Posts by Dimitris Hatzopoulos

21) Message boards : Number crunching : Optimized Rosetta App... (Message 19898)
Posted 7 Jul 2006 by Profile Dimitris Hatzopoulos
Post:
IMHO people with expertise in code optimisation should get in contact with the project directly and obtain the source code.

Doing it akosf style (work on the binary .exe with TurboDebugger) won't be very useful, because the project changes the code very frequently (even the public R@H app, 2 updates per month isn't uncommon)
22) Message boards : Cafe Rosetta : About the price of oil (Message 19881)
Posted 7 Jul 2006 by Profile Dimitris Hatzopoulos
Post:

Feet1st, mentioning oil, you've struck a nerve.

I'll never understand people, why they don't REVOLT against this kind of abuse. After bleeding financially for years and years. How can they possibly believe people who are lying to them in the most blatant and obvious way?


You're expectng logical behaviour there. Which is NOT going to happen in a society that is told by adverisers that the cool vehicle they have to own burns about 80% of a pint of gas each mile it goes.

Hummer Fuel Stats

Look at the 2004 H2 SUV and weep.

Also, (to quote John Lennon) "You say you want a revolution ..." How exactly are we supposed to revolt?


dgnuff, I understand what you mean about the Hummers and it's a sign of our times.

But what really bugs me is that this whole runup in oil price (which incidentally just made new all-time highs today to $75.775/barrel as I'm writing this) is basically a financial game which is now out-of-control.

I will stop here, because oil is not the subject of this thread.
23) Message boards : Cafe Rosetta : About the price of oil (Message 19807)
Posted 5 Jul 2006 by Profile Dimitris Hatzopoulos
Post:
Just in case anybody missed it, today crude oil made new all-time highs (intraday) to $75.4/bar, up 1.8%

On the other hand, natural gas is down -6% today and down -65% since Dec-2005 just made fresh 1.5 YEAR LOWS. Nat.Gas also belongs to the energy complex and its price is historically correlated with crude oil (correspondingly to their respective energy content; a barrel of oil has about six times the energy content of a thousand cubic feet of natural gas). Although they're not perfect substitutes, they're used interchangeably esp. in industry.

In both cases of nat.gas and crude oil, the storage facilities are almost FULL and supply comfortably covers demand. In the case of nat.gas it pressures price downward, whereas oil -having IMO a BROKEN pricing system, as I've explained in detail earlier- price keeps going up and up due to financial inflows for "paper barrels", but producers like Saudi Arabia and Iran can't find buyers for their real "wet barrels" of oil.

And crude oil producers resort to actually cutting production e.g. Saudi Arabia cut production by -400,000 barrels/day (from the 9.5Mbpd level of the past 2yr downto 9.1Mbpd) in Apr-06 citing lack of buyers and Iran leased 2 more VLCC supertankers a few weeks ago, for a total of 9, to use them to store 18 million barrels while looking for buyers. (explained in detail and citing sources in prior posts)

Nat.Gas is now trading at a price equivalent to oil at $35/bar (instead of $75/bar it's right now)



24) Message boards : Cafe Rosetta : About the price of oil (Message 19805)
Posted 5 Jul 2006 by Profile Dimitris Hatzopoulos
Post:
Studer SL, you raised some interesting points, but I wanted to stay on the topic of oil in this thread. I'll be happy to discuss general economic matters and my outlook. (I'll only send URLs to sites with info I think is right)

I'll send a couple of charts here, but if people want to discuss economic matters, we'd better create a new thread for general economic/political issues (perhaps "vote" withthe +/- signs?)

Late credit card payments in USA, as proxy for "distress in the system":


Spending on essentials as % of disposable income:



Basically, watching the trends, it's easy to tell that US is rapidly destroying its middle class and ladders of upwards mobility. IMHO it's being done on purpose, but then I'm heavily biased aginst the current regime, so I may not be totally objective and you should look at the facts and make up your own mind.
25) Message boards : Cafe Rosetta : About the price of oil (Message 19804)
Posted 5 Jul 2006 by Profile Dimitris Hatzopoulos
Post:
Just a quick note that crude oil is back at all-time highs of $75+/bar, rising +1.75% sofar today (session isn't over). Sofar, I don't see real outrage.

