the U.S., which has accused Tehran of using its nuclear program as a cover for weapons development and providing support to Shiite militants in Iraq that are killing American troops. Iran has denied the allegations.

Iranian oil officials have said previously that they were shifting oil sales out of the dollar into other currencies, but Ghanimifard indicated Wednesday that all of Iran's oil transactions were now conducted in either the euro or yen.

"In Europe, Iran's oil is sold in euros, but both euros and yen are paid for Iranian crude in Asia," said Ghanimifard.

Iran's central bank has also been reducing its foreign reserves denominated in dollars, motivated by the falling value of the greenback and U.S. attempts to make it difficult for Iran to conduct dollar transactions.

U.S. banks are prohibited from conducting business directly with Iran, and many European banks have curbed their dealings with the country over the past year under pressure from Washington.

However, the U.S. has been wary of targeting Iran's oil industry directly, apparently worried that such a move could drive up crude prices that are already at record levels.

Iranian analysts say Tehran can withstand U.S. pressure as long as it can continue its oil and gas sales, which constitute most of the country's $80 billion in exports.

http://money.cnn.com/2008/05/01/news/international/usga...stversion=2008050109

U.S. gas: So cheap it hurts
Relatively low taxes have kept pump prices far below most other developed nations, which some say is precisely why the current runup is so painful.
By Steve Hargreaves, CNNMoney.com staff writer
Last Updated: May 2, 2008: 12:18 PM EDT


Most expensive places to buy gas
Rank Country Price/gal
1. Bosnia-Herzegovina $10.86
2. Eritrea $9.58
3. Norway $8.73
4. United Kingdom $8.38
5. Netherlands $8.37
6. Monaco $8.31
7. Iceland $8.28
8. Belgium $8.22
9. France $8.07
10. Germany $7.86
111. United States $3.45

Where gasoline is cheapest
Rank Country Price/gal
1. Venezuela 12 cents
2. Iran 40 cents
3. Saudi Arabia 45 cents
4. Libya 50 cents
5. Swaziland 54 cents
6. Qatar 73 cents
7. Bahrain 81 cents
8. Egypt 89 cents
9. Kuwait 90 cents
10. Seychelles 98 cents
45. United States $3.45
155 countries surveyed between March 17 and April 1, 2008. Prices not adjusted for cost of living or exchange rates.
Correction: Due to data errors, previous versions of these charts were incorrect. The charts have been updated.
Source:AIRINC
gas_pumps.ap.03.jpg
Americans are feeling the pain of spiking prices at the gas pump more acutely than citizens in other countries because they've become acustomed to cheap fuel and large cars, experts say.

NEW YORK (CNNMoney.com) -- Despite daily headlines bemoaning record gas prices, the U.S. is actually one of the cheaper places to fill up in the world.

Out of 155 countries surveyed, U.S. gas prices were the 45th cheapest, according to a recent study from AIRINC, a research firm that tracks cost of living data.

The difference is staggering. As of late March, U.S. gas prices averaged $3.45 a gallon. That compares to over $8 a gallon across much of Europe.

The U.S. has always fought to keep gas prices low, and the current debate among presidential candidates on how to keep them that way has been fierce.

But those cheap gas prices - which Americans have gotten used to - mean they feel price spikes like the ones we're experiencing now more acutely than citizens from other nations which have had historically more expensive fuel.

Cheap gas prices have also lulled Americans into a cycle of buying bigger cars and bigger houses further away from their work - leaving them more exposed to rising prices, some experts say.

Price comparisons are not all created equal. Comparing gas prices across nations is always difficult. For starters, the AIRINC numbers don't take into account different salaries in different countries, or the different exchange rates. The dollar has lost considerable ground to the euro recently. Because oil is priced in dollars, rising oil prices aren't as hard on people paying with currencies which are stronger than the dollar, as they can essentially buy more oil with their money as the dollar falls in value.

And then there's the varying distances people drive, the public transportation options available, and the different services people get in exchange for high gas prices. For example, Europe's stronger social safety net, including cheaper health care and higher education, is paid for partly through gas taxes.

Gas price: It's all about government policy. Gasoline costs roughly the same to make no matter where in the world it's produced, according to John Felmy, chief economist for the American Petroleum Institute. The difference in retail costs, he said, is that some governments subsidize gas while others tax it heavily.

In many oil producing nations gas is absurdly cheap. In Venezuela it's 12 cents a gallon. In Saudi Arabia it's 45.

The governments there forego the money from selling that oil on the open market - instead using the money to make their people happy and encourage their nations' development.

Subsidies, many analysts say, are encouraging rampant demand in these countries, pushing up the price of oil worldwide.

In the U.S., the federal tax on gas is about 18 cents a gallon, pretty low by international standards.

But those relatively low gas taxes make it hard now for Americans to deal with gas prices that have risen from around $1 to over $3 a gallon in the last seven years.

"Everybody pays more, but the U.S. pays more in absolute terms," said Lee Shipper, a visiting scholar at the University of California Berkeley's Transportation Center. If you're already paying $4 in taxes, said Schipper, then an extra $2 a gallon isn't that big of a deal.
Talkback: Tell us what you think

Revenues from Europe's high gas taxes are used to fund a variety of things. One thing they have built is better public transportation, said Peter Tertzakian, chief energy economist at ARC Financial, a Calgary-based private equity firm.

They gave people an alternative to driving, something we don't have in North America," said Tertzakian.

Low fuel taxes and prices sprung out of a national love for mobility going back generations, said Robert Lang, director of the urban planning think tank Metropolitan Institute at Virginia Tech.

In fact, the U.S. could not have had the western expansion it did without the cheap mobility railroads and horse carriages afforded long before it became an auto-obsessed culture, said Lang.

"You couldn't have Manifest Destiny unless you could move," he said.

The automobile, and its promise of personal mobility, only deepened the nation's love affair with travel.

"Nobody sang 'She'll have fun fun fun until her daddy takes the tokens away,'" said Lang. 'It's totally romanticized."

Gas consumption Europe vs. U.S. There is some evidence Europe's high gas tax