WM - $81,000 combined household income for a 2 child family is not exactly swimming in cash.
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WM - $81,000 combined household income for a 2 child family is not exactly swimming in cash.
That is clearly not true. Petrol taxes are *much* higher for example in Europe than here in NZ, while in the US petrol taxes are lower still. There is a cool site below that lists pump prices across the world as at dec '06. Cheapest was Turkmenistand and Venezuela at 2 and US3c per litre (i.e. very heavy govt subsidies), most expensive is Norway and Iceland at 1.85 per litre. The estimated pump price free of Govt. distortions is US53c, NZ prices at the time was 98c.
http://www.gtz.de/en/themen/umwelt-i...port/10285.htm
[QUOTE=skinny;169459]That is clearly not true. Petrol taxes are *much* higher for example in Europe than here in NZ, while in the US petrol taxes are lower still. There is a cool site below that lists pump prices across the world as at dec '06. Cheapest was Turkmenistand and Venezuela at 2 and US3c per litre (i.e. very heavy govt subsidies), most expensive is Norway and Iceland at 1.85 per litre. The estimated pump price free of Govt. distortions is US53c, NZ prices at the time was 98c. End quote.
Skinny,our addidiction to oil is probably so great that small price increases will have little effect,especially when no alternative public transport is available. It seems we will go without most things than lose our independence for travel.Just increasing taxes without other means of getting around will only bring more money to the treasury and solve nothing .
However a large jump in prices will have the effect that we will see in the near coming future. The sh-it will hit the fan.My quess is we have 4.5 years left to squander this valuable resource before we hit the geology limit from which there will be no escape.
Its hard to know the geology limit when new technologies enable drilling deeper and further and further offshore
Given exponentially growing demand for oil any new technologies would have to be fabulous to keep up. Such talk is reminiscent of the German belief that super-weapons would win the war for them while the Russians were marching on Berlin.
from Bloomberg:
Oil Rises Above $89 to a Record as Dollar Drops Against Euro
By Mark Shenk
Oct. 18 (Bloomberg) -- Crude oil rose above $89 a barrel in New York for the first time after the U.S. dollar declined to a record low against the euro, enhancing the appeal of commodities as an investment.
Investors purchased oil on speculation the Federal Reserve will cut borrowing costs to bolster the U.S. economy. Oil reached records the past four days on concern Turkey will use military force against Kurdish rebels in northern Iraq, a step that the U.S. says may damage Iraqi security and disrupt oil supplies.
``The further decline of the dollar sent the oil price higher as the day went on,'' said John Kilduff, vice president of risk management at MF Global Ltd. in New York. ``There's a round robin of bullish elements at play. The realization that prices will hit $100 a barrel is seeping into the market.''
Crude oil for November delivery rose $2.07, or 2.4 percent, to settle at $89.47 a barrel at 2:51 p.m. on the New York Mercantile Exchange. It was a record close. Futures reached $89.78, the highest price since trading began in 1983. Futures are up 55 percent from a year ago.
On Oct. 15, prices passed the previous all-time inflation- adjusted record reached in 1981 when Iran cut oil exports. The cost of oil used by U.S. refiners averaged $37.48 a barrel in March 1981, according to the Energy Department, or $84.73 in today's dollars.
Brent crude oil for December settlement rose $1.47, or 1.8 percent, to $84.60 a barrel on the London-based ICE Futures Europe exchange. It was a record close. Futures touched $84.80, the highest since trading began in 1988.
Turkish Measure
Turkish legislators passed a measure yesterday that allows Prime Minister Recep Tayyip Erdogan to authorize one or more military assaults within a year. Erdogan is threatening to direct an attack against members of the Kurdistan Workers' Party, or PKK, saying U.S.-led forces failed to control about 3,500 militants sheltered in Iraq's north.
``It doesn't look like anything is imminent but it does make the situation more unstable,'' said Peter Beutel, president of Cameron Hanover Inc., a New Canaan, Connecticut, energy consultant. ``As we have seen, giving politicians permission to attack normally leads to an attack.''
Iraq holds the world's third-biggest crude-oil reserves, after Saudi Arabia and Iran, according to BP Plc. Iraq's oil-rich northern region is controlled by a semi-autonomous Kurdish administration. Kirkuk, the center of the region, is about 100 miles (161 kilometers) from the Turkish border.