Meanwhile today, natural gas (which is substitutable for oil in many application) is at 2yr lows, down -4.5% today, down -65% from Dec-2005 and nat.gas trades right now at a price which would correspond to crude-oil $35/bar (instead of $75/bar).

The past weekend, Saudi Oil Minister gave an interview to a French newspaper, here's some extracts from Reuters story:

Naimi said Saudi Arabia had always worked on market stability "in the interest of consumer countries, producer states and in the interest of the world economy in general".

"There is no doubt that the initiatives taken by my country and by other oil producers, within or without OPEC, will sooner or later return stability to the market," Naimi said.

Naimi said since the beginning of his career in the oil sector, he had never seen as many disagreements and agitation, noting this could partially be explained by a short-term rise in oil prices and "rumours about an assumed exhaustion, limits in excess production capacities and effects on the environment".

"It is preferable to us, government officials, business men and intellectuals, to be realistic, to avoid resorting to intimidation or exaggeration despite what this might accomplish in terms of attention and short-term political advantages."
26) Message boards : Cafe Rosetta : Rosetta Banner? (Message 19757)
Posted 4 Jul 2006 by Profile Dimitris Hatzopoulos
Post:
Very nice, good job.

If I may offer a suggestion: I've tried various "phrasings" and I've had the best results with the catch-phrase:

"Put your PC to work to fight disease"

because "processor cycles" term might not be clear to non-tech users.

27) Message boards : Rosetta@home Science : DISCUSSION of Rosetta@home Journal (2) (Message 19746)
Posted 3 Jul 2006 by Profile Dimitris Hatzopoulos
Post:

BTW: Was that "Internal benchmark" compared with a credited
benchmark program ?
eg: Sisoft Sandra
http://downloads.guru3d.com/download.php?det=177


SiSoft Sandra's integer and floating point benchmarks are optimized to produce the higest possible results. That's all well and good, but it's not REALLY important exactly what numbers Boinc comes up with in it's results, as long as it's reasonably good at linearly giving a score that matches the speed of the machine. If you take the time to optimize the benchmark so that it gives a better score, would it actually give a fairer result? Probably not...


I think by "internal benchmark", DB was referring to a set of calculations (a mini-WU if you prefer, doing e.g. time to perform 10 steps of full-atom-relax of the "1tul" protein vs a reference PC) which will be compiled into the base Rosetta.exe and will be used instead of BOINCclient.exe's own benchmark, so that an fpops-based credits system can be used.

This way credit claims will be more "objective" as it will measure "real" work for the project (although one can always crack the Rosetta.exe and change it, since we're still talking initial-replication=1).

Some BOINC project science apps might fit entirely in L2 cache, whereas others might be more dependant on memory (FSB) speed. In the latter case, a 3GHz and a 2GHz P4 might do about the same "real work" per CPU-hour. Using fpops, will probably cause some differences between points/CPU-hour among BOINC projects.
28) Message boards : Cafe Rosetta : "Is Distributed Computing being Distributed Badly?" (Message 19737)
Posted 3 Jul 2006 by Profile Dimitris Hatzopoulos
Post:
4 years ago, I was told that an RMSD of 4 angstroms was the point where predictions started being useful. Has the point of being useful suddenly dropped to an even smaller RMSD?


I mentioned 1.5A because that was the accuracy for T281 in CASP6 2yr ago, according to R's page accuracy

Also, AFAIK, the resolution of "experimental" (Xray) methods is 1.2-1.3 A
29) Message boards : Number crunching : Report Problems with Rosetta Version 5.25 (Message 19716)
Posted 2 Jul 2006 by Profile Dimitris Hatzopoulos
Post:
I also had FRA_t329* WU crash on WinXP. Perhaps the project should delete them from the queue?
30) Message boards : Cafe Rosetta : "Is Distributed Computing being Distributed Badly?" (Message 19712)
Posted 2 Jul 2006 by Profile Dimitris Hatzopoulos
Post:
Tarx, I found some time over the weekend to go through most of the slashdot conversations (waste of time you will say, but it satisfied my curiosity :-)

You sent some comments from slashdot:
"I'm a guy who was once associated with one of labs/projects mentioned above. I was working on the problem for years, and have a great deal of expertise in the area. I can also tell you that the project is complete and utter crap, from a scientific perspective. The PI routinely misrepresents the project goals, claiming "possible" results that could never, ever come from the type of research performed. In general, the "science" is poorly-conceived and improperly controlled, and most of the "experiments" are methodologically flawed. I can't post my name here...it would be career suicide. As one of the authorities to whom you seem so desperate to appeal, let me assure you: if you are devoting your resources to this project, the world would be a better place if you simply turned your computer off."
Making the assumption (yes, it is a big assumption) that he is right, now I wonder which one he was talking about... I'm lousy at detective work


It's pretty obvious that the poster quoted above was referring to F@H. Whether accurate or not, we can't really tell for sure.

