Posted on 08/29/2005 10:55:27 PM PDT by Aussie Dasher
RECORD oil prices this week were evidence of a speculative market bubble that was set to burst in the next 12 months and make the hi-tech crash of 2000 "look like a picnic", US business publisher Steve Forbes said today.
The price of light sweet crude topped $US70 a barrel yesterday as Hurricane Katrina headed for the US Gulf Coast, which accounts for about a quarter of US oil output.
Mr Forbes, editor-in-chief of the influential Forbes business magazine, said inflation and increased demand from China and India only accounted for a small part of the price raise from $US25 to $US30 a barrel three years ago.
"The rest of it is sheer bubble speculation," Mr Forbes said in Sydney at the launch of a business conference.
"I'll be blunt, there's hardly a hedge fund in North America that hasn't speculated on oil futures.
"So I'll make a bold prediction ... in 12 months, you're going to see oil down to 35-40 US dollars a barrel.
"It's a huge bubble, I don't know what's going to pop it but eventually it will pop – you cannot go against supply and demand, you cannot go against the fundamentals forever."
Mr Forbes said the higher the oil price rose, the harder it would eventually crash.
"I don't think it's going to go to $US100 but if it does, the crash is going to be even more spectacular," he said.
"It will make the hi-tech bubble look like a picnic – this thing is not going to last."
Mr Forbes urged the US Government to stop adding to its Strategic Petroleum Reserve (SPR), a 700-million-barrel reserve that is meant to be used in emergencies.
"The speculators know now that no matter what happens to the price of oil, Uncle Sam is there buying almost every day," he said.
"Stop the buying and in fact throw some of that oil on the open market, boy that would throw it in turmoil and send the price down."
The US Government has said it could release some of the SPR to overcome any shortages caused by Katrina.
then fund managers will learn to know better, and in any case ordinary americans will when they get wise to it they will be on a warpath to lynch the fund managers that put the financial end of this crisis in motion by skyrocketing oil/gas prices. They should be dealt with like the pillagers of Enron et al.
duh,? I don't get it. maybe if I sent you a thousand dollars could you maybe like explain more about why I is so dumb. Huh?
I'm glad to see you're willing to fight your private little war against oil speculators down to the last ordinary American.
Praying the Forbes is right!
I keep wondering if this is Soro's manipulation of oil futures hoping to make dubya look bad.
oil bubble... that I believe
Energy production runs 15-20-year cycles. That's about how long it takes to develop new technologies, production, & accceptance in the market.
The way it works is there is an energy shortage. Prices surge. The higher prices make new technology/new production fiscally attractive to the private sector. New energy sources are found and developed. The shortage turns into a surplus, and prices drop. But now we have all this new production capacity, more than can be utilized.
Over time, energy use/consumption catches up with that excess production/capacity. The supply/demand equasion reaches equilibrium. Then the demand side keeps growing, causing a shortage again. The cycle repeats.
We're at the stage where our demand has surpassed our supply side of the equasion. (Well, not really. Just at "reasonable" prices.) Even now, new technologies and new sources of energy are being considered, now that they're economically feasable. The supply side will catch up with the demand side soon.
Would you rather see it go to six dollars a gallon in that same 36 months??
Only a wounded lion would be more dangerous than a hungry lion. But, force our backs to the wall, and the world might see the US react like a hungry, and a wounded lion.
This is also what I have long suspected. I would wager that Soros and his cronies have been working this program since long before the last election.
Yes, I could've added 'wounded'. Good point.
Personally, I'd like to see the Strategic Oil Reserve full. The name should be clue enough for all. Concept: Just how does one fight a war when the first weapon used is the nation being cutoff from the it's supply of oil?
Until the bubble keeps on growing, I will ride the bubble buying XTO and Lufkin.
The oil bubble will burst. The gasoline bubble may not drop as much. No new refineries built in USA since 1976.
Ditto that sentiment.
For instance, we bought two Diesel cars that get 50mpg to replace two 22 mpg gasoline vehicles. Now our gasoline consumption is zero. Our oil consumption is down by >50%.
Not economically sensible, but it does reduce domestic oil consumption. Next step - secure a one or two hundred gallons of Diesel to be able to refuel from home for a couple of months. My consumption will look to rise, but then drop to zero for a while. Others will act. We live in interesting times.
(1) setting themselves up for large swings either way, for which they had better be prepared; and
(2) marching in step with Hillary, Harry, and Nancy in that what is good for them personally is disastrous for the American economy.
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