``There are plenty of bullish geopolitical headlines,'' Kilduff said. ``Yesterday we had Bush's World War III comments and the Turkish legislation.''
World War III
President George W. Bush said yesterday a nuclear-armed Iran risks World War III. He added that the U.S. and Russia remain in agreement that Iran shouldn't gain a nuclear weapon. The dispute over Iran's nuclear program has raised the prospect of a decline in shipments from the country, the fourth-biggest oil exporter.
``Most commodities are priced in the U.S. dollar, so the drop on the dollar has an immediate effect,'' Beutel said. ``The price in dollars needs to go higher to reflect the true value of the commodities.''
A lower dollar makes oil relatively cheaper in the countries using other currencies. In U.S. dollars, West Texas Intermediate, the New York-traded crude-oil benchmark, is up 46 percent so far this year. Oil is up 35 percent in euros, 40 percent in British pounds and 42 percent in yen.
Members of the Organization of Petroleum Exporting Countries have said a falling dollar justified higher prices because oil- producing countries sell oil in dollars and often buy goods in euros. Algerian Oil Minister Chakib Khelil said on Oct. 15 that the increase in crude oil prices is helping Algeria recoup losses from the falling value of the U.S. currency.
Higher Output
OPEC agreed last month to produce an extra 500,000 barrels a day starting Nov. 1 to meet rising demand. World oil consumption peaks in the fourth quarter when refiners make heating fuel for the Northern Hemisphere winter.
``What they did a month ago is too little, too late,'' former Saudi Arabian oil minister Sheikh Ahmad Zaki Yamani said at a London conference organized by the Centre for Global Energy Studies, which he chairs. More OPEC oil is needed ``to reduce tension in the market as we approach winter.''
The profit margin, or crack spread, for turning crude oil into fuels fell 11 percent to $4.6184 a barrel today, the lowest since Oct. 31, 2006, based on closing futures prices in New York. It rose to $30.479 on May 17, the highest since at least 1989.
Heating oil for November delivery rose 3.04 cents, or 1.3 percent, to $2.3493 a gallon in New York, a record close. Futures touched $2.3609, the highest intraday price since trading began in 1978.
Gasoline for November delivery increased 3.85 cents, or 1.8 percent, to $2.1851 a gallon, the highest close since July 19.
Crude Oil Rises to Record $90 After Dollar Drops Against Euro
By Gavin Evans
Oct. 19 (Bloomberg) -- Crude oil rose to a record $90 a barrel in New York after the U.S. dollar fell against the euro, enhancing the appeal of commodities as an investment.
Investors purchased oil on speculation the Federal Reserve will cut borrowing costs to bolster the U.S. economy when the bank next meets Oct. 31. Interest-rate futures show a 70 percent likelihood the Fed will lower its target rate for overnight loans a quarter-percentage point to 4.5 percent.
``There's still no end in sight in terms of what people are willing to pay,'' said Bob Frye, commodity broker at Access Futures & Options Trading in Woodlake, California. ``With the weakness in the dollar'' we may get to $96 if prices stay much above $90, he said.
Crude oil for November delivery reached $90.02 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $89.56 at 8:07 a.m. in Sydney
The contract rose $2.07, or 2.4 percent, to $89.47 yesterday, a record close. Futures reached $89.78, the highest price since trading began in 1983.
Oil futures set records the past four days on concern supplies from northern Iraq may be disrupted if Turkey takes military action against Kurdish rebel bases in the region.
``There's a round robin of bullish elements at play,'' John Kilduff, vice president of risk management at MF Global Ltd. in New York, said yesterday. ``The realization that prices will hit $100 a barrel is seeping into the market.''
Brent crude oil for December settlement rose $1.47, or 1.8 percent, to $84.60 on the London-based ICE Futures Europe exchange yesterday. It was a record close. Futures touched $84.80, the highest since trading began in 1988.
To contact the reporter on this story: Gavin Evans in Wellington at gavinevans@bloomberg.net
Last Updated: October 18, 2007 18:12 EDT
If NOG locked sales in at the current oil price (forward contracts) then the SP would more than likely be rerated. If they gamble that the oil price will stay high then the NZO SP will continue to under perform others in the same industry.
Its simple. Lock in the cashflows please.