Ready for $70 oil?
Posted May 6th, 2008 by jzneff
output
It's maddening to read all these articles that have analysts predicting $200 per barrel oil in 2008. The reality is, it's not going to happen.
I know this won't ring true to the "sky is falling" crowd, but get ready to see a steady DECLINE in the value of oil...due to several reasons.
1) The dollar is going to begin deflation...I said it...deflation. The reason being the amount of capital lost in the housing bubble is pure capital lost...the value is destroyed...likely several trillion dollars worth of value. The fed got in front of this deflation with some easy money, but it will deflate regardless.
2) The price of oil is rising only on speculation...global oil supplies are up, and global oil demand is down from 2007. Supply goes up, demand goes down, price should go down. It's speculators that watched the meteroic rise from $25 to $75 who only assume oil will continue to go up...it won't in the near future. Look at the recent spikes in crude...they aren't related to supply, but "terrorist" attacks in Nigeria and the Turkish/Kurdish nonsense. Those issues are temporary and the snap back will occur quickly.
3) OPEC is madly overproducing. They know that $120 oil isn't sustainable to their business...in short they know that the market will find alternatives to crude if the price stays there. $70 oil is a very clear line...it's where tar oil, shale oil, and coal oil begin to become competitve. OPEC does not want the American market to develop infastructure, and they'll take less money to keep their cash cow sustainable. Look at the member nations...every one is producing well over their agreed upon limit.
This should begin with a peak around end of May or early June...begin to fall after that throughout the summer. You'll see a small peak again around labor day and then the real bottom will fall out post September. I'm sure you'll all blame election politics, but either way we'll all be happy to pay $2.45 at the pump.
What really is great to hope for is all the speculators that have pumped money into the oil market are going to lose big....right now the $120 price is being held together with string...random acts of terrorism, global insecurity, and worthless economic pundits playing follow the leader.
When the whole world is doing one thing...it's normally profitable to do the opposite. Short-sell oil, blow your broker's mind, and make some quick $$$ in the process.
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Sounds reasonable...
I think you are right on for the most part. I can really do little but parrot Peter Schiff when it comes to macroeconomics (everyone should read Crash Proof if they haven't already!), but from what I know it is definitely speculation mixed with inflation that is driving up the price of oil right now. I think you are right, the speculative bubble for crude will pop at some point in the future (no idea when), and gas prices will drop significantly. However, I think that there is still an uptrend in oil prices over the course of the next several years. (not saying that you don't know this, I'm sure you do)
Speculation is making crude disproportionately expensive right now, but heightened inflation is still going to drive the price upwards even after the bubble pops. Will it be as rapid as what we are seeing now? Probably not, but I really don't know enough to predict with any sort of accuracy what will happen with the USD as far as hyperinflation, deflation, etc. are concerned. I think foreign investors will have a lot to do with which way the dollar goes.
Yes
Yes I am ready for $70 oil.
I hope you are right.
I admire your tenacity for sticking to your guns. LOL.
I hope so too
Nothing has really happened that would go against what i've been saying, the ceiling is a little higher than I predicted...but I still wasn't saying any unwinding would occur until next week or the week after.
The US free market is about to show them what the summer driving season will be like when gas is $4 a gallon. I've already stopped driving any more than necessary to get myself to work and back. My wife's Explorer is starting to gather cobwebs. I let my lawn get 4 feet high, because I couldn't stomach cutting it (luckily, I live in the boonies, so no neighbors to complain).
Our individual decisions are going to cut our gas consumption slightly, and the rest of the world will have a more dramatic pullback. You couldn't sell a used pickup right now, and RV lots are going under. Boats are growing barnacles because no one is driving them. This will be the first Memorial Day in half a decade with less cars on the road than the year before.
$12 gas?
This is the worst prediction that I've heard so far.
http://www.businessandmed...
On a side note. I bought a 55 gallon drum and filled it with off road diesel yesterday.
Utter nonsense
It won't get to $12 per gallon for many decades. To get there, you would have to have crude at $500 per barrel (give or take). That would mean that at present consumption levels, we would be spending 42 billion dollars per day on crude, that's 15 trillion dollars per year. There really isn't money out there to sustain that kind of price.
