Posted on 12/31/2007 8:57:38 AM PST by Clemenza
http://www.portfolio.com/views/columns/economics/2007/12/17/Why-Oil-Prices-Will-Drop
I remember.. maybe 10 years ago, asking a "Strategic Planner" for Citgo what the price of oil was going to do in the next year. At that time, it was ~ $20-25. He predicted it would increase to $30. SIX MONTHS later, it was getting close to $10 again.
I concluded... NO ONE really knows... :-)
For some, maybe. 10,000ft horizontal wells in Tx panhandle can produce within a couple of months of breaking ground.
I believe oil as energy is very close to being over, I offer just two of many promising ideers... http://www.youtube.com/watch?v=PFGiWiXMHn0 http://www.youtube.com/watch?v=jt5z8L4LBJE&feature=related
“Depends a lot on whether the dollar continues to fall further into third world currency status.”
It’s nowhere near third-world currency status. These comments are patently ridiculous.
The only reason oil prices are high at all is “futures speculators”.
There is plenty of fuel and lots of liberal hype about how it’s going to run out.
I really can't imagine why. The over-priced high dollar of several years ago is what should have scared you.
When there’s subsidies and lots of profit to produce corn because of the ethanol boom, farmers are going to quit producing wheat, barley, milo, etc, in favor of the big cash winner. Now there’s a shortage of these things because corn is taking up all the available land. Corn(for human consumption) still gets more expensive because ethanol plants are soaking up all the corn production. WHenever there's a shortage of something, the price goes up.
There is a worlwide shortage of grain(all grains) right now, and the ethanol boom isn't helping any.
Corn can grow practically anywhere where the soil thaws for at least part of the year. I seriously doubt, btw, that the government will let the bottom (through ethanol subsidies) fall out of the corn market, which is leading to all sorts of moral hazards.
Ethanol as an additive and a bridge over short-run deficits can be extremely cost effective. Putting a nation of 300 million mostly car-owning people on ethanol full time is certainly not.
That is probably the single most significant line in the entire article. I believe that oil will decline in price significantly in the next couple of years (since a lot of the increase in the price has been due to speculation and/or a fear premium related to the Mideast), but it'll probably never go below $30-$40/bbl. Given that, Shell and others can invest in R&D for tar sands with the knowledge that they pretty much can't lose money - the only question is "how much will they make?"
Given the size of the reserves, in a few years this will have an immense impact on the market. When combined with more (and far better) diesel-powered autos, hybrids, battery-powered autos, what Shiek Yamani was worried about 25 years ago will come to pass.
The market cannot be pre-empted forever by speculators, nor by governments (just ask the few Soviets left).
About ten years ago gas sold for less than a dollar a gallon in California. Was that because the oil companies were feeling charitable that year? I think it had more to do with supply/demand economics.
Oil companies cannot arbitrarily determine price. If they set the price too high, they will have a surplus they will have to store. If they set the price too low, they will run out of product. It has absolutely nothing to do with public "whimpering".
That's insane (and back then, I was insane/liberal as well, so I should know.)
Oil companies make about 12 cents profit on a gal. of gasoline — or 1/3 of the 36 cent tax per gal. (TX).
That has a lot to do with it, and W loves the weak dollar.
I’d say the bottom is somewhere near $85. I would not be surprised to see $105 in January if some reports claims China and India economies are continuing to expand.
The most hideous consequence of being dependent on Middle East oil is that OPEC can influence American elections by controlling the supply (and thus the price) of oil. If they increase the supply when we elect a president friendly to their desires then the American public will perceive that Arab-friendly presidents=low gas prices.
Should the gas prices move up to $4.50, you can kiss the motor boat industry so long and there will be job loss associated with that. Marine fuel was already up to $4.00 + last summer.
Lots of people like a weak dollar — especially if they’re in any business that exports products/services to places like Europe, Japan, etc.
BUMP!
Clemenza wrote “Free Traitor” not “Free Trader”. He/She has other intentions...
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