Posted on 07/09/2008 8:35:21 PM PDT by curiosity
Bull Excrement
High Oil Prices Are Here to Stay.
It is likely that we never see $100.00 oil but rather $175.00 to $200.00 oil within the next 24 months.
A lot of people like to promulgate the “Peak Oil” myth to justify current oil prices.
I am certain that we reached “Peak Real Estate” more than a few years back, and do recall a lot people saying real estate was not a bubble.
I read my children Animal Farm when they were pre-schoolers and then talked about it through out their lives. They learned about Freedom and politics that way.
My doctorate is not in economics, but I do have a couple of degrees in that field and the argument that futures speculation was driving the recent price increases was never coherent to me. I have not heard anything on the side of those who want to claim that it is speculators ginning this which amounts to much more than wishful thinking and hand waving. Granted this is the standard for politicians and they are in desperate need of a scapegoat - but that still doesn’t make the case.
Maria Cantwell, unfortunately my senator from Washington state, is now pushing some bill trying to scapegoat speculators.
She has been one of the biggest opponents to new drilling in the US for years. She is also one of the biggest receivers of campaign contributions by the Sierra Club.
She was even quoted saying something along the lines that that any overshore drilling in Washington state would be done over her dead body. She’s constantly butting into Alaska’s politics as well trying to block any new drilling there as well.
And, a bit later on, we will have a conversation about the workings of mkts, whether manipulated -- as they obviously are just now -- or not.
May I commend to your attention the study of the ''open interest'' in the various futures exchanges: NYMEX, SIMEX, and DUBEX (ICE/IPE can't be studied right now -- they don't present OI figures)? Just a thought. Look it up, professor, over the past 3 days...you might just learn something.
FReegards!
Despite their dismal reputation, the oil speculators provide a vital service. They help airlines and other big oil consumers to hedge against rising prices, and so to reduce risk—a massive boon amid the economic turmoil. By the same token, they provide oil producers with more predictable future revenues, and so allow them to expand more confidently and borrow more cheaply. That, in turn, should help to lower the price of oil in the long run.
First oil speculators have no effect on oil prices, then oil speculators do have an effect on oil prices; before I buy "The Economist" theory they need to determine which position they are taking.
My doctorate is in economics and I agree with you 100%. Others on this forum have stated that $175/bb is here to stay. I think that may be true in the long run, but I think that long run is only as far away as Congress's willingness to make new supplies available now. There is no reason that we have to accept $175/bb oil now and into the forseeable future. At current prices, remote drilling (ANWR), deep water drilling (OCS), and shale oil and tar sands (most of which is federal land holdings) are all economically viable and we will see those sources tapped. However, there will be no movement to ease the problem until after Nov. In the meantime, the public needs to beat on Congress for a real explanation of why we aren't drilling when we know there's oil to be had. This bullsh@# about not coming on line for 10 years and even if it did, it wouldn't make a difference is simply political nonsense. With a 9% approval rating, you'd think they'd try to do something good for the American consumer...but, no. They have their political agenda and you and I will pay the price. Their behavior is disgusting.
BS is right...
That is a fact...and just now the headline is: "In open letter, 12 U.S. airlines call on Congress to curb excessive speculation that they say drives up oil and fuel prices, slamming the airline industry."
http://money.cnn.com/2008/07/09/news/companies/airlines_speculation_letter/index.htm
...agreed. We can do better without clinging to wishful thinking about cheap freight fuel and continuation of the recent trade paradigm.
There are even idiots that claim we have already peaked...inspite of the fact that production (as shown here by the IEA) is still increasing! Kind of like the global warming crowd that ignores global temperatures showing that the earth is actually cooling. Insanity....
http://bp2.blogger.com/_fl4GqRfOC9Q/SGnDq54csLI/AAAAAAAAAOY/NmEcpoODaJI/s1600-h/IEASupply.jpg
Maybe, maybe not.
The problem with all of this prediction stuff is that it is impossible to predict the future.
The price of oil is a perfect example. The problem is that we have too many variables. The other problem is that oil is a fungible commodity whose price direction is largely driven by the last units sold. Demand, supply, distribution (refineries), taxes, speculation, depreciation of the dollar, etc. all play a major role in determining the price and many of them are completely independent variables.
Merely increasing domestic production will do nothing to affect the price of gas if world wide demand keeps increasing. What it will do though is help maintain the value of the dollar. The problem is that we are shelling out more than 700 billion a year for oil, it is the trade deficit coming back to bite us.
For what it is worth (nothing) I think that the price of oil has peaked for at least the next year or so. I fully expect the price to fall below $100 as the Chinese end their oil subsidies and as demand falls in response to the high prices. The main problem I have with that prediction though is that the Fed seems determined to continue manufacturing money to keep the financial institutions solvent. If the Fed doesn't keep pumping out the money we would in all likely hood be facing the prospect of deflation and a depression.
This was previously posted here:
http://www.freerepublic.com/focus/f-news/2040579/posts
It was worth posting again. Anyone interested in this topic would likely find the comments on the earlier version interesting and even enlightening.
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