OIL at 3 Year Low!!

[Evan Andreou]

I am not sure whether  it was an allegations or truth but I heard about some brain surgeon at SAA that decided it would be a brilliant strategic coupe to hedge by fixing their oil purchase price at $140 a barrel for a year? Ouch ouch ouch!!!

 

True' date=' and we the taxpayer will be paying for it as the gvt will bail them out.

[/quote']

 

This is the same organisation that pays out multimillion rand bonusses to management, and claims they are solvent on various television programmes

[Evan Andreou]

Wolverine' date=' what is absolutely amazing to me is how quick it has taken for the oil price to lose 67% of its value. In July, brent was trading at $150!!

 

What do u think is the outlook for Sasol shares, in the short and long term?

[/quote']

Sasol is a diversified industrial company, although oil is one of their main profit drivers, they have a host of other, albeit secondary, revenue streams in the chemical area.

 

On the short term they should succumb to volatility, if you are looking at 36 months and longer as an investment term, you should be well rewarded for the risk.

[IanC]

Speed Devil

I heard that one reason the petrol price wont drop to previous levels is that the tax component are double to than the time the Oil price were last at $50 per barrel.

[Willehond]

The fact that US and Euroland are heading deep into their winter shortly will increase the demand for oil' date=' which should see an increase in price follow.[/quote']

 

I seriously doubt that, the petrol price is a reflection of current activity as well as future predictions/confidence as oil is traded as a commodity.  It is currently pretty much at expectation.

 

I am currently at a client who produces plastics and other oil based products and THEIR demand has almost collapsed (huge Saudi firm) which means they buy less from the oil companies, which is part of the problem.  Their onsite stock levels have increased so much that they have a YEAR's stock.  Bad news and they are shutting down plants for long turnarounds and maintenance.

 

Consumers and businesses are buying less oil products (raw and processed) and that will keep prices and demand in Europe low.

[nathrix]

 

 

I wish all the oil runs out to be honest! Then we can use our bicycles for everything 

 

This gets my vote for the most stupid post of the year. And its not as if there is a lack of competition for this particular accolade.

 

Nathrix' date=' I would say that your area of expertise is more suited to the posting of smut than it is to economic commentary. Perhaps you should stick to what you do best?

[/quote']

 

Uuhm Harryn...I do not think you have the slightest idee what my expertise are, so do not jump to any conclusions Mr. know it all.

 

I think you'll be quick to change your opinion when oil DO run out in the future, unless we are able to milk another planet for the black gold or in the distant future we are an advanced enough civilization to replace it with something cleaner and/or more economical. I'm NO financial GURU, as I'm sure you are, but haven't noticed any major decrease in the price of consumer goods in the past when the price of oil dropped, but have seen a drastic increase when the price of oil increased. You do not need to be a rocket scientist to figure that one out you opinionated SAINT!

 

And STOP looking at 'smut' and making smutty comments, I don't think you are qualified to distinguish between 'smut' and beautiful woman.

 

You get my vote as 'Saint of the Year'.

 

....keep your accolades for yourself, Harryn!

nathrix2008-12-03 02:45:00

[Evan Andreou]

 "haven't noticed any major decrease in the price of consumer goods in the past when the price of oil dropped, but have seen a drastic increase when the price of oil increased. "

 

 

The problem here is that increasing oil prices are a driver of inflation, leading to higher prices of most goods when oil rises.

When the oil price decreases and eventually leads to lower inflation it unfortunately doesn't lead to decreased prices, merely a slower rate of price rise 

wolverine2008-12-03 02:50:14

[KDEE]

'slower rate of price rise'

 

Well said. Its something that I battle to explain to people. Worked for a major FMCG group for 17 years and we only had one price increase a year, in extreme years ( 2 ), we had a mid year increase on some lines..

 

That price increase took into account many factors that had come before and predictions of what would happen in the year forward..

 

Deep discounts on certain lines if the profitability was there in the year would take place to the retailers as well though..

 

Retailers like PnP, Makro, Spar, Shoprite etc would/will pass on discounts to the consumer that we gave, but they always kept the same margin....

 

[GoLefty!!]

Maybe we have an economist or a brain surgeon amongst us here on the the HUB that can explain why the oil orice can come down to the sme level as three years ago' date=' but that they can't drop the price of petrol/diesel to the same levels at that time.

 

I do agree however that the present oil price is not good news at all for us, and personally hope it does go up a bit soon, as oil, gold and platinum are vrey good indicators of the state of the market.

[/quote']

 

 

An oil price drop does not translate into an immediate drop of fuel price at the pump.