Unless
Unless, of course, the Fed continues to devalue the dollar, which it will.
With hyper-inflation, the dollar value essentially becomes meaningless. So not only might we have $12 per gallon gasoline, we might have $12,000,000 a gallon gasoline. They do in Zimbabwe.
I'm with you
Of course...this is the path we are headed towards. It's going to take more time and more horrible decisions to get us to this point.
Hyperinflation won't occur unless one of two things happen
1) The Fed gets the printing press running very fast...to the tune of trillions of dollars per month
2) Our economy absolutely crashes...and I mean crash. Well beyond what 1929 looked like or anything that's happened since.
The scare of the Chinese dumping the dollar isn't enough pressure to cause hyperinflation...inflation, yes, recession, yes...
We are not past the point of no return...no one knows how far off it may be but it's time to get our path righted before we get there. Dr. Paul and his movement are our last chance to correct our course before we have to resort to Paulsen's 17% interest rates. We can correct this thing before it gets too bad.
hmm
Maybe a RP community can move to Zimbabwe? How are the winters there? How much violence is there in that local? Wonder what the cost of a firearm or a pack of smokes costs there compared to a gal of gas?
Speculators
This is where the new money created by the fed is going. It has to go somewhere. Now it is creating a commodity bubble which of course hurts low and middle class workers the most.
Of course I don't agree with the proposed solutions because they fail to attack the problem which is money created out of thin air. End the Fed!
http://www.latimes.com/bu...
From the Los Angeles Times
Are commodity traders bidding up food, fuel prices?
A Senate panel warns the markets' regulator to rein in speculators.
By Elizabeth Douglass, Nicole Gaouette and Richard Simon
Los Angeles Times Staff Writers
May 21, 2008
The record-shattering run-up in energy and food prices has put investors who buy and sell such things on the hot seat -- so hot that some in Congress on Tuesday threatened action.
"The American people are about to take out pitchforks" because of the cost of groceries and gasoline, Sen. Claire McCaskill (D-Mo.) said during a Senate hearing on whether commodities are being pushed higher by investors' high-stakes bets that prices will keep going up. Given the uproar from consumers, McCaskill warned an official from the U.S. Commodity Futures Trading Commission, "if you don't do something, Congress will."
Such strong words came on another record day for oil prices -- which flirted with $130 a barrel -- and as drivers in many states prepared to pay more than $4 a gallon for gasoline on Memorial Day trips.
Sen. Joe Lieberman (I-Conn.), who chaired Tuesday's hearing before the Homeland Security and Governmental Affairs Committee, said that commodities trading by pension funds and other institutional investors has risen sharply. He noted that investment in index funds tied to commodities has grown twentyfold to $260 billion in the last five years.
"This unbridled growth raises justifiable concerns that speculative demand -- divorced from market realities -- is driving food and energy price inflation and causing a lot of human suffering," Lieberman said.
Much of the focus has been on the stunning rise in the cost of crude oil, which has rocketed up by more than $40 a barrel since early February and closed Tuesday at $129.07, up $2.02, in New York futures trading. But similarly spectacular jumps have hit the prices of gasoline, diesel, heating oil, corn, wheat and gold.
The link between soaring prices and the vast sums of money flowing through commodity markets is controversial and hard to quantify.
Economists, traders and regulators routinely dismiss the notion that excessive trading is the culprit instead of traditional market forces such as supply and demand. And they warn that increased regulation could interfere with trading programs used by airlines and others to blunt the negative effects of rising commodity prices.
Jeffrey Harris, chief economist at the Commodity Futures Trading Commission, told lawmakers Tuesday that the high prices reflected increased demand from emerging markets and decreased supply because of bad weather or geopolitical events.
Harris and others also pointed to broader economic factors such as the sinking value of the dollar, which has made commodities traded in the United States a relative bargain for foreign investors. Commodities also have recently offered more certain returns than the stock market.
"Together, these fundamental economic factors have formed a perfect storm that is causing significant upward pressure on futures prices across the board," Harris said.
Such explanations are less than soothing in the face of the unprecedented price hikes, which have alarmed consumers and politicians and yielded unusual alliances.
