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Lehman Bros. Report: Oil Bust in the Cards
MoneyNews.Com ^ | April 25, 2008

Posted on 05/11/2008 4:38:50 PM PDT by TennTuxedo

Is $120 oil even real? Not if you ask the Saudis, or even Lehman Bros. The investment bank’s oil expert said this week that the oil boom is due to bust. Economic growth across the globe will slow just as new refineries kick in, raising supply.

(Excerpt) Read more at moneynews.newsmax.com ...


TOPICS: Business/Economy; Culture/Society; Extended News
KEYWORDS: business; economy; oil
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To: tcrlaf

Not true. Most of the Bakken is wide open for development. It is also a fairly expensive place with very long horizontal deviations and massive hydraulic fracturing required.

The Bakken will produce a lot of oil, but it isn’t close to being a new Texas ... and the US needs about three new Texas sized increments of production [at the peak in Texas production] to get close to independence. Don’t hold your breath.


41 posted on 05/11/2008 8:21:50 PM PDT by R W Reactionairy ("Everyone is entitled to their own opinion ... but not to their own facts" Daniel Patrick Moynihan)
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To: adm5

Hard to predict price, but the price you have suggested would probably require a massive depression. If you are not predicting a depression, where is the new oil going to come from?


42 posted on 05/11/2008 8:25:43 PM PDT by R W Reactionairy ("Everyone is entitled to their own opinion ... but not to their own facts" Daniel Patrick Moynihan)
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To: tcrlaf

How can it be tied up in court when so many of these oil rigs are being leased on private property? Some of these people were millionaires on their first royalty check.


43 posted on 05/11/2008 8:50:18 PM PDT by Not just another dumb blonde
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To: Osage Orange
I’ll take Boone Pickens over them both............

You're right! He predicted before them all. What's he saying now?

44 posted on 05/11/2008 8:53:01 PM PDT by montag813
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To: Right Wing Assault

On the upside and the downside.


45 posted on 05/11/2008 8:53:42 PM PDT by A Strict Constructionist (We have become an oligarchy not a Republic.)
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To: stinkerpot65

Because inventories are adequate to meet demand. In fact, this very fact belies the notion that this is a speculation-driven “bubble.”

When the Iranians cut us off in the late 70s price increases were driven to a considerable extent by hoarding. That’s not the case this time. The price spriral is strictly a function of supply and demand, the former being driven by India and China.

People are in for a shock when the increases of the past few days start showing up at the gas pump. This is why I’m leery of McWeird’s proposed gas tax “holiday.” It’s not going to have any political mileage when you consider that the federal tax on gas becomes rather inconsequential when the cost per gallon tops $5.

Fact is, most everyone I know will greatly curtail or cancel summer trips when that 5-dollar barrier is crossed, which seems inevitable given the upward pressure on the cost/bbl.


46 posted on 05/11/2008 9:11:03 PM PDT by libsmacker75
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To: cookcounty

Who knows? You don’t always get to drill where there’s oil.

http://corner.nationalreview.com/post/?q=ODllNTFlNzA0ZGViNGJjMWZiOTIwYWZhN2FhOWQwNjU=

My guess is that Brazil is a sure thing. I’ve read production will commence 2010.


47 posted on 05/11/2008 9:15:13 PM PDT by meatloaf
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To: TennTuxedo

The real answers are to go nuclear (on this, and perhaps only this, the French are right,) and to open ANWR and the central Gulf of Mexico by giving explorers maximum tax incentives.

As to the enviros’ objections: hit ‘em with SLAPP and RICO suits rooted in national security considerations. Toss any who defies the suit in jail—the price for their obstructionism and outright treason.


48 posted on 05/11/2008 9:18:10 PM PDT by libsmacker75
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To: meatloaf
"The one with $3 to $4 gasoline and $100/barrel oil leads to R&D, new alternatives and infrastructure development (oil sands production and new pipelines for wider distribution possibilities) and another brought on by a move to higher mpg vehicles."

I agree.

At less than 3.50 a gallon the little home brew E100 Machine has popped up. www.efuel100.com

Wait till gas hits ten a gallon! There will be dozens of US Entrepreneurs fielding alternatives.

49 posted on 05/11/2008 9:34:20 PM PDT by NoLibZone (The Huge Demonstrations by Illegals in 2006 prove they have more of the Spirit of 76 then we do)
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To: R W Reactionairy
If you are not predicting a depression, where is the new oil going to come from?

You're right, I don't thing supply is the answer. But I think looking at prices just two years ago we were in the high $60's/bbl, so it's not unrealistic to think that we could correct that much two years from today.