Btw, here is another "Anonymous Coward" who claims the opposite:

"A similar approach, Rosetta@Home, led by the most respected protein folding group in the world, The David Baker Lab, uses an algorithm with is much more likely to yield useable results. Last year they used distributed computing to vastly outperform every other protein folding lab in the world."

In terms of scientific contribution, neither of these projects is really worth a great deal. They're both quite speculative, with long-range benefits, if any.

Still, if you have to give one project the benefit of the doubt, it's Folding@Home. Rosetta may "work" better than other ab initio methods, but that isn't saying a whole lot. Ab initio protein structure prediction is just one step above useless, scientifically. A nice game, good for PR and flashy pictures, but the results are usually dismal.

That said, you can still find value in the methods, but only if they give us some scientific insight as to the process of protein folding. The thing is, Rosetta doesn't do that. It can't. It's a heuristic algorithm, and the best you can possibly ever do with it, is say that you're confident to some probability that a particular prediction may be "correct" (in case you're wondering, this probability is usually quite low).

In contrast, Folding@Home is based on a physical model of the world. It may not work very well at structure "prediction," but it's a much better algorithm for other, more realistically-attainable problems (like small-molecule binding). It's also based on actual physical models, and so there is a chance that it can contribute to our understanding of the basic physics of protein folding.

In short: if you truly want scientific relevance, devote your time to other projects. If you insist on helping this field, however, use Folding@home.

(incidentally: I am a computational biologist who has a PhD in the field.)
src

So there you have another opinion from some anonymous self-proclaimed expert (could be some kid playing with the computer in his mother's basement, as people develop some strange "loyalty" to one project or the other; or even a project person in disguise doing "damage control" against the 1st post you quoted).

Obviously, if R@H manages to do 1.5A RMSD blind predictions for several CASP7 targets this year, then this is hardly "one step above useless", as this guy claims.

On the other hand, if F@H can develop a better method for small-molecule binding than current "docking" (AutoDOCK, LigandFit, THINK etc), it would also be a great achievement.

And then you have the comments from the GlaxoSmithKline guy:

writing that after two years in computational chemistry for what is now GlaxoSmithKline, "I became strongly convinced that computers do not find cures for diseases - or even give you much understanding of illnesses. Molecular modeling is so far from being able to model in vivo molecules that it's practically worthless. ... [W]e already know that trials at this stage are poorly correlated with actual drug usefulness, simulations are just as much a waste of resources as SETI. ... It seems to me that molecular modeling is actually one of those hard 'macho' (but ultimately pointless) projects that gets funding because to criticize it makes you seem anti-drug, anti-therapy and anti-human-progress. (I'm not saying people shouldn't try to model molecules. This is a great blue-sky goal. But people who are trying to find drugs or therapies shouldn't be wasting their time with such techniques.)"


Again, contrary to what the former GSK guy claims, the CureCancer guy from Oxford (doing virtual screening for anti-cancer drugs on grid.org) thought the results were very good by industry strandards.

The screensaver project has produced a large number of 'hits'; molecules predicted to be potential inhibitors of proteins and possible leads for drug discovery. The bottle neck to exploitation of these predictions is the potentially costly synthesis of the compounds and their biological testing.
For two of the series we have passed that stage and the results are very encouraging.
One of the more interesting and challenging targets is the phosphatase.
Much of biology is a balance between phosphatases and kinases. The latter have been important commercial targets for anti-cancer drugs for many years, but the phosphatases have proved more difficult as for one thing the biding site into which the drug must bind is rather ill-defined. The project produced some 128,000 hits for this target. We analysed the results and produced a list of 400 good hits of differing chemical types. These were synthesized and tested. Over 40 [~10%] proved to be genuine inhibitors which is very good by industry standards and what is more they are uncharged molecules which are very different from known inhibitors. We are trying to find pharmaceutical companies to take this further.
For a second series where the target is urokinase plasminogen activator [implicated in prostate cancer] we have again had hits synthesized and tested, this time by collaborators at the Arizona Cancer Center. This too has produced encouraging novel active compounds . These results were presented at the American Association for Cancer Research and a poster giving details is being put on the Oxford Chemistry web site


So, the Oxford guys found value in virtual screening using "docking" software to narrow-down the potential small-molecules (drugs).

Confused? Discouraged? Lots of tough questions, if you genuinely care about the science, rather than credits... Not even to mention things we clearly understand, like excessive redundancy of some projects, wasting so much of volunteer resources for no good reason... DC isn't "free", the difference is an additional eur140/yr per P4 24/7 (in my case).

PS: And to loosely quote some frustrated guy at grid.org's forums, "if all life-science projects work as well as this one [grid.org]", then SETI is probably the most likely one to yield results :-("
31) Message boards : Cafe Rosetta : About the price of oil (Message 19587)
Posted 30 Jun 2006 by Profile Dimitris Hatzopoulos
Post:
To answer Beethoven's question, What I would like people to do to get this chaged:

Write to your regulators / legislators / representatives. Surely there must still be a few honest men among them, who care for people's interests. They can't all of them have sold you out, can they?

Take the "investors" who are pouring $$$ in oil "paper barrels" out of the picture. Demand that anyone dealing in oil for over a certain threshold, must be involved in the physical market.

The price mechanism for oil is broken and the market is cornered. One way to immediately solve this crisis, is to abolish the current pricing system and go back to nation-to-nation contracts. If Saudis say they see no reason why oil should be trading over $50 (see statement 2 days ago), use that price as a start.

There are other options, I get more technical in the links:
http://dhatz.blogspot.com/2006/06/oil-to-38657-per-barrel.html
http://dhatz.blogspot.com/2006/06/oil-price-marginal-barrel.html

This IMHO is NOT a problem which can be solved by reducing demand/consumption or increasing supply (drive less, drill ANWAR) for PHYSICAL, real "wet barrels" of oil (unless we're talking adding 10Mbpd in spare capacity for LSC which can't happen overnight). There is ALREADY a enough real oil to meet demand, the producers can't find buyers for it (not just now, but for some time, S.A. cut -400Kbpd, Iran is leasing VLCCs to store it while looking for buyers). Producers are pumping LESS than what they did 1-2 years ago as they have no buyers, you read about it everyday and yet price is driven up at the "paper barrel" financial trading level.

Remember that the biggest part of US' trade deficit is due to oil imports. And you're paying for it by selling out your country's "silverware", i.e. selling toll-roads, ports, companies etc.

If it were a REAL supply/demand crisis situation, where countries were outbidding eachother for the last few drops of oil, it might have been a "necessary evil" to sell out your country's silverware to pay for it. But always remember that THERE ARE NO REAL BUYERS FOR PHYSICAL OIL IN THE REAL WORLD and this situation exists so that very few people can make even more obscene profits!


PS: As I'm writing this, oil is back near all time highs, over $74/barrel!
32) Message boards : Cafe Rosetta : About the price of oil (Message 19585)
Posted 30 Jun 2006 by Profile Dimitris Hatzopoulos
Post:
I'm copying over some discussions from SETI forums:

Um, I don't understand what you mean by the people should "revolt". Do you mean demonstrations at the refineries? Protests in the streets?


I'm not talking about refineries or BigOil. Ofcourse they're profiteering off a broken pricing mechanism and pretend all is well and are shedding crocodile tears about how sorry they are.

I mean to change the BROKEN mechanism used to set the price of oil, off the price of derivatives whereas there is no real link between derivatives and physical. Isn't it obvious?

When you have even the #1 exporter of oil in the world tell you BLUNTLY that oil should be selling for no more than $50 (see yesterday's Reuters story) and now it's 50% higher, just what more do people need?

If we were talking about the market for apples instead of oil barrels, and you saw the price go up and up and at the same time the producers tell you can't sell their apples, wouldn't you think the market is "broken"? Why don't people do the same for oil?

Apparently people have the misconception that international "open markets" set the price for oil, but due to technical aspects -explained earlier- the oil derivatives markets are neither free nor fair. They're cornered, but unlike a similar situation that might happen in a piece of paper i.e. stock, oil is a basic commodity which everyone HAS to buy and it's getting awfully expensive!


