Posted on 09/05/2005 7:39:23 AM PDT by cloud8
PUBLISHING billionaire Steve Forbes has predicted that soaring oil prices will lead to a crash that could make the hi-tech bust of 2000 "look like a picnic".
Mr Forbes, publisher of Forbes magazine, said the price of oil, which peaked at more than $US70 a barrel on Monday as Hurricane Katrina headed for the US Gulf Coast, was unsustainable.
He said factors such as inflation and increased demand for oil from China and India accounted for only a small part of the price hike from $US25-30 a barrel three years ago.
"The rest of it is sheer bubble speculation," he said.
Mr Forbes, who was speaking at the opening of the Forbes Global CEO Conference in Sydney yesterday, said the higher the oil price rose, the harder it would eventually crash, creating more pain for hedge fund managers and their clients.
"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."
He predicted that oil would fall to $US30-35 a barrel within a year.
Mr Forbes's comments came as the price of oil eased following US Government comments that it could release some of its Strategic Petroleum Reserve.
The 700 million barrel stockpile is set aside for emergency use and could be used to counter oil shortages caused by Katrina's impact on the Gulf of Mexico, which accounts for about a quarter of US output.
After leaping nearly $US5 a barrel to $US70.70 on Monday, US oil futures retreated more than $US1 a barrel yesterday.
Part of the demand has bee the filling of the Strategic Petroleum Reserve, which had just about been completed prior to Katrina. Presumably this was to give the US enough stocks to ride out an interruption when we invaded Iran, Venezuela, etc.
However, seeing what happened when Katrina took 1 million barrels per day off the market for a month or so, I'm not sure that taking Iran's 4 million barrels a day off the market for a year or two looks like an attractive proposition anymore.
I would think that if refineries are incapacitated temporarily, at some point there's going to be a drop in demand for crude as inventories back up. Any economics experts have a model for a production chokepoint when demand and raw materials are both high?
Ok. So it drops to $35. Will the prices come down to the $35 per barrel level? Probably not. I seriously doubt they ever come back below $1.75 or so a gallon.
I laugh to the bank. I did my homework and now the profits of investing wisely are far out weighing the cost of oil to this household. Many many times more in fact.
Greed has a way to make a fool of those who try to call it something else.
Even if crude oil is destined to go higher eventually, its price could drop to $40-ish in the near term without surprise.
That's just a normal retracement of a price rise from $25 to $70.
That says it all.
Good for you! Whatever it takes to make a buck!
With production of the gasoline at 80-100% capacity, we're going to keep seeing inflated prices at the pump. Sadly, the countries that have the shortest downstream production (crude to gasoline) are Saudi Arabia and Venezuela.
You, and all the others here, need to keep pounding this theme until it's picked up and becomes "conventional wisdom!"
I am not suprised that the gov. of LA was not prepared. However I am suprised that the oil companies were not prepared. I would have thought they would have extensive plans in place for this when they knew it was going to happen. I understand that theres not much they can do when the cat 5 cane wrecks things but they should have forseen the need for workers and their families to survive and adapt and continue working.
You said it.
but aren't hedges tied to the bond which in turn is the cause for the current low mortgage rates (which are also inverse for the current fed rate hikes?)
We had the grandkids up for part of the weekend. We went to Sacremento to take them to see the play Dora and the Pig Pirates.
Yesterday, we took them back home. My trophy bride commented that most of the gas stations on the way out of town had dropped their prices 5 to 12 cents per gallon overnight.
Considering that there were two more days in the Holdiday, that was a fairly significant drop.
"obscene" profits
Interesting choice of words...
I think you are making too much of a paycheck for your labor, please forward a portion of said "obscene paycheck" to: dakine.
Ever stop to think that those profits get rolled over into the next round of technology which makes a lot of domestic production possible?
The well I am working on would not have been possible 20 years ago. When we are done we will have drilled a hole in a 6 foot thick target zone nearly two miles sideways, two miles down, effectively turning 6 feet of pay into nearly 11,000.
I know of no other industry so berated for making the money it needs to crash the price of its product.
The demand is not just ours alone. India and China factor into the demand side of the equation, where before a couple of years ago, they did not. The paradigm has changed.
~eh?
"'The rest of it is sheer bubble speculation,' he said."
~eh?
"Mr Forbes, who was speaking at the opening of the Forbes Global CEO Conference in Sydney yesterday, said the higher the oil price rose, the harder it would eventually crash, creating more pain for hedge fund managers and their clients."
Smart man, Forbes.
Knows a fruad when he sees one.
But do remember where ya heard it *first*.
...'k. ;^)
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