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Forbes warns of oil bubble [price could return to $30-35]
Herald Sun (Australia) ^ | 31aug05 | James McCullough and Mandi Zonneveldt

Posted on 09/05/2005 7:39:23 AM PDT by cloud8

PUBLISHING billionaire Steve Forbes has predicted that soaring oil prices will lead to a crash that could make the hi-tech bust of 2000 "look like a picnic".

Mr Forbes, publisher of Forbes magazine, said the price of oil, which peaked at more than $US70 a barrel on Monday as Hurricane Katrina headed for the US Gulf Coast, was unsustainable.

He said factors such as inflation and increased demand for oil from China and India accounted for only a small part of the price hike from $US25-30 a barrel three years ago.

"The rest of it is sheer bubble speculation," he said.

Mr Forbes, who was speaking at the opening of the Forbes Global CEO Conference in Sydney yesterday, said the higher the oil price rose, the harder it would eventually crash, creating more pain for hedge fund managers and their clients.

"I don't think it's going to go to $US100 but if it does the crash is going to be even more spectacular," he said.

"It will make the hi-tech bubble look like a picnic -- this thing is not going to last."

He predicted that oil would fall to $US30-35 a barrel within a year.

Mr Forbes's comments came as the price of oil eased following US Government comments that it could release some of its Strategic Petroleum Reserve.

The 700 million barrel stockpile is set aside for emergency use and could be used to counter oil shortages caused by Katrina's impact on the Gulf of Mexico, which accounts for about a quarter of US output.

After leaping nearly $US5 a barrel to $US70.70 on Monday, US oil futures retreated more than $US1 a barrel yesterday.

more


TOPICS: Business/Economy
KEYWORDS: gasprices; oil; price
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To: Timothy
So does Jealousy and Envy.

Not sure those apply. I'm not particularly jealous of the thieves who run the oil companies. I've got all I need, so I don't feel compelled to amass more at any cost. And I might be self-deluded, but I like to think I exhibit some morality in my business dealings.

On the other hand, continued price gouging like we've seen in the last couple of weeks is going to inevitably result in the government sticking its nose in. It's already happened in Hawaii, and there are rumblings of price caps in California. If California goes, expect others to follow. That's the consequence of unbridled greed.

Tyrants to the left of me, looters to the right ... Extremes giving rise to their opposite ...

61 posted on 09/05/2005 9:39:02 AM PDT by IronJack
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To: DaGman
This says more.

Land rig status

Offshore rig utilization rates

How we got here? while everyone was thrilled at cheap gas,...

62 posted on 09/05/2005 9:41:00 AM PDT by Smokin' Joe (If you are not part of the solution, you are part of the problem.)
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To: dakine

It's on its way. Join the Dropping-of-the-Month Club and get a different variety sent in a colorful baggie each month.


63 posted on 09/05/2005 9:41:35 AM PDT by IronJack
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To: Grampa Dave; Dog Gone; BOBTHENAILER
I know this is off-subject, but look at this sudden string of bulletins on BigCharts.MarketWatch.com:

12:19 New Orleans police: Citizens not being allowed back in city
12:14 New Orleans police: Thousands of people remain in city
12:15 New Orleans police: 400 police officers unaccounted for
12:11 New Orleans Police: Now switching to law enforcement mode
12:11 New Orleans police now targeting looters

What the he!! is going on down there NOW??? Do we have deserters on the poleice farce???

64 posted on 09/05/2005 9:42:29 AM PDT by SierraWasp (My Governor has morphed into the "FLINCHINATOR!!!")
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To: IronJack

So, what level of profit would you let them have? What is not "obscene"?

And where is their profit coming from? I see the price per barrel increasing and the wholesale cost being bid up, so I'm assuming their costs are increasing just as fast.


65 posted on 09/05/2005 9:44:57 AM PDT by VeniVidiVici (When a Jihadist dies, an angel gets its wings)
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To: IronJack

In case you missed...


http://stockcharts.com/gallery/?VLO


66 posted on 09/05/2005 9:45:46 AM PDT by dakine
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To: BOBTHENAILER
"What do you think is driving this country and its economic engine, apples?"

(Dripping Sarcasm) Why yes, Mr. Nailer, the pristine plantings of one Johnny Appleseed are finally baring fruit so's the citizens of the United States can prosper without relying upon wretched gains based on filthy lucre, don'tcha know??? (snort!)(/sourchasm)

67 posted on 09/05/2005 9:47:17 AM PDT by SierraWasp (My Governor has morphed into the "FLINCHINATOR!!!")
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To: winodog
You make sure the personnel are safe, onshore. You will need them.

You make sure the wells and related infrastructure are shut down to keep from adding a major pollution event to the problem.

You go back out after the storm, repair what got broken (because in a cat 5 hurricane, something is going to get broken--period) and you bring things on line as fast as repairs and the rest of the infrastructure will allow you to do safely.

What more plan would you have?

I cannot think of a more adaptable private industry.

68 posted on 09/05/2005 9:47:49 AM PDT by Smokin' Joe (If you are not part of the solution, you are part of the problem.)
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To: BOBTHENAILER

Don'tchew know them big Drug & Oil cumpennys jus pocket dem bichin profits an hord 'em up till dere CEO's die so's dere trussfund babies can lord it over all the werkin poor pipples of da urth? Oh! An besides, it's awl Bush's fault!!!