A nationwide group calling itself the Energy Market Oversight Coalition hopes to persuade Congress to rein in commodity speculation. Its members include consumer advocate Public Citizen, municipal utilities, convenience store and truck stop operators, a steel makers trade group and retailers that sell heating oil, wheat, barley and gasoline.
"Frankly, our industry and consumers are under siege right now," said Shane Sweet, chief executive of the New England Fuel Institute, a trade group for heating oil distributors that helped organize the coalition.
The coalition runs a website, www.closetheenronloophole..., that urges Congress to eliminate a provision pushed by energy trader Enron Corp. that in 2000 cleared the way for energy trading outside the purview of regulations governing activity on the New York Mercantile Exchange. Much of the world's energy trading still takes place through the Nymex, but a growing share flows through thinly regulated electronic systems that critics call "dark markets."
The farm bill that Congress is sending to President Bush includes a measure that would close that so-called Enron loophole, increasing federal oversight of energy trades. The effort took five years to get through Congress and is a clear sign that re-regulating some energy markets now has much broader appeal.
Rep. Joe L. Barton of Texas, the top Republican on the House Energy and Commerce Committee and influential among his fellow GOP lawmakers on energy issues, said in an interview that he supported efforts to rein in energy trading.
"I don't think there's any question that speculators in the oil markets have taken prices higher than they would be otherwise," Barton said. "I think there ought to be new rules."
Barton, Lieberman and others have said they would draft legislation that would restrict commodity investments by large investors and close a loophole that allows speculators to avoid investment limits. A separate provision embedded in the Senate Democrats' energy bill would ensure that foreign exchanges using trading terminals within the United States adopt the same limits and reporting requirements as energy commodities traded on U.S. exchanges.
"You've got futures exchanges that are rife with the ability to manipulate and excessively speculate," said Michael Greenberger, a University of Maryland law professor who spent two years in charge of the Commodity Futures Trading Commission's trading and markets division. "Congress firmly believes that they've got to bring this speculation under control. And it is my thesis that if these markets were policed, the prices would drop very rapidly."
elizabeth.douglass@latimes.com
nicole.gaouette@latimes.com
richard.simon@latimes.com
Douglass reported from San Diego, Gaouette and Simon from Washington.
If you think crude oil, which is selling at over $135.00 bbl in
Tokyo as I write this, is going to plunge to $70 bbl, then by all means, go ahead and short oil and may fortune shine brightly upon you. Best regards.
70.00 oil... NOPE! 800
70.00 oil... NOPE!
800 Oil?
The price of oil futures, passing through the $130 level as they have this morning, likely headed far north of $200, is really secondary to the Bigger Picture of how the economy and oil are tied together. But is $800 oil in the cards? Oh yeah....
A conversation with Dallas area petroleum geologist Jeffrey J. Brown and a follow-up email explains the concept of oil going nonlinear from here:
"In my opinion, we are looking at an accelerating net oil export decline rate, combined with a requirement for an accelerating rate of increase in oil prices, in order to balance supply & demand, as forced energy conservation moves up the food chain.
Let's take all consumers in all oil importing countries and break them into five groups, and then rank them by income. So, at the bottom of the bottom quintile, we have a poor Third World consumer. At the top of the top quintile, we have Bill Gates. As we go up the income ladder, the cumulative purchasing power vastly increases, which as noted, IMO, suggests a requirement for an accelerating rate of increase in oil prices in order to balance supply & demand.
I think that these two factors will interact--and are interacting--to produce the following oil price trend: $50, $100, $200, $400, $800 . . .
The question is the time period between the doublings."
You won't see that $800 (and higher) figure in cowardly MSM yet, but that's where we go. If $140 oil means $5 gas, then $25 a gallon comes into focus, or at $6 a gallon at $140, then $800 oil implies $30 at the pump...or even more. You can do the math. You might even want to hazard a guess at what point rebellion, economic collapse and all the rest comes along, too.
---
Earlier this week, Brown and Dr. Samuel Foucher posted "A quantitative assessment of future net oil exports by the top five net oil exporters" at the Energy Bulletin and although too long to post in its entirety, deserves a careful read. You might want to mull on their conclusions:
"Our simple mathematical model and recent case histories have shown that once oil production in an oil exporting country starts declining, the resulting decline in net oil exports can be quite rapid, and the oil exporter tends to show an accelerating net export decline rate.
