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AFTER QADDAFI: Oil Prices Will Tank, Stock Prices Will Soar
Business Insider ^ | 08/21/2011 | David Kotok, Cumberland Advisors

Posted on 08/21/2011 5:55:34 PM PDT by SeekAndFind

News reports continue to show the progressive demise of the Qaddafi regime in Libya.

Rebel forces have apparently taken more of the country’s oil refining (Zawiya) and processing infrastructure (Brega). Most observers give the Qaddafi regime limited time before a full regime change takes place in Libya. Watch what happens to oil prices if and when the Qaddafis lose and leave.

In short order, Libyan oil production will ramp up. As it does, oil prices in world markets will fall and oil futures markets will reflect the expected increase in production of oil from Libya. The key prices to watch are those trading in Europe, like Brent. US oil prices (WTI) are no longer the leading indicator of world prices intersecting with world supply/demand. Excess inventory at Cushing, OK is complicating the pricing structure. We expect oil prices to fall when highly desirable, sweet Libyan crude production is fully resumed and enters the pipeline. Maybe, they are going to fall by a lot. This will come as a much-needed boost to the US economy and to others in the world.

Remember: the oil price acts like a sales tax on consumption. To clarify this relationship we convert crude oil prices to gasoline prices and then estimate what a change in gas price will mean for the American consumer. Roughly, a penny drop in the gas price per gallon gives Americans 1.4 billion more dollars a year to spend on other than gasoline. That is a huge stimulant to the economy. The ratio is different in Europe because the gas taxes are so much higher there. Nevertheless, it is still significant.

(Excerpt) Read more at businessinsider.com ...


TOPICS: Business/Economy; Culture/Society; Foreign Affairs; News/Current Events
KEYWORDS: libya; oilprices; qaddafi; stockprices
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1 posted on 08/21/2011 5:55:42 PM PDT by SeekAndFind
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To: SeekAndFind

One can only hope. The downside is that Hussein will have his mug in front of any camera he can find claiming credit.


2 posted on 08/21/2011 5:58:26 PM PDT by johniegrad
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To: SeekAndFind

Who wants to bet if stocks start to go up, Obama will cut his vacation short and make an economic speech, thus, crashing the market again?


3 posted on 08/21/2011 5:59:37 PM PDT by mnehring
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To: SeekAndFind
Dow futures down 69 points as we speak.
4 posted on 08/21/2011 6:00:08 PM PDT by hinckley buzzard
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To: SeekAndFind; All

That is if they ramp oil production..


5 posted on 08/21/2011 6:00:08 PM PDT by KevinDavis (What has Ron Paul done in Congress??)
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To: johniegrad

Credit for AlQaeda selling us fuel?


6 posted on 08/21/2011 6:00:33 PM PDT by himno hero (Obamas theme...Death to America...The crusaders will pay!)
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To: himno hero

Credit for reduction in oil prices, improving stock market, and taking out Gaddafi.


7 posted on 08/21/2011 6:02:17 PM PDT by johniegrad
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To: hinckley buzzard
Dow futures down 69 points as we speak.

And gold up to $1875/oz...

8 posted on 08/21/2011 6:03:58 PM PDT by null and void (Day 940 of America's holiday from reality...)
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To: SeekAndFind

Well, the NATO attack on Libya has put an end to oil exports until the violence ceases. But I wouldn’t be any too confident that it will lower oil prices in the long run.

The country will be taken over by Muslim terrorists who hate America and the West. Alternatively, the country will break down into civil war among the various tribes, who have little love for each other.


9 posted on 08/21/2011 6:04:01 PM PDT by Cicero (Marcus Tullius.)
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To: SeekAndFind
In short order, Libyan oil production will ramp up.

I guess the Jihadis taking over will get some help from Iran or Venezuela? Otherwise I don't see it happening since they will probably just shoot all the people who might know what they are doing.

10 posted on 08/21/2011 6:04:11 PM PDT by palmer (Cooperating with Obama = helping him extend the depression and implement socialism.)
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To: hinckley buzzard

Wait just a minute....the guy said stocks will soar!!!


