Free Republic
Browse · Search
News/Activism
Topics · Post Article

To: RightWhale
They will try to make it happen, but time is limited, and investment money is also limited. There could be several bad years followed by a more peaceful and less robust economy. Really bad years.

Perhaps, but what you are saying is that the market for oil is broken. Normally, as a resource becomes scare, the price increases as the scarcity becomes more acute. I.E., everyting does not just kick along fine until one day the resource doesn't exist anymore. The price starts to go up in both the spot and the futures markets before the resource runs out. These are the price signals that tell people to start committing assets to new supply.

The idea that we are going along fine, and then one day all hell is going to break loose, and that then and only then will people think about how to bring along new supply suggests that for oil, unlike every other item in the market, the market is broken - and that the spot and futures prices are not giving correct signals to the market place.

The other implication here is that if you think that, then you ought to be buying oil futures, as they are trading less than the spot price. That is, the market thinks that oil prices are going to go down in the future. If they oil market as a whole is wrong, then you stand to make a lot of money.

The more likely situation, imho, is that all of the journalists and the internet jockeys don't think that there are any prospects for increased supplies because the government isn't in charge of talking about them, and that in reality there are literally tens of thousands of people with their own plans to bring new energy supplies to market when the time is right. I know that If I had a good idea to profit as oil prices rise, I sure wouldn't be telling anyone about it.

26 posted on 06/11/2004 1:06:42 PM PDT by Rodney King (No, we can't all just get along)
[ Post Reply | Private Reply | To 22 | View Replies ]


To: Rodney King

Yes, oil futures seems like a good gamble, but as with all futures will the price change as quickly as you need?


31 posted on 06/11/2004 1:58:01 PM PDT by RightWhale (Destroy the dark; restore the light)
[ Post Reply | Private Reply | To 26 | View Replies ]

To: Rodney King
the market for oil is broken

Not yet. There are three years, worst case. Watch China-- last year China increased imports of oil and metal immensely, this year again, and next year they intend to continue the increase. For world production to increase, Saudi being at max right now, the less profitable fields will have to be hit and it all adds up to more oil cost.

36 posted on 06/11/2004 2:13:12 PM PDT by RightWhale (Destroy the dark; restore the light)
[ Post Reply | Private Reply | To 26 | View Replies ]

Free Republic
Browse · Search
News/Activism
Topics · Post Article


FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson