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Oil bubble to burst: Forbes
Herald Sun ^ | 30 August 2005

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.


TOPICS: Culture/Society; News/Current Events
KEYWORDS: burstbubble; cary; makeittrue; oil; steveforbes
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To: Lejes Rimul

'everyone in america' ??? Get a freaking grip.


41 posted on 08/30/2005 8:28:56 AM PDT by flashbunny (Always remember to bring a towel!)
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To: Lejes Rimul

you really need to get a grip. You are apparently clueless.


42 posted on 08/30/2005 8:30:06 AM PDT by flashbunny (Always remember to bring a towel!)
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To: flashbunny

If you didn't read the part in the article where Forbes says that all funds are speculating in oil, you're the clueless one.


43 posted on 08/30/2005 8:32:54 AM PDT by Lejes Rimul (Paleo and Proud)
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To: Lejes Rimul

Thanks to a nasty divorce and child custody case, I rent and own no stock or retirement.

Let all the bubbles burst... ;^>


44 posted on 08/30/2005 8:33:03 AM PDT by RobRoy (Child support and maintenance (alimony) are what we used to call indentured slavery)
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To: MikeinIraq

I'd bet money that Forbes is correct. The price increase from 30 to 70 doesn't make sense in the time frame mentioned.

If 30 was a market price 2 years ago, and it's more than double that today, then where is the great new need that wasn't there then, but is here today?


45 posted on 08/30/2005 8:33:19 AM PDT by xzins (Retired Army Chaplain and Proud of It!)
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To: xzins

there isn't one....

its all speculative....kinda like the Housing market....


46 posted on 08/30/2005 8:35:36 AM PDT by MikefromOhio (Ohio State (-15) vs. Miami of Ohio, September 3rd)
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To: Aussie Dasher

Mass suicides on the NYMEX ensue. Can't wait!!

/grabs popcorn


47 posted on 08/30/2005 8:53:41 AM PDT by Ace of Spades (Sed quis custodiet ipsos custodes?)
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To: Aussie Dasher
I hope that this ruins Soros and Buffet.
48 posted on 08/30/2005 9:24:06 AM PDT by Mike Darancette (Mesocons for Rice '08)
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To: Lejes Rimul
As much as high gas prices are a burden, I think people like the idea of having pensions when they retire.

So we should continue to pay high prices so the highly speculative hedge funds are safe? Do pensions really invest in the hedge funds? Is that wise?

I'm curious to know how close to capacity is the Oil Reserve and how many barrels a month do we buy.

49 posted on 08/30/2005 9:35:03 AM PDT by Mike Darancette (Mesocons for Rice '08)
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To: MikeinIraq

Mr. Forbes was my choice for President TWICE!


50 posted on 08/30/2005 9:36:08 AM PDT by GOP_Lady
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To: Aussie Dasher
Oil is up around $3.00 right now.
51 posted on 08/30/2005 9:36:25 AM PDT by COEXERJ145 (Cindy Sheehan, Pat Buchanan, John Conyers, and David Duke Are Just Different Sides of the Same Coin.)
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To: Aussie Dasher
It's just like "Trading Places" and the lesson from the Duke brothers. For the moment, everyone is betting that the price of oil will go up, so they are pulling their money out of Frozen Concentrated OJ and Pork Bellies and putting it all on Oil. When the bubble breaks it will also look like the Dukes when they realized Murphey and Akroid scammed them.

Love that analogy and that movie.

52 posted on 08/30/2005 9:37:58 AM PDT by biblewonk (A house of cards built on Matt 16:18)
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To: GOP_Lady

yeah...my parents too, at least the 2nd time.

that was before I could vote :)


53 posted on 08/30/2005 9:41:54 AM PDT by MikefromOhio (Ohio State (-15) vs. Miami of Ohio, September 3rd)
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To: RobRoy
Thanks to a nasty divorce and child custody case, I rent and own no stock or retirement

Sorry to hear that, but when you're on the couch with one hand on the remote and the other in a bowl of popcorn watching "Rescue Me" or "Shield" and no one is breaking your chops you can't tell me it's not the best money you ever spent ;-)

54 posted on 08/30/2005 9:44:06 AM PDT by MattinNJ (Allen/Pawlenty in 08-play the map.)
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To: Aussie Dasher
This time last year, the price of oil was about $45/barrel. According to the Oil Market Report, from 3Q 2004 to 3Q 2005 both the supply and demand for oil in the world grew from 82 mb/day to 84 mb/day.

So there is no reason, other than speculation, why the oil price should be higher now than it was a year ago. My guess is that it will drop down to that level by year's end.

55 posted on 08/30/2005 10:55:00 AM PDT by Dave Olson
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To: Aussie Dasher

I hope he's right, the sooner the better.


56 posted on 08/30/2005 10:56:38 AM PDT by 1Old Pro
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To: Paladin2
For instance, we bought two Diesel cars that get 50mpg to replace two 22 mpg gasoline vehicles.

Yes, but over the past 5-10 years SUV purchases have gone thru the cieling so all those people who traded in their 30mph VW bug to a 14mph Tahoe are using twice as much fuel. Add to the the ongoing population shift from failed Democrat cities to suburbia where they drive twice as far and you can see how demand has gone up.

I would be interested in knowing what the ave mpg of the population of autos on the road is and what simply doubling that mpg would do to demand.

57 posted on 08/30/2005 11:01:59 AM PDT by 1Old Pro
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To: Lejes Rimul

Unless they were cashing out their 401 (k) they lost nothing but some tally marks.

Now if they were directly invested in stocks, like lots of folks I know who bought Cisco stock in late 99 early 00, THEN you will see some arse losing.


58 posted on 08/30/2005 11:17:51 AM PDT by American_Centurion (A liberal is a socialist who isn't quite willing to get blood on his hands yet. -KarlInOhio)
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To: MikeinIraq

Mr. Forbes is correct, the price of oil does not remotely match fundamental facts.. its futures manipulation by the same folks that brought you the tech bubble.


59 posted on 08/30/2005 11:20:10 AM PDT by HamiltonJay
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To: Lejes Rimul
If you didn't read the part in the article where Forbes says that all funds are speculating in oil, you're the clueless one.

He says all hedge funds. You need a million dollars in net worth to even qualify to buy into a hedge fund.

To the average American, hedgefunds don't normally mean anything....Of course there was that big one a few years back that sparked off the Asian currency crisis but it was bound to happen anyway.

60 posted on 08/30/2005 11:30:15 AM PDT by NeoCaveman (The constitution is not in exile, it's in a nice safe deposit box in the Cayman Islands - Lileks)
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