We have used some additional mathematical methods to forecast future production and consumption for key oil exporting countries.
Our middle case forecast is that the top five net oil exporting countries, accounting for about half of world net oil exports, will approach zero net oil exports around 2031—going from peak net exports to zero in about 26 years, versus seven years and eight years respectively for the UK and Indonesia. In our opinion, the only real difference between the top five and the UK and Indonesia is that the top five net exporters in 2005 had a lower rate of consumption relative to production.
Extrapolating from year to date 2007 data, it appears likely that the top five will show an average aggregate net export decline of about one mbpd per year in both 2006 and 2007, putting them on track to go from about 23 mbpd in net exports in 2005 to close to zero in the 2030 time frame.
Smaller oil exporters like Angola can and will increase their net exports, but smaller exporters, just like smaller oil fields, tend to have sharper production peaks and more rapid net export declines than do the larger net exporters. And offsetting many of the gains by some smaller exporters will be sharp declines in net exports from other smaller exporters like Mexico, the #2 source of imported crude oil into the US, which will probably approach zero net oil exports by 2014.
Declining net oil exports will inevitably result, absent a severe decline in demand in importing countries, in continued rapid increases in oil prices, as oil importing countries furiously bid against each other for declining oil exports.
In simplest terms, we are concerned that the very lifeblood of the world industrial economy—net oil export capacity—is draining away in front of our very eyes, and we believe that it is imperative that major oil importing countries like the United States launch an emergency Electrification of Transportation program--electric light rail and streetcars--combined with a crash wind power program.
As Alan Drake has pointed out, the United States--with roughly 1/3rd its current population, 1/25th of its current inflation adjusted GDP and with primitive Technology --built subways in its largest cities and streetcars in 500 cities, towns and villages in just 20 years (1897-1916), which does not even take into account numerous interurban systems.
If we could do it in 1908 with mules, manual labor and with minimal fossil fuel input, why can't we do it 2008?"
What this implies, to the trader in me, is that as net energy exports decline, and the Brown/Foucher paper lays the groundwork for an arguable case that the decline will accelerate in nonlinear fashion, then prices will likely rise in 'doubly nonlinear fashion'. First, at least as a reciprocal of the nonlinearity in the export drop, and then further by some also nonlinear [price fears] function whose size may be a dependent variable on the rapidity with which the doublings of price (and presumably currency devaluations which will appear as "inflation") are perceived by investors.
(OMG how much coffee did I have this morning?)
War Over Iran's Oil Department
Iran Blockage Talk
There was one other thing that Brown shared with me in our conversation Tuesday - posed as a question: Could the US versus Iran situation become a global flashpoint, in the same sense that Germany's invasion of Poland (Kampania wrześniowa) was in 1939?
as for me and my home, we shall worship the LORD
And then you read this:
'Squawk Box' Guest Warns of $12-15-a-Gallon Gas
http://www.businessandmed...
Deflation will knock down
Deflation will knock down most assets including commodities. It will only be temporary until hyperinflation kicks in.
how can you have deflation
how can you have deflation first then hyperinflation?? the fed is damned if they do and damned if they don't! they will print money like no tomorrow.. we will see a hyperinflationary depression! inflate or die! which do you think the incompetent fools at the fed will do??
as for me and my home, we shall worship the LORD
I'd completely agree with you...
But what timeframe are you speaking of? Do you mean in the next decade if we don't change our ways dramatically? Then yes, hyperinflation may then be a reality.
I don't feel we're on the edge of that cliff...our country and its economy can be saved...or else why the hell are we fighting this fight? I'm staying here and fighting for what's moral and right, if I truely believed we were on the brink of this disaster, I'd be on the next boat to somewhere elseville today.
Oil isn't going up, the
Oil isn't going up, the dollar is going down. The oil is still getting sold folks as currencies appreciating against ours are becoming ever more capable of affording more of this finite resource. More will go to them and less will go to us. Don't blame the oil companies, their profits may be at record highs but so are their production costs, and currently GOVERNMENT takes more of their profit than they get to keep. And they're calling for MORE taxes. Massive fields are going into decline as demand soars, government has completely blocked our domestic oil companies from exploration in the gulf, arctic, and pacific. No state wants the "unsightly" rigs or risk to the environment. It's the "not in my backyard" mentality. At the same time, our government has spent thirty years blocking nuclear plants while France is now 79% nuclear. I mean, hello! Nothing like waiting until your face is smashed in to dodge the punch.