Um, I'm not disagreeing with you at all, Dmitri. <kindly said>

I'm just asking about the "How" of it all. What would you like people do to get this changed?

Best regards.


Edit: P.S. I'm seeing the price disconnect at the supermarket every day, on apples and other products. There's a complete disconnect there too. Prices are based solely on demand monitored in real time by the retailers' computers. Only a drop in demand succeeds in lowering prices. These new price disconnects we're seeing are a feature of new computer-enabled business savvy in many fields, I think.

33) Message boards : Cafe Rosetta : "Is Distributed Computing being Distributed Badly?" (Message 19555)
Posted 30 Jun 2006 by Profile Dimitris Hatzopoulos
Post:
Of course as anonymous can't tell who wrote what, so perhaps this other comment is from the same person, or maybe not... (in response to the question Is "Human Proteome Folding" the same as Folding@Home, the one run by Stanford?)
"They are competitors. Or rather... "Human Proteome Folding" would like to compete, but haven't been able to. Just look at the amount of _hard_ results coming out of Folding@Home in the form of scientific papers and your choice is easy. The "Human Proteome Folding" project claims they are heading into "phase2", yet haven't published any real results public journals.
Yes, I'm in the field, but no, I'm not related to the Pande group, but I find their recent work _very_ impressive scientifically."


It's not so hard to form your OWN opinion about the various projects and what exactly they do.

The best way would be to read the papers published from the various projects.

A lot of stuff posted in the slashdot is misinformation. Also, many people CONFUSE POPULARITY WITH SCIENTIFIC MERIT / VALUE (remember the phrase "millions of flies can't be wrong; eat sh*t").

As for project comparison in layman's language, IMHO the best info is in Differences between protein projects and also mine in dc-projects
34) Message boards : Cafe Rosetta : "Is Distributed Computing being Distributed Badly?" (Message 19502)
Posted 29 Jun 2006 by Profile Dimitris Hatzopoulos
Post:
Feet1st, mentioning oil, you've struck a nerve.


Dimitris, I hope you didn't take my carberator reference personally. I didn't intend for it to be a reference to your thread in the cafe. Your analysis goes beyond the guy asserting that such a carberator exists and is being suppressed. I didn't mean to go off-topic. I think we should leave the oil discussion to the cafe.


Nono, ofcourse I didn't take it personally.

I guess oil going back to all-time (nominal) highs today made me a bit upset and I had to get it off my chest.
35) Message boards : Rosetta@home Science : Genetic algorithms and rosetta@home (Message 19497)
Posted 29 Jun 2006 by Profile Dimitris Hatzopoulos
Post:
One of the problems with using something like a GA in Rosetta@Home is communication. While it's plausible to have each computing node with an independently evolving population of structures, that process is limited by the number of structures that can be constructed on that single node in a reasonable amount of time. The most straightforward approach to adding this information would be prohibitively expensive in terms of communication, especially when we consider the number of users that we have on intermittently active or slow connections.


I hope that one day soon, the trickle-up, trickle-down facility of BOINC could be used to achieve what you described.

As far as frequency of communication, I'm sure that many people with permanent Internet could easily contact every e.g. 2hr (0.1day)
36) Message boards : Cafe Rosetta : "Is Distributed Computing being Distributed Badly?" (Message 19480)
Posted 29 Jun 2006 by Profile Dimitris Hatzopoulos
Post:
...yet they seem MORE then willing to ask everyone to band together and NOT buy gasoline on ONE day next week... and they think this will lower the gas prices. Meanwhile they floor the accelerator when the light turns green and get it up over the speed limit in a block so they can slam on their brakes for the next red light which was clearly visible from the first. And they complain about the corporate conspiracy to NOT make cars that get better mileage. And how the oil companies have the auto companies on their payroll. Hey look, if there really IS a carborator out there that makes a car get 100MPG... and you know about it... then SELL IT! Don't keep it to yourself! ...and if you really don't have any first-hand knowledge of such... then shut up.
[dismount soapbox]


Feet1st, mentioning oil, you've struck a nerve.

I'll never understand people, why they don't REVOLT against this kind of abuse. After bleeding financially for years and years. How can they possibly believe people who are lying to them in the most blatant and obvious way?