11 posted on 08/21/2011 6:05:56 PM PDT by Osage Orange (HE HATE ME)
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To: Osage Orange

-69 is soaring it could have been -269. It’s all relative.


12 posted on 08/21/2011 6:07:38 PM PDT by central_va ( I won't be reconstructed and I do not give a damn.)
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To: bigheadfred

wth did I do with my crackpipe????

oh, no....am i logged in????


13 posted on 08/21/2011 6:07:38 PM PDT by bigheadfred (The world needs wannabees)
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To: SeekAndFind

If oil production “ramps up” it will because the BIG FIX goes into effect and the Europeans move workers in to operate the facilities.

Now, are these real nice democratic ululating islamic radicals going to welcome westerners with open arms to run their oilfields?

I doubt it


14 posted on 08/21/2011 6:07:38 PM PDT by silverleaf (WS)
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To: SeekAndFind
Roughly, a penny drop in the gas price per gallon gives Americans 1.4 billion more dollars a year to spend on other than gasoline.

So if the price of gasoline fell by 1000 cents, we would save enough money to cover a typical Obama budget deficit. To put it in perspective, $1.4 billion is trifling when our own government sucks out 1000 times that amount each year.

15 posted on 08/21/2011 6:09:32 PM PDT by Hoodat (Yet in all these things we are more than conquerors through Him who loved us. - (Rom 8:37))
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To: johniegrad

Yep, they will want to show us a shiny side (excepting not mentioning that its a Iranian play with AlQaeda, MB and their ally Hussein Obama) for image enhancement amongst the unwashed. The joy of politics!


16 posted on 08/21/2011 6:09:52 PM PDT by himno hero (Obamas theme...Death to America...The crusaders will pay!)
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To: Cicero
Exactly. If the Muslim Brotherhood types take over -- and I'll take 3-1 on on that proposition -- any drop in overall price levels of crude will be short-lived.

However, a better way to trade crude will at that point be known. Buy WTI (NYMEX) crude futures and sell Brent (EuroNext) futures. Why? Libyan crude is a proxy for Brent, which is now trading some $22/bbl over West Texas. The jihadi types WILL have to export to pay their bills, and the mkt will transfer a considerable amount of demand to the more reliable suppliers. Or, in plain English, WTI will gain in price on Brent.

Good trading to you!

17 posted on 08/21/2011 6:09:58 PM PDT by SAJ (What is the next tagline some overweening mod will censor?)
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To: Cicero
The country will be taken over by Muslim terrorists who hate America and the West. Alternatively, the country will break down into civil war among the various tribes, who have little love for each other.

I still think Al Qaida traded Bin Laden for Libya.

18 posted on 08/21/2011 6:10:45 PM PDT by tacticalogic
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To: SeekAndFind

So I guess tomorrow is the day to sell.


19 posted on 08/21/2011 6:11:05 PM PDT by Brilliant
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To: SeekAndFind

I’ve got to disagree. Stock prices have everything to do with horrendous debt of US and Europe.

Prices at the pump apparently have absolutely nothing to do with the price per barrel, because it has fallen dramatically from its high, but prices haven’t followed suit.


20 posted on 08/21/2011 6:12:43 PM PDT by xzins (Retired Army Chaplain and Proud of It! True Supporters of our Troops PRAY for their VICTORY!)
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To: tacticalogic

International Intrigue was Bobby Mumphrey’s downfall. The Brits own it.


21 posted on 08/21/2011 6:12:58 PM PDT by eyedigress ((Old storm chaser from the west)?)
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To: SeekAndFind

Oil may go down some; it does not mean that Eurozone debt is NOT crap. Look out below!


22 posted on 08/21/2011 6:14:19 PM PDT by joelt
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To: SeekAndFind

Yes and unicorns will roam freely


23 posted on 08/21/2011 6:14:46 PM PDT by Flavius (What hopes for victory, Gaius Crastinus? What grounds for encouragement ?)
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To: null and void

I bought ten pounds of it before y2k never thought about it still have in my roll away in the garage


24 posted on 08/21/2011 6:16:45 PM PDT by al baby (Is that old windbag still on the air ?)
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To: SeekAndFind
The market's will have already "priced in" Gaddafi being gone, there'll be no change in oil prices.