Why don't we just nationalize oil and remove the corporate price-fixing excuse from the conspiracy books? I'm tired of hearing it, it's completely wrong.
I keep responding to this...
Ok...I mention inflation many times...I'm not going to argue that there hasn't been some unacceptable levels of inflation recently.
In the last 5 years, the US Dollar has gone from roughly even with the Euro to about $0.73 to the Euro. That is largely the result of inflation. It represents about 27% reduction to the value of a dollar.
Inflation may explain some of the price increase, but we have not had and will not have a 500% inflation rate. The printing that the federal reserve is doing is unbelieveable, but they would have to be printing trillions upon trillions. About 40% +/- of the money that is around today has been created in the last ten years. There hasn't been a collapse in our GDP, so where is the inflation that would be resonable to assume that oil would go from $25/barrel in that time to $132/barrel. Inflation cannot predict this kind of change.
The increase in oil price is speculation, pure and simple. The run up to 2007, largely the result of inflation and increased demand. The demand has not increased much since that time, and production hasn't decreased much.
The crude market like many others has it's price set by speculators. Long oil positions have been more in demand since the loss of faith in mortgage based derivatives and the stock market as a whole. A lot of people were predicting a major stock crash this spring in November of last year. I said that profits generated on Wall Street haven't decreased much compared to stock prices, and the p/e was pointing to just barely overvalued.
Speculators lost faith in the market for a time, and poured their money into gold and oil. Gold has unwound a little, but oil has kept it up. The recent rise in oil prices was derived from fear of high oil prices after money started flowing into oil...so more money has gone into oil.
There aren't any shortages in the world, no one is being denied oil for the right price, so there isn't a problem with supply. Now we are beginning to see the effect of demand...especially in India and China, where oil has begun to bring large recessions...they have been booming, but still aren't to a point where a 500% inrease in oil in a decade can be sustained. This recession will be felt in the consumption of oil. The US is only on the brink of where oil prices will cause serious problems, but any further up will slow our usage dramatically.
Oil is starting to send the planet into recession, and during recessions, cars can't be sold, people won't drive much more than necessary, and less gas will be consumed. Take a drive past your nearest pleasure boating lake this weekend...do you think it isn't going to look like a normal memorial day? Sailboats, sure, but not too many power boats. No one in their right mind would drive an RV right now, and maybe we'll put off the visit home until gas gets a little cheaper.
Lower consumption, lower price.
You can, however, argue that the World Bank are the ones speculating up the oil market in disguise...that I may buy. If they are, then we're f'ed with a capital F. Because if they wanted to, they could collapse the world.
speculation??? only??? your
speculation??? only??? your wrong! its the dollar devaluing! and high demand from china and india! 3 billion people finding the middle calsss life style.. now can afford cars like us 300 million... 70.00 oil NOPE1
as for me and my home, we shall worship the LORD
After reading what I wrote...
I'm assuming you read what I wrote...you think the dollar has been devalued 500% in a decade? You think a dollar in 1998 is worth $0.20 today?
Describe to me, please, how printing roughly 4 trillion dollars in 10 years causes the dollar to devalue by a factor of 5.
There is not a large middle class in China or India. They have some newly wealthy people, but there is not middle class. They have the rich and powerful, and they have the peasants. The production industries are booming, and that's the large portion of the increased oil consumption you're seeing, but the average Chinese or Indian can barely afford to feed his family, so buying a car is a long way off.
What effect do you think $130 oil is having on the Chinese and Indian economies? Take a look, they're crashing much harder than we are. Slowdown in economic times=lower oil consumption.
Some are predicting $800 oil? And you call my prediction crazy? What percentage of the world can afford oil at that rate? I would need to quit my job, as I couldn't afford to work paying $400 to fill my car up once a week. It simply could not happen, there isn't enough wealth on the planet to justify $800 per barrel...oil would be consumed at 1/4 the rate it is today at that price.
