Skip to comments.Why $120 oil is good
Posted on 05/08/2008 9:35:15 PM PDT by kellynla
NEW YORK (CNNMoney.com) -- With $120 oil not seeming to follow the fundamental law of supply and demand many are wondering if the market is broken.
The Federal Reserve has been cutting interest rates, saving Wall Street but sinking the dollar and driving up food and fuel prices. Investors, also called "speculators" by some, have been pouring money into commodities of all sorts, artificially driving prices higher in an attempt to squeak out healthy profits in the face of falling stock values.
But to many, all the financial voodoo is merely a distraction. The fundamental reality of oil - and the thing that makes it so attractive to investors in the first place - is that we are using ever more and finding ever less. High prices are necessary if we are to reduce demand, find new oil, and develop alternative technologies.
"The market is starting to send a signal: You got to get your alternative in line," said Robert Kaufmann, director of Boston University's Center for Energy and Environmental Studies. "Societies that ignore this kind of signal do so at their own peril."
Kaufmann isn't promoting the so-called "peak oil" theory - he doesn't think the world is quickly running out of oil.
(Excerpt) Read more at money.cnn.com ...
This from people who ride limos and the subway to work.
With the dollar falling, I bet alot of the change in oil price is due to that rather than demand. Of course, demand is a factor, but throw in the dollar debasement and you get to 120 pretty fast.
The high prices are merely an artifact of our artificially-depressed dollar.
The Fed should be setting the interbank rate at closer to 5% rather than 2% - it’s widely recognized that this rate should be almost identical to the annual rate of growth of the economy, the GDP.
Of course, if we can import more cheap Chinese plastic junk toys and move them around and mark them up multiple times, we can make our GDP boom!!
The GDP gives such a false sense of prosperity when we get into imports.
Don’t forget butanol!
Everyone always says "it is different this time". It isn't different.
Real estate wasn't different in its 2001 to 2006 bubble. Tech stocks weren't different in their 1996 to 2001 bubble. Junk bonds weren't different in their 1986 to 1991 bubble. Etc. Etc. Etc.
Commodities are the latest, that is all. Oil is in a bubble, grains are in a bubble, gold was in a bubble and has already begun correcting. Brazil is also a bubble. China was a bubble and is already correcting.
People who know nothing of finance outside of the one market they are looking at throw a straw, think the world has changed when the bubble gales roll through their favorite asset. The world hasn't changed. Only the speculative plaything of the week.
1) Open all federal lands with oil and natural gas potential for exploration.
2) A Manhattan Project to build new nuclear power plants like nuanced, environmentally conscious France has done.
3) Stop using grain for ethanol production for fuel.
4) Use nuclear power generated for desalination to solve water shortages.
5) Continue to explore and develop alternative energy and fuels, but with the idea that these are long term, not short term priorities.
It's government who is manipulating the market, to achieve an objective which, if put up for a vote, would see them losing 100-0. We are sheeple.
Hello, kellynla, attack dog.
This is tennteacher signing off. You are a jerk of the first order.
No more posting. No more contributions. Enjoy.
Admittedly, at this stage of my life, a sector fund is rather risky. That said, however, I have no intention of switching to a balanced fund or an asset-allocation fund--or some other "safe" investment--just now. Oil will probably go much higher before it plateaus--especially if Israel should take out Iran's suspected nuclear facilities, as I expect to happen before 2008 belongs entirely to history.
I want one of those French cars someone invented that runs on compressed air. It is @4300 psi and you can fill the tank in 2 hours with a compressor that comes with the car. Runs like a regular car with 130 mile range. $7000 is the price tag. For 22,000 you can get one with a gas engine also. The engine refills the compressed air tanks....giving you 100 mpg.
My sediments as well, i.e. one doesn't need to read any further after the first sentence.
If we just had a Republican candidate with a pair who could say to the unions, “Back me, and I’ll push for oil drilling jobs in Alaska and North Dakota....”