When you have even the oil producers themselves (who are benefitting from this) tell you bluntly that oil should be costing under $50 and yet your OWN COUNTRY'S (U.S.A) BROKEN, CORNERED MARKETS make it trade almost 50% higher at $73.5 (at all time high) just so the profiteers of the ruling elite can enjoy DECADES worth of profits in a few years?

e.g. yesterday from Reuters:

Saudi cut shows record oil defies market logic
Wed Jun 28, 2006 11:58am ET167

LONDON (Reuters) - Oil power Saudi Arabia has offered the most compelling proof yet that record high prices are divorced from the realities of supply and demand.
...
"There is absolutely no relationship between price and supply and demand," Saudi Oil Minister Ali Al-Naimi noted. He told pan-Arab newspaper Al Hayat in early June that crude oil was worth no more than $50 a barrel based on fundamentals.
37) Message boards : Cafe Rosetta : "Is Distributed Computing being Distributed Badly?" (Message 19426)
Posted 28 Jun 2006 by Profile Dimitris Hatzopoulos
Post:
Thanks, it was a very interesting discussion (I 'll take some time later today to read it all).

Apparently, many people are negative about health / life sciences projects, as they think they're donating to enrich BigPharma. This attitude is very common.

Also, for the majority of people, after some point it's all about points, as apparently the science is over their heads. In that regard, I think Rosetta is probably unique, in that one can easily understand what one's PC is doing.

Also some projects exaggerate relevance to cures, to attract more crunchers, which I find a bit dishonest.

IMO, SETI isn't a "waste". But it proved to be so popular, that they had to crunch every WU multiple times and I consider THAT to be a waste. They've created a truly wonderful thing, with BOINC and with encouraging their huge audience to join other projects.
38) Message boards : Cafe Rosetta : About the price of oil (Message 19403)
Posted 28 Jun 2006 by Profile Dimitris Hatzopoulos
Post:
Last week, Iran leased 2 more VLCCs (Very Large Crude Carriers, oil super-tanker ships)for oil storage, claiming lack of demand for heavy, sour crude. With now 9 vlccs, have storage capacity for 18.3 million barrels. (As per latest issue of OGJ.)

So, there is a GLUT of heavier crude oils, a GLUT of nat.gas (they couldn't find where to store it anymore and plunged in price -65% since Dec-05)

And the only "demand" is for light sweet crude oil via "paper barrels" of the futures markets (derivatives). As "traditionally" all crude oils are priced off those futures "paper barrels" benchmark, it causes the entire price chain to spike yet, despite the world being awsh in "wet barrels" of oil.
39) Message boards : Cafe Rosetta : About the price of oil (Message 19399)
Posted 28 Jun 2006 by Profile Dimitris Hatzopoulos
Post:
What can be done?


In my blog I offered several ideas:

"So, from the lack of real action for 3+ years now, e.g. no additions of refinery capacity for the heavier types of oil, or expanding the types of futures contracts traded, or adding risk to holding speculative longs by randomly selling e.g. 30Mb from SPR (instead of letting momentum funds front-run mindless price-insensitive buying for filling of US SPR during 2002-2005), or even suggesting that we go back to nation-to-nation contracts, I can only conclude there is some hidden agenda behind accepting the broken price discovery mechanism in oil market today"

There's tons of explanations of why the price is so high and won't come down. Listening to the radio, or reading the paper, I gather that the 'glut' of storage oil on the market has now affected OPEC so badly that they're storing oil in old tankers (and running out of them!). They're looking (begging) for people on the open (spot) market to buy oil.


Indeed, there is a glut of real "wet barrel" oil, yet price remains stratospheric at $72.2 a bit down from all-time-highs of $75. Basically IMHO it's a broken pricing mechanism, which leads to the paradox where oil keeps going up in price (supposedly on surging demand) and yet producers can't find buyers for REAL "wet barrels".

Inflation, inflation everywhere!


Inflation is evident everywhere but the governments' statistics and wages.

Pretty soon, the producers are going to have to start ramping back, correct? And when that happens, the price IS gonna be pretty much set in stone, correct?


The producers ARE cutting back, as they have nowhere to store it (why pump it up?). Wrt price, not really, it all depends on how long this broken system will persist.