1st of all the currencies of
1st of all the currencies of those countries are strengthening...there currency buys MORE. you need to go to china and see what is really happeneing.. they have a huge growing middle class.. if our population is at 300 million and they are at 1.5 billion, and they have a middle class say of 500 million, that already dwarfs the size of our middle class.. more consumers wanting oil, etc.. now that does not even include INDIA! the chines auto makers are having a hard time producing enough cars! people are waiting in lines for gasoline there! China is going global to buy as much oil production as possible.. they are in every country that produces out bidding us using the trillion dollar us dollar surplus they have! just because the US goes into depression does not mean that other countries will.. they may have a slowdown, but not have the type of hard times we will have. now you talk about 800.00 oil.. REMEMBER. the chinese currency is strengthening.. the dollar is weakening.. the chinese money will buy more.. has nothing to do with what they can afford! the price of oil is going up because of stupid government and stupid fed reserve policy! you have to get away from the thinking of whatever happens to us good old boy americans will happen to the rest of the world! it won't!
as for me and my home, we shall worship the LORD
Are you reading these posts before you respond?
Yes, the Euro has strengthened, and that's part of the reason why we've lost 27% against it...but how in the world would a 27% decline against a strenghtening currency explain a 500% increase in oil price? Yes, inflation is a part of that 500%, but not even close to the largest factor. Inflation is not the cause of $130 oil...I haven't had anyone explain to me how this is possible that a 27% inflation rate in a decade has brought about 500% increase in crude???
"and they have a middle class of say 500 million" This is where you are assuming and you are dead wrong. There are 35 million privately owned cars in the whole country. There are 1.3 billion people in China...that amounts to one car for every 37 people, so roughly 2.5% of Chinese people can afford to buy a car. That is not evident of a large middle class. The majority of the 1.3 billion people in China are peasants, who are living hand to mouth like they have for centuries.
India...you are again assuming a large middle class...and this is even less true in India. There are roughly 10 million automobiles in the entire country, and that amounts to about 1% of their population.
So out of 2.5 billion +/- people, we have 45 million who can afford to drive a car. That's less than 2%...which leaves 2.455 billion people who are below middle class by our standards.
Stop believing this nonsense about the huge middle class in India and China, for it is simply untrue. Ron Paul people seem to be cynical of anything the media tells them...why are you buying this nonsense about this massive middle class over there???
All kidding aside,
you may be right or you may be wrong, only time will tell.
All I know is that to me, there seems to be a big money grab going on right now. The rich get richer and the poor get poorer.
This is the problem with the private banks controlling the national currency.
But, this is only my opinion.
Rich will get richer this summer, poor will get poorer
The masses are flooding the oil market with money, and that's what's driven up the cost recently. Amateur traders with no more faith in the dollar or stocks have been finding commodities, especially oil. But it's the rich who are watching this from the sidelines, and getting their put options.
I posted a thread recently about a big time oil man who's talking $150 oil, but has his hedge funds loaded with oil puts...he's lying to drive up the price of oil artificially, and has his money bet on a fall. When the rich are buying puts, it means they know something we don't.
The rich began bailing from real estate in the late 90's, and instead wrote books and video series on how to "flip" houses for big profits. They knew that this bubble was coming...if they truly thought house flipping was a long term thing, they wouldn't be writing books on how to do it. Everyone thought real estate would go up forever, but nothing goes up forever.
jz... its not the "masses"
jz... its not the "masses" its the big institutions like bearstearns (who lost there asses) and goldman etc. they are the ones recieving the money from the federal reserve and malinvesting it.. don't beleive the dribble you here on CNBC that its those rotten speculators causing the havoc.. they are lieing to you! they are using the MSM to cover there hind quarters why they rape and pillage!
as for me and my home, we shall worship the LORD
You misunderstand me
I'm not claiming that any freshly printed money is going into oil..it's not. It's going into lending, home loans, business loans, things like this.
The money pouring into oil is coming from the middle class of this country, who has been spooked away from traditional investments and debt based securities and into crude and other commodities.