And I don't necessarily think a "massive depression" would be the root cause. (maybe a 4 to 6 quarter recession would contribute)

Reverse Engineering Crude Oil Prices:

Let's chalk $25 of the $125 price to the futures traders being futures traders.

So now we're down to $100, $25 can reasonably be attributed to the weak dollar (inflation). The dollar is in uncharted terrority. Most commodities, including precious metals, have all gone insane in the last two years partly because of this.

Now we're at $75, and that 4 or 6 quarter recession that is coming will give the U.S. economy a sniffling sneezing coughing aching stuffyhead fever which will, of course, cause the rest of the world to need to be rushed to the E.R., thus driving down crude oil demand worldwide AND causing our dollar to make strong gains vs. those weakening currencies, which is bearish for commodities.

I know this is overly simplistic, but I just don't think it's as far-fetched as you and others might think.

50 posted on 05/11/2008 9:41:42 PM PDT by adm5 (Roger That. - MA2 Michael A. Monsoor, USN - Medal of Honor Recipient Posthumously)
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To: TennTuxedo
Lehman Bros. Report: Oil Bust in the Cards

Wouldn't surprise me. We've cut our driving by at least 15 percent. Multiply that several million times.

51 posted on 05/11/2008 9:42:23 PM PDT by dragnet2
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To: PAR35
Much of the price 'increase' in oil is a result of the crash of the dollar.

This is how it is usually presented, but believe it or not, I saw one analyst, or perhaps reporter, stating the opposite. They said the dollar is falling because of the rise in oil prices, LOL.

Funny that the dollar showed a small bounce in the last few weeks, while oil kept on going up. Helped by silly Goldman prognostications, no doubt.

52 posted on 05/11/2008 9:43:14 PM PDT by bluefish (Hey! Where did this come from?)
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To: adm5

I’m in DUG. For those interested, DUG is not a direct short on oil per se. It is an ETF that tracks 2X the inverse of the Dow Jones US Oil and Gas Index. Includes Exon, Chevron, as well as some DJUSEN swaps.

$50-$60 for oil feels too aggressive for me. I’m looking for a correction that will bring it back inline with the trend up, but am not willing to bet on a fundamental shift in the trend. The recent rise has been too steep (parabolic, quantum, exponential, whatever) and is mere speculative bubble garbage. It is the greater fool principle, in action.

I’m hoping for it to gap higher in the morning, as I’ve only accumulated about half of what I’d like to be holding. It could rise all this week (especially since too many people are looking for the crash at this point).

I can be patient.


53 posted on 05/11/2008 9:51:59 PM PDT by bluefish (Hey! Where did this come from?)
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To: TennTuxedo

I don’t think we’ll get $200 oil this summer like some have said. The Euro seems to be weakening slightly against the dollar after six years of dominance. And the Fed signaled that they would not lower interest rates immediately after the last cut because inflation is looming.


54 posted on 05/11/2008 11:34:42 PM PDT by TheThinker (Capitalism is the natural result of a democratic government.)
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To: cookcounty

That is what I was wondering. It was a keyword or something and than it dissapeared. Hell, during the last Democratic debate both Hillary and Obama said nothing about Bakken. I want to know about the Oil that could’ve guaranteed us energy independence also.


55 posted on 05/12/2008 1:58:36 AM PDT by Merta (They Call Me The Ranting Man)
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To: netmilsmom

It’s simply a matter of time before oil goes back to a dollar a barrel.


56 posted on 05/12/2008 6:43:32 AM PDT by Spouting Horn (Terrorism is a tactic. The battle's against Shariah and Jihad.)
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To: NoLibZone

I can’t wait. Along with the magnetic fuel filter and the turbo velocity inducer I’ve already added to my car, I’m sure there’ll be many more to boost my mileage .... just kidding! I’m hoping we’ll see some significant advances.


57 posted on 05/12/2008 6:52:10 AM PDT by meatloaf
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To: Right Wing Assault
It's kind of a physics joke. Contrary to popular belief, a quantum leap is small.

Thanks, RWA ... the "quantum leap" thing is one of my pet peeves.

58 posted on 05/12/2008 6:57:14 AM PDT by r9etb
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To: bluefish
The price of oil has gone parabolic. That can’t be sustained, regardless of the commodity..... I wonder how many green traders are getting ready to learn their first big lesson in the old pump and dump routine.

But I see FReepers on here everyday saying our only way out is to buy Oil company stocks. Just sit back and watch the profits roll in!

59 posted on 05/12/2008 10:10:57 AM PDT by subterfuge (changed tagline just for this thread..........)
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To: TennTuxedo

Everything but the True Cause.


60 posted on 05/12/2008 10:13:09 AM PDT by RightWhale (It's still unclear what impact global warming will have on vertical wind shear)
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