69 posted on 09/05/2005 9:52:11 AM PDT by SierraWasp (My Governor has morphed into the "FLINCHINATOR!!!")
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To: Felis_irritable

Do a search on Shell. There is a thread where they have found a way to make it feasable at $30 per barrel. And at that price there were comments that there is the equivalent of 1.7 TRILLION barrels in the Colorado Green river valley alone.


70 posted on 09/05/2005 9:53:11 AM PDT by RobRoy (Child support and maintenance (alimony) are what we used to call indentured slavery)
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To: cloud8

Buying up futures with a limited supply drives up the price per barrel.

That's true but I'm not buying futures. Another thing, I'll be damned if I am going to defend the fact that I did my homework economy wise and now am making some very nice money from it. If someone doesn't like somebody profiting from the rise in oil prices they're in the wrong country.


71 posted on 09/05/2005 9:56:47 AM PDT by jwh_Denver (Damn the MSM, the truth full speed ahead!)
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To: cloud8

Boy, that sounds like good news!!


72 posted on 09/05/2005 9:58:40 AM PDT by bethtopaz (We will not allow another generation of heroes to be forsaken. -- NewLand, from Free Republic)
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To: Grampa Dave
We canceled our labor day weekend 600 mile loop drive. We stayed in the Seattle area and did some roller blading and tandem bike riding, had some nice food and watched a couple of movies at home on the projector.

I'm not calling for a boycott, but when enough people just decide to try something else besides driving it just may have the impact we want. Sometimes critical mass is just spontaneous.
73 posted on 09/05/2005 9:58:54 AM PDT by RobRoy (Child support and maintenance (alimony) are what we used to call indentured slavery)
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To: Sooth2222

THAT OLD BLACK PRINT MAGIC or did Forbes go 'all in' on this?

Baby down and down I go,
All around I go
In a spin, loving the spin that I’m in
Under that old black magic called love spin?.

74 posted on 09/05/2005 10:01:14 AM PDT by ex-snook (Protectionism is Patriotism in both war and trade.)
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To: Felis_irritable

Recently an article detailed a Shell project that is feasible at less than $30 a barrel, and totally effective.


75 posted on 09/05/2005 10:04:01 AM PDT by sharktrager (Don't look at my profile. It's inappropriate.)
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To: Sooth2222

THAT OLD BLACK PRINT MAGIC or did Forbes go 'all in' on this?

Baby down and down I go,
All around I go
In a spin, loving the spin that I’m in
Under that old black magic called love spin?.

76 posted on 09/05/2005 10:04:50 AM PDT by ex-snook (Protectionism is Patriotism in both war and trade.)
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To: HawaiianGecko
A doubling of the price of oil would seem correct if there was a doubling of the demand for oil (or something along those lines).

Oil is considered an inelastic commodity. That is, there isn't a 1:1 relationship between its price and its demand. As we've seen, the price has gone up rapidly, but the demand still seems to be there. However that inelasticity also works in the other direction -- small changes in demand produce large changes in price.

So, it is oil's very inelasticity that I believe will cause its price to plummet from even a small drop in its fear-driven demand.

77 posted on 09/05/2005 10:08:43 AM PDT by Dave Olson
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To: cloud8
One thing about speculators: eventually you have to take delivery of the oil. Eventually you are going to run out of room for it if you are not making productive use of it

I think the Chinese have been busy playing with the price of oil, in partnership with some Middle-eastern interests, in order to mess with the US economy

78 posted on 09/05/2005 10:12:43 AM PDT by SauronOfMordor
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To: Zarro
Go attack hollywood for the price of a DVD, then. How much profit is "obscene"? Inquiring minds want to know. No well is guaranteed to be a producer, a tremendous capital outlay is involved, and the money has to come from somewhere. When oil prices are down, stock prices are down, investment is low because the rate of return is low. As I said, the money to keep drilling and producing has to come from somewhere.

IF we are to achieve energy independance we have to find and bring on line resources faster than they are consumed and depleted. We have been losing ground while gasoline has been cheap (since the early '80s), and since I started in this industry (1979), have gone from producing over half of what we use here in the US to importing 60% from elsewhere.

Sorry, but we can not have it both ways.

Either we pay the sponsors of international terrorism for their oil, or produce our own.

79 posted on 09/05/2005 10:12:52 AM PDT by Smokin' Joe (If you are not part of the solution, you are part of the problem.)
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To: RobRoy

Instead of my wife and I going out in separate vehicles to do errands, we go in one vehicle. Instead of going daily to the local grocery store, we go 2 or 3 times.

As I noted on another thread starting in August a fishing friend and I have basically retired his boat. We use his smaller engine on my bigger boat on the local lake and my bigger motor on the local river. We plan our fishing trips better re tides and other factors.

Another fishing friend wanted to drive up to the American River for some halfpounder steelhead fly fishing a week ago Friday. I checked the River flows and they were really too high for that fishing. We postponed the trip, and a friend who went had a miserable time due to the high flows. We avoided the waste of a 150 mile round trip.

Normally, my wife and I go to the SW coast of Oregon later this month or the first part of October. That is an 8 to 10 hour drive each way. This year we will go to the mid N California coast, a 2-3 hour drive.

My wife and I are using the internet and phone for a lot of other shopping. My wife and some of the other women in her office now car pool to go shopping and do it once a week instead of a couple.

When enough Americans respond like your family, us and others, the demand for gas will drop and the price will come down.


80 posted on 09/05/2005 10:13:48 AM PDT by Grampa Dave (Jamie Gorelick is responsible for more dead Americans(9-11) than those killed in Iraq.)
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