I'm not listening to the drivel from CNBC...in fact, the media drivel recently has been sensationalist stories about the endless skyrocketing of oil, i'm hearing economic pundits claiming oil will rise to this level by this time, while meanwhile they are spending their own money and their client's money on shorting oil. They are telling you one thing and doing another with their own money. This is the pillaging you speak of. If you assume the media is dishonest, then don't believe them when they talk of massive shortages, skyrocketing consumption, and $130 oil or higher is here to stay.
It sounds like you got...
inside information. It will be interesting to see how it all plays out.
My uneducated view is that Bush and Co. have allowed the Big Oil Companies to charge whatever they want at the gas pump.
I believe that Bush and the Neocons are Big Business' best friends.
They are making record profits while we are suffering.
We have to commute to work, we are a captive audience.
This is slavery, where the workers have to buy their goods from the company store.
Can anyone say Revolution?!?!
Nothing inside
There's nothing inside about what I know...I just think it's the most rational thing to think...i'm wondering how oil doubled in a year with no pressure from supply/demand and no increase in inflation.
Don't demonize Bush & Co...god, I hate to defend Bush, but he isn't the one doing this. Blame the Federal Reserve if anything, for they precipitated the housing bubble, which caused the subprime meltdown, which caused money to flow into oil in the past year. That money is about to be lost, and a lot of hedge funds and rich oil men will get richer by selling oil short.
I'm no economist, but all
I'm no economist, but all this rapidly expanding, fake, fractional-reserve-banking-derived money sloshing around the world in recent years seems to be doing little more than warping one market after another and making the vast majority of us poorer in the process. Where is all this "money" coming from, and where will it all end up?
The petrodollars and eurodollars
will one day come home to roost. That is the day we are all screwed.
Yes, I'm More Than Ready
In fact, please hurry.
Have faith
The free market will fix this problem in short order.
At the rate its going,
It'll be 70 dollars per gallon at the pump soon.
Don't laugh...
Check this out!
http://www.businessandmed...
Where's the happy little tire swing?
Thought of looking at Domestic oil
investment? There are opportunities available. Perhaps time to have your 401k $ really work for YOU!
http://www.brayconn.com/
lol
lol
LOL I was wondering when someone
would resurrect this thread. When it was posted oil was about 120 per barrel now it's over 130. Note to jzneff: we're not even close to being done yet.
If you read somewhere in the thread
I predicted a ceiling of 128-130 by Memorial day, then a slow decline through the summer. So far i'm off by a buck or two.
Wait for it...wait for it...
Okay, I'll wait for it
but I won't hold my breath. I'll post in this thread again once we reach 140 per barrel. That will be exactly 100% more than your price point of 70. We will be there before July is over.
I'll post in this thread again once we reach 140 per barrel.
Could happen tomorrow!
Where's the happy little tire swing?
Or sooner?
From WSJ online 5/21/08; 9:45pm Central Time
"The world's premier energy monitor is preparing a sharp downward revision of its oil-supply forecast, a shift that reflects deepening pessimism over whether oil companies can keep abreast of booming demand.
The Paris-based International Energy Agency is in the middle of its first attempt to comprehensively assess the condition of the world's top 400 oil fields. Its findings won't be released until November, but the bottom line is already clear: Future crude supplies could be far tighter than previously thought.
A pessimistic supply outlook from the IEA could further rattle an oil market that already has seen crude prices rocket over $130 a barrel, double what they were a year ago."
Where's the happy little tire swing?
Oil is down a buck today
You have seen the ceiling of oil...yesterday, it reached $135. It's now $132.
Now we'll get to find out if I was right...let the unwinding begin.
where
Where do you check for the current trading price?
Without reading the post...
Shouldn't there be a "1" in front of the "7" ??
Where's the happy little tire swing?
How much oil decreases who
How much oil decreases who knows, but i think it's not irrational to believe such things. In other words, this absurd track like everything else will have its breaking point. Behavior will change at some point. People will stop driving. My sense is that breaking point is 4 dollars a gallon for gas. Once that stabilizes, people are going to react. I won't be surprised if this summer is the peak of the price.
wow.......
another wishful thinker...........our market has not dictated the price of oil in a long time. The price will keep going up, that is the plan. No doubt about it!
The price of oil based on US
The price of oil based on US currency increases NOT so much because the value of oil is increasing but rather because the value of the US dollar is decreasing. When dollars are worth less it takes more of them to purchase the same quantity as before, resulting in an perceived "price increase" in terms of dollars.