Remember: The same market "experts" said Libya's 1.5% "contribution" to world oil supplies were sufficient to disrupt supply and prices, but hey, that won't stop them from saying the exact opposite once Libyan oil comes back online.....

25 posted on 08/21/2011 6:18:30 PM PDT by usconservative (When The Ballot Box No Longer Counts, The Ammunition Box Does. (What's In Your Ammo Box?))
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To: al baby

Unbridled Enthusiasm.


26 posted on 08/21/2011 6:18:40 PM PDT by eyedigress ((Old storm chaser from the west)?)
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To: al baby

Not to let the cat out of the bag, but if there’s any way for anyone to figure out where your garage is, you might want a new hiding spot. :)

Just saying.


27 posted on 08/21/2011 6:20:05 PM PDT by Cringing Negativism Network ("Cut the Crap and Balance!" -- Governor Sarah Palin , Friday August 12 2011, Iowa State Fair)
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To: palmer
I have reservations, too.

It's easy to write "ramp up production" but not so easy to actually do it.

There's just been a war there, you know. Smart money would say LESS production this year, not more.

As for next year, you have to ask: how much damage? How many capable people in key positions were lost? Of those still on the job, will they get along with the new bosses, and with each other? Do they have the extra capacity to "ramp up" to? Where is it, in the tank or still in the ground?

I'm no expert on Libya or the oil industry, but I'm guessing 18 months before they even get back to their "normal" production levels. And cheaper? Not likely.

28 posted on 08/21/2011 6:21:32 PM PDT by ZOOKER ( Exploring the fine line between cynicism and outright depression)
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To: SeekAndFind

Overly optimistic...


29 posted on 08/21/2011 6:24:24 PM PDT by EBH (God Humbles Nations, Leaders, and Peoples before He uses them for His Purpose)
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To: Osage Orange

Get concerned if the dollar goes down and the market goes down. Follow the dollar.


30 posted on 08/21/2011 6:24:52 PM PDT by Orange1998 (Obama also inherited AAA credit rating.)
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To: johniegrad

Yep! It will be, “see what I did!” as he squeals “Me, Me, Me all the way home!


31 posted on 08/21/2011 6:24:59 PM PDT by Red_Devil 232 (VietVet - USMC All Ready On The Right? All Ready On The Left? All Ready On The Firing Line!)
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To: SeekAndFind
Lower oil prices also mean a lessening of inflation pressures

Oil prices do NOT affect inflation. The rise and fall of oil prices affect other prices but do not affect the amount of money in circulation. Inflation affects oil and all other prices. The prices of oil or of any other goods and services do not affect inflation. When a writer cannot get cause and effect straight it causes one to wonder what else he does not really understand.

32 posted on 08/21/2011 6:26:23 PM PDT by arthurus (Read Hazlitt's "Economics In One Lesson.")
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To: Orange1998

Whatever...


33 posted on 08/21/2011 6:27:26 PM PDT by Osage Orange (HE HATE ME)
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To: himno hero

This is the problem - I am no apologist for Qaddafi but this is a sad day - lots of money will be forwarded onto committed terrorists and so we will be paying for our own demise. I don’t think Obama does irony but the Jihadists do and will be laughing all the way to the Surplus store!

Mel


34 posted on 08/21/2011 6:28:11 PM PDT by melsec
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To: Osage Orange; Orange1998

It is kinda fun to see an Orange vs Orange. Col. K is gone.


35 posted on 08/21/2011 6:29:59 PM PDT by eyedigress ((Old storm chaser from the west)?)
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To: Cringing Negativism Network

I lost it all in a boating accident along with all my guns and tens of thousands rounds of almost 5 month old ammo


36 posted on 08/21/2011 6:30:20 PM PDT by al baby (Is that old windbag still on the air ?)
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To: SeekAndFind

This truly was Obama’s and Eurpeans “WAR FOR OIL” and that was an untrue criticism aimed at Bush which we now find is all too true with the Liberals....