There is a 6 week lag between the purchase of Crude on the high seas and the arrival of petrol or diesel at the retail forecourt, ie Caltex, Shell, Engen, Sasol, Total, Zenex etc.

 

When the oil price drops sharply as it has done then the Oil buy in oil at the higher price but have to sell it at a lower price. This loss is managed by a mechanism called the Slate. To manage what DME owes the OIlco's ie minimise the slate they regulate the fall of the Fuel price to keep the Oilco's losses to a minimum.

Ultimately the money comes form the end user.

 

Since SA does not produce it's own Oil, it has to import oil at thats at a US$ price and not the oil price seen on the TV every night. Thatprice is an average of a barrel of Brent oil. SA does not import Brent, it imports oil from the Gulf states, West Africa and South America. the price of those crudes vary but averages out as slightly higher than Brent due to thesmaller volume purchased, so a small vessel which has a higher cost per tonne than a larger vessel.

 

Retail prices of goods does nto drop because if a high oil price drives prices up, then the market becomes sensitised to a higher price and adjusts their budget.

This affect inflation (if ou look at the correct basket of goods..) which means that for a period of 2-3 yrs the prices stablise due to competition but inflation claws th market back to a managable budget.

 

If you want all this too stop then you need to be in a Socialist to Communist mindset.

If those make you uncomfortable then it'sbest to keep quiet and quit moaning.

 

 

[gianni]

The fact that US and Euroland are heading deep into their winter shortly will increase the demand for oil' date=' which should see an increase in price follow.[/quote']

 

Our petrol prices have been decreasing steadily for the past month and there's talk of a few more cents off because we  (in Ireland) have not seen prices fall as much at the pump as in the rest of Europe.  99c  as opposed to ?1.26+ per litre.

 

With regards to demand, the price usually goes up in the US in summer when more people are driving around as they use gas more than oil for heating in winter.  That's what we see here anyway.

 

Interestingly it seems as if they are slowly changing their ways. I've been hearing that even though prices have dropped form $4-5 to $2 / gallon, people ares till behaving in the same way as during the highs of the prices eg. sharin cars, travelling less etc etc

 

 

[Domestiquehated]

Maybe we have an economist or a brain surgeon amongst us here on the the HUB that can explain why the oil orice can come down to the sme level as three years ago' date=' but that they can't drop the price of petrol/diesel to the same levels at that time.

[/quote']

 

Of the litre price the motorist pays at the pump, some goes to the oil company, some goes to the retailer who owns the service station and the rest goes to the government in the form of taxes and levies.   Now, the first two rates are set by governmant and the pump price itself is set by the government allowing them in effect to determine how much they cream off.  Admittedly some of this money goes toward the Fuel Fund which is used to absorb price shocks. 

 

Anyone in need of fancial advice or alternatively a half price lobotomy?  Actually there is a similarity there, but I won't go into that...

[stumpie]

 

as I said elsewhere  ................. Petrol's come down so the price of bikes and milk will follow suite!!

Can not wait! 

[JPW#]

A friend of my dad can bring in Diesel from Angola for R2/L, and still make  profit, gov is still milking us.

[Tumbleweed]

even lower:

 

Oil prices sank to fresh 3-year lows Thursday in Asia as more bleak news from the world's largest economy signaled that crude could tumble below $40 by the end of the year.
Light, sweet crude for January delivery was down 88 cents to $45.91 a barrel _ the lowest since closing at $45.42 on Feb, 10, 2005 _ in electronic trading on the New York Mercantile Exchange by midday in Singapore. The contract fell 17 cents overnight to settle at $46.79.

[Captain Slow]

 

A friend of my dad can bring in Diesel from Angola for R2/L' date=' and still make  profit, gov is still milking us.

[/quote']

 

That might be true, but the quality is not up to standard and most modern diesel engines can't run with it. They must run on Low Sulphur 50ppm and can use 500ppm only when 50ppm is not available. Hi Sulphur diesel will kill your modern Turbo Charged Diesel Engine!!

 

[GoLefty!!]

A friend of my dad can bring in Diesel from Angola for R2/L' date=' and still make  profit, gov is still milking us. [/quote']

 

 

You may or may not have noticed that Angola produces it's own oil therefore the transport costs for oil is low.

 

Yes SA does have relatively high taxation of finished Fuel, this is mostly on On Road fuels like Petrol and Diesel. the user of the infrastructure pays...

 

Angola does not have those mechanisms in place because they sell oil to the users at a premium which is used to fund infrastructure.

 

You cannont compare Angola to SA. We don;t have oil...

[Dirty Twin]

http://www.moneyweb.co.za/mw/view/mw/en/page1

 

R43.28