My opinion is that the price of oil will be directly affected by the value of the dollar.
Also consider the fact that Iran has completely removed the US dollar from all Iranian oil sales. Iran, since the end of April, has only been selling oil in Euros or Yen. This will result in their customers not needing to hold US currency for oil purchases, resulting in less demand for US currency (less demand usually means a lowered value in relation to other currencies).
In addition, there are plans for some big oil pipeline from Iran to India & Pakistan. CHINA has expressed interest in participating in that pipeline as well. I believe those oil customers for Iran amount to 35 to 40% of the world population. The US even tried to pressure India to not participate; we even tried to bribe them with nuclear technology -- India basically told US to buzz off.
One more thing: a number of gulf state nations have been considering to drop the dollar peg from their currencies. For anyone not familiar with dollar pegged currencies, it means those currencies have a value based on the value of the US dollar (the value of their currencies go up or down based on what the US dollar does). The dollar peg enables the US to export our inflation tax to their countries. IF those countries drop the dollar peg it will result in there being less dollars in circulation (via the dollar pegged currencies) that will soften the blow of US$ inflation.
To me, it all spells a $ worth less in relation to other world currencies which would mean higher priced oil due to the lesser value of the dollar.
Be ready for higher priced oil, not $70 oil. Just be thankful if oil does temporarily drop to that price, and be sure to fill up your vehicles in preparation for the eventual increase.
I've already conceded inflation plays a part
Of course inflation plays a part in the price of oil, and we've lost value so naturally the price should go up.
But please ask yourself, how much value has been lost?
You could argue somewhere around 60% in a decade (I still believe it's less) but even assuming that's correct.
The price of oil per barrel was 25 bucks a decade ago, and even a 60% inflation rate over that period of time would only bring the price to the $40 range.
Iran selling oil in different currencies is meaningless...please understand that the contracts they are agreeing to are bought on the 3 world oil exchanges, and these contracts are made in dollars.
It matters very little that they won't accept the physical dollars, it's simply a matter of a currency exchange. China still buys the oil in dollars, since the price was set in dollars. China exchanges their dollars for Euro's at the market rate and buys the oil...but in reality, the physical currency that changes hands is immaterial.
The reason dollar hegemony works is not so much that countries are forced to hold our dollars, but that the price of oil is set in dollars. If the crude oil were paid for in barter, you would still have the price set in dollars. The idea that countries have to hold dollars to buy oil is misleading, since they could hold whatever currency they like, and then exchange that currency for dollars when it's time to pay the oil contract.
The Iranian oil bourse threatens that relationship, but has not made a dent yet. The only thing that's been traded on the bourse is a handful of oil derivatives...plastics and things like that. No crude has been sold on that exchange. It threatens to break the monopoly that the dollar has, but at this point, it's only a threat. I really have no faith that even left to their own devices, the Iranians have the clout and the economic brains to do this. Japan likely could undermine dollar hegemony, but I don't think Iran could. The country is run by backward thinking communist types, and I have never felt threatened by communism because it's a stupid concept that only works on paper.
Iran is having trouble getting contracts sold, and have resorted to selling at $10 per barrel below WTI grade. It's normally only about 2. China and India can't bear the cost of oil at this rate, so the market is drying up.
If you'd like to check...figure out how many puts were bought in February after oil started it's steep acent. Firms that know money and economics are buying these puts and will rob the prospectors blind, because the rise in oil is simply fear and money looking for a home.
I disagree
Fortune Favors the Bold
the real cost of oil has been hidden for many years. What you pay at the pump isn't the whole story of the price. There is the cost of extraction (empire) payed by the taxpayer, the creation of money that winds up in the hands of big oil (like exxon-mobil, whose largest shareholders are the Rockefellers) plus tons of indirect subsidies, like regulatory suppression of competitors. Our infrastructure has been maldeveloped on the prospect of cheap, eternal plentiful oil, and reality is starting to set in.
When it comes to the economy,
you suck.
"first by inflation, then by deflation, the banks...will deprive the people of all property" -Thomas Jefferson
I'm Ready for One Dollar Oil!
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