Where are the Anti-war protestors?


37 posted on 08/21/2011 6:30:20 PM PDT by Typical_Whitey (Ask a liberal to explain how tax increases create jobs in America)
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To: SeekAndFind
wishful thinking.

Gunfire in Tripoli. But in celebration.

http://www.youtube.com/watch?v=4tghoRiZ3ek"

Rebels could not win a video game.

Mock taking of Tripoli being filmed in Qatar.

38 posted on 08/21/2011 6:31:22 PM PDT by DTA (U.S. Centcom vs. U.S. AFRICOM)
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To: al baby

Don’t tell me you were a cockeyed optimist.


39 posted on 08/21/2011 6:31:59 PM PDT by eyedigress ((Old storm chaser from the west)?)
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To: SeekAndFind

Libyan oil goes to Europe anyway. The main benefit for the US here is not having another expensive, interminable overseas conflict of dubious constitutionality or benefit.


40 posted on 08/21/2011 6:32:38 PM PDT by icanhasbailout (I have no argument and can't do logic so I think I will call you a noob instead)
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To: Typical_Whitey

Projection is a liberals name.


41 posted on 08/21/2011 6:33:35 PM PDT by eyedigress ((Old storm chaser from the west)?)
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To: eyedigress; Osage Orange
I like his jokes....

He thinks a moment and says, "Tonto Rubenstein, but my friends call me Bubba!"

42 posted on 08/21/2011 6:36:32 PM PDT by Orange1998 (Obama also inherited AAA credit rating.)
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To: mnehring

Obama will call for emergency foreign aid to repair all the damage - he caused - to Libyan oil infrastructure and boost their production, while his czars continue to everything they can get away with to suppress our own production.


43 posted on 08/21/2011 6:37:26 PM PDT by JohnBovenmyer (Obama been Liberal. Hope Change!)
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To: Cicero

Spot on! It only took nine posts to nail it, which is a credit to you who responds to the need to post the truth.


44 posted on 08/21/2011 6:37:42 PM PDT by jonrick46 (2012 can't come soon enough.)
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To: Orange1998

My Native American background should be off limits. Jees


45 posted on 08/21/2011 6:39:06 PM PDT by eyedigress ((Old storm chaser from the west)?)
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To: SeekAndFind

Hmmmm...blood for oil?...Haliburton profits can’t be far behind..I’m sure we’ll hear all about it....not..


46 posted on 08/21/2011 6:43:59 PM PDT by lawnguy (The function of wisdom is to discriminate between good and evil-Cicero)
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To: xzins

stock prices have everything to do with forecasting abilities of the investors. Right now investors see regulations and a bunch of businesses said the hell with it and closed up - big companies can’t get work done if they want to anymore, we are losing our capability to do big things. So inverstors in genral are wary of everything - as evidence in the wild instability of the market.


47 posted on 08/21/2011 6:46:48 PM PDT by mike_9958
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To: All

Two points:

1) Oil hit its recent, world destroying price spike in summer of 2008, when Libya was at full production.

2) When Libya went offline in March, we were told Saudi Arabia and Kuwait were ramping up production. There was some trouble doing so, but just last month we were told Saudi finally was producing more oil. With Libya coming back online, assuming that happens in the next 2 years to previous rates, why would anyone think the Saudis and Kuwaitis will keep their spigots open, draining away reserves they’d like to have for the future.

I see a non event here.


48 posted on 08/21/2011 6:49:32 PM PDT by Owen
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To: eyedigress

Lucky you.


49 posted on 08/21/2011 6:49:52 PM PDT by Orange1998 (Obama also inherited AAA credit rating.)
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To: mike_9958

Basic explanation of today’s market:

Everything’s in the crapper, so everything’s going down!


50 posted on 08/21/2011 6:51:04 PM PDT by xzins (Retired Army Chaplain and Proud of It! True Supporters of our Troops PRAY for their VICTORY!)
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