Posted on 12/31/2007 8:57:38 AM PST by Clemenza
It’s possible but not likely. Inflation adjusted though it probably will at some point.
Besides the Euro Currencies, Canada and Brazil, the $ hasn’t really dropped that much. Furthmore, the dollar has only dropped around 40% from it’s peak (when it was overpriced) while oil has gone up 500% instead of 40%. Most of the increase in oil price is due to demand for oil/speculation/etc, not the weak dollar.
There is no shortage of amything. The technical term is scarcity.
The $ hasn’t dropped nearly enough to cause the price of oil to go up that much (over 500% vs 40% drop from it’s peak when it was overvalued).
Another factor is the concept of using imported oil and leaving American oil in the ground, which idea goes back to the end of WW II when the Middle East oil and other foreign sources began to flow in massive volume. This is strategic thinking and has not been far from policy all along.
Nobody buys wheat at retail. Factory product is retailed. Doubling the cost of wheat would not result by itself in doubling the cost of bread in the store.
Excellent post. Thanks.
Here is some more recent speculation in 2005, from a much better known source.- Tom
Oil bubble to burst: Forbes Herald Sun ^ | 30 August 2005
Posted on 08/30/2005 1:55:27 AM EDT 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.
Good article.
I heard that idiot Forbes on Fox say the oil was going to be down to $40 a barrel in ‘07.
Yeah right.
This is downright silly! The lower 2/3 of Illinois is floating on a sea of coal. The US has almost twice as much hydrocarbon assets as Arab OPEC has in oil.
Instead of getting off petroleum, why don’t we “get off” the self-loathing ideology that forbids the development of these assets? Environmental concerns are being leveraged to support an attempt to develop a pristine Utopian vision where natural resources are forever locked away from humans who are forbidden to use them.
The net effect of this crazy secular religion is to push resource development overseas into countries that have little regard for environmental protection. In the end, we have our pristine area but more net pollution. The transfer of money to corrupt governments funds causes that work against US interests. Indeed, right now, Wahhibist ideology is being spread to Muslim prison inmates right under our noses.
Read what I said.
We need to get off of petroleum, if we can develop an effective electric car, we can run it off coal. If you are going to argue against it simply because is is an area where you might agree with the greens, fire your electric plant with baby seals and endangered whale blubber, I don’t care.
I just want off the OPEC nipple.
I’ve heard that before — that each nuke plant was a one-off design, and that the key to safety, lower costs, and easier approvals lies in standardizing. Makes sense.
I’m hoping to see a wave of demand get a dozen new plants begun all at once. Of course, if energy prices collapse that won’t happen.
http://en.wikipedia.org/wiki/Internal_combustion_engine#Engine_Efficiency
“Engine Efficiency
The efficiency of various types of internal combustion engines varies, but it is nearly always lower than electric motor energy efficiency.
Most gasoline-fueled internal combustion engines, even when aided with turbochargers and stock efficiency aids, have a mechanical efficiency of about 20% [1][2].
The efficiency may be as high as 37% at the optimum operating point. Most internal combustion engines waste about 36% of the energy in gasoline as heat lost to the cooling system and another 38% through the exhaust.
The rest, about 6%, is lost to friction. Rocket engines can approach 70% efficiency at some parts of a flight; made possible by the very high combustion temperature and lower exhaust temperatures, but while the average efficiency depends on the mission, for a launch vehicle to reach Low Earth Orbit the overall efficiency is only around 10%.
Intersting, but it’s all speculation isn’t it?
It’s fallout from WW I and WW II. The basic reasons are strategic.
the experts who are predicting the worst, based on geology and geopolitics, are missing the crucial role that economic incentives play in determining the price of crude. The tripling of oil prices since the summer of 2003 has unleashed forces that within the next two or three years will bring oil prices tumbling back down to below $50 a barrel. Looking even further ahead, prices could easily fall to $30 a barrel or even lower. So before you trade in your Cadillac Escalade for a Toyota Prius, think twice: $1.50-a-gallon gas might not be gone forever.Prognostication doesn't get any better than that. :')
Contrarian energy investor ping.
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