Most of the charts and articles you've referenced here reflect the month of April, and they mostly talk about the Western world (specifically the US). What's going on in China? And to a lesser extent, India? Things haven't changed much in three months. It's such a fast changing world, too.


Charts are same-day as posts. Articles, I gather over the Web and may be weeks/months old. Doesn't change much, the real market picture is the same for the past 1.5yr

I'm not an economist, but I would say those "orange" people have something to do with whats going on, too! Maybe these 'speculators' ain't so happy that the world is going flat without them?


I'm afraid I don't understand what you mean "orange people"?

Another interesting thing is that the European price for fuel has always been a lot higher than the US. I remember paying something like 4.50 a liter in Italy 10 years ago. Is that right?


The difference in EU is due to taxes. I'm talking about CRUDE OIL in my articles, not the refined products (gasoline etc).

So, my question is what mechanism could you use to artificially inflate the price of light sweet crude and sustain it, in order to develop new technology that will in the end, defeat it? And to further aggravate the question, who would be developing the new technology? Hate to be an outsider holding on to a bunch of light sweet crude when that happens, but either way, someone is always living behind a dumpster at a 7-Eleven.


Well, one COULD use today's method, i.e. take advantage of the broken price discovery mechanism in crude oil to artificially inflate its price.

But it's like shooting oneself in the foot.

If governments want to reduce our exposure to foreign oil and/or go "greener" (more environment friendly), they can simply TAX the product. e.g. put a $3/gallon tax on gasoline to drive it to $6/gallon. It would force consumers to use less and opt for more efficient vehicles etc etc.

Instead nowadays it's ruining our trade balance. Because 500-600bn/yr goes to oil exporters.

It really makes no sense to me why this situation persists so long and why sheeple haven't revolted yet.
40) Message boards : Cafe Rosetta : About the price of oil (Message 19366)
Posted 27 Jun 2006 by Profile Dimitris Hatzopoulos
Post:
More stuff posted in the mainstream media about this. Basically, I think everyone who has done his homework knows the oil price spike is due to "investor" demand.

As long as -due to small spare world production capacity for THOSE PARTICULAR CRUDE OIL TYPES- investors control the "marginal barrels" of the oil type used for physical delivery in futures (light sweet crude), they can set price to just about anywhere.

The question is whether something ought to be done about this bleeding of ~$500-$600bn/year from western nations into the hands of oil producers (at current prices it's going to be even more).

Bhushan Bahree and Ann Davis wrote in WallStreetJournal in Apr-06 (source):

Crude oil closed above $70 a barrel for the first time, highlighting a phenomenon reshaping the petroleum world: investment flows into oil futures are supplanting nitty-gritty supply-and-demand data as prime drivers of prices

In contrast to past bull markets in crude, this year's run-up has occurred even though oil inventories in the U.S., the world's largest market, have swelled to their highest levels in nearly eight years....

The answer to the puzzle posed by rising prices and inventories, industry analysts say, lies not only in supply constraints such as the war in Iraq and civil unrest in Nigeria and the broad upswing in demand caused by the industrialization of China and India. Increasingly, they say, prices also are being guided by a continuing rush of investor funds into oil markets. Institutional money managers are holding between $100 billion and $120 billion in commodities investments, at least double the amount three years ago and up from $6 billion in 1999, says Barclays Capital, the securities unit of Barclays PLC....

Since early 2005, the crude-oil market is in what traders call contango, meaning futures contracts for a given product are priced higher than that same good for near-term delivery. The price of oil to be delivered four months from now is about $3 more than oil to be delivered next month.
Flooded oil storage near Port Arthur, Texas
oil_storage2.jpg

In short, it pays for refiners and other oil-market players to buy and hold oil now to sell it down the road. Making that trading opportunity possible, says Colorado-based oil analyst Philip K. Verleger, is the huge volume of new buyers on the other side: investors who he estimates have put more than $60 billion into U.S. crude-oil futures since 2004.

Indeed, San Antonio-based Valero has been operating with its crude tanks full since the start of the year. When the market is in contango, "you tend to operate at the top of your tanks," says Bob Beadle, Valero's senior vice president in charge of crude oil, supply and trading. Mr. Beadle estimates that in the U.S., the difference between the industry operating at full tanks and at minimum operating levels amounts to as much as 75 million barrels of oil, or about three days of supply.


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