Posted on 03/08/2008 3:59:54 AM PST by Man50D
The recent rise in oil prices to over $100 a barrell has been fueled largely by speculators, anaylsts say, hoping to hedge against the falling dollar and an unstable world situation - especially in the Middle East and South America.
But that might change in the next few weeks:
The stunning price rise has been driven almost exclusively by investors who were bailing out of the dollar and other financial assets and pouring into commodities, Judith Dwarkin, chief economist at Calgary-based Ross Smith Energy Group, said yesterday.
“The fundamentals don't support prices at $80, let alone $100,” Ms. Dwarkin said. She said global demand growth has slowed in recent years, while spare capacity among members of the Organization of Petroleum Exporting Countries has expanded somewhat, even as inventories of gasoline are at robust levels.
“The greater prices diverge from what is fundamentally supportable, and the longer they stay at a distance from what is fundamentally supportable, the greater the risk of a correction, and a large one.” She has forecast an average price of $75 a barrel for this year.
Oil consumption in the developed world is dropping more sharply than anticipated just a few months ago because the subprime crisis has contributed to increasing economic weakness, Mr. Lynch said. Even emerging economies have slowed their demand growth in the face of record high prices, he added. This speculative bubble, analysts say, may pop before summer due to increased gasoline stocks and a slowing economy.
At this point, any drop would be a welcome relief.
Hypocrisy never got in the way of a good environmentalist. They don't care a wit about the environment...only care about having the power to control, like all good Communists.
Continued $100 per barrel oil prices could be OPEC’s downfall as at those prices even marginal oil wells that are capped in the US and the vast reserves of oil in so-called tar sands and oil shales could become profitable. The high gasoline prices could also trigger lower consumption. $100 per barrel oil could also spur the development of new technologies that would reduce our need for OPEC oil.
They have advocating $5/ gal. gas for years. Now they complain. Why?
Because the money isn't going into the gov. coffers, Big Oil is getting most of the money.( not necessarily profit, but they don't understand business)
Jorge should dig up some of the dim quotes wanting $5 gas and hit them over the head with them.
I won't hold my breath.
excellent data
in my corner of the world (Indianapolis) I don’t see any less traffic or any lower freeway speeds
3 bucks a gallon hasn’t been enough to promote conservation that I can see
Please stop cheering me up.
Please stop cheering me up.
Cheap labor is certainly one element in the equation of doing business in China, however, it's not the only one. Another huge component is industry regulation, or the lack thereof. Similarly, China doesn't have the general liability situation that we've created here in the states. That factor alone is almost as large as the labor component, especially when you look at the cost of insuring against frivolous law suits. That is one thing that is driving up the cost of everything, especially health care. That latter issue is the primary reason why I sold my businesses in 2000 and 2001. Both went under less than two years after I sold them, primarily because of general liability exposure and the associated costs.....but also due to a loss of seasoned engineering expertise and the effects of 9/11 on the tech side of things....
***I agree, Bush could increase his popularity rating by 15% by aggressively campaigning for ANWAR drilling now.***
Bush is constantly campaigning for ANWAR drilling. But the oh-so-smart conservatives who wouldn’t vote for RINOS in the last election gave us a congress full of democrats (think Reid and Pelosi), and THEY won’t vote for ANWAR.
Let’s face it, no president gets to make the law, only congress can do that, and we conservatives have to fill congress and the WH with pubbies in order to lower the price of gas.
Bysh has proven to be too self-effacing, in the sense of not being able to command media attention. I think it was partially intentional, but he just doesn’t seem to have the instinct for it.
oops, lost control of my “y” there. Bysh = Bush.
How much is a barrell? Is it more than a barrel?
Wish I cud get payed too rite!
The EPA has new sulphur standards for Diesel (D-2). For now, most refineries are purchasing and importing low sulphur diesel and re-refining it to ultralow sulphur diesel. Of course our wise and wonderful government is putting a stop to that practice (they don’t want that extra sulphur in the USA). In the meantime Russia’s Lukoil has pretty much cornered the ultralow sulphur diesel market along the eastern seaboard. Much, if not most of the Diesel produced here in the USA is for off road and marine use only.
Correct CGG. Cheaper dollars to borrow can lead to inflation- too many dolars chasing too few goods.
That was one of SlicKKK’s stroke-of-the-pen, law-of-the-land things which many call “Utahgate” and which was one of the three things which Jerome Zeifman said he’d have impeached SlicKKK for, the other two being the obvious bribes to Monica Lewinski and Webb Hubbell. I can’t believe Jorge didn’t rescind that order the first week he was in office.
-—the vast reserves of oil in so-called tar sands and oil shales could become profitable-—
Oil sands have been in commercial production for 4 decades.
http://www.freerepublic.com/focus/f-news/1975859/posts
http://www.freerepublic.com/focus/f-news/1797747/posts
http://www.freerepublic.com/focus/f-news/1772296/posts
http://www.freerepublic.com/tag/oilsands/
If the speculators get squeezed, oil could drop to its market value of $80, but due to the usual over-correction of the exchange it would probably swing to $60 and then gradually return to $80.
Thank your EPA. With the introduction of Ultra-Low Sulfur Diesel requirements, diesel became more expensive than premium gasoline in most place, most of the time.
National Clean Diesel Campaign
http://www.epa.gov/diesel/
You can see below when the requirement kicked in:
Weekly U.S. Distillate 0-15 ppm Sulfur Production
http://tonto.eia.doe.gov/dnav/pet/hist/wd0tp_nus_24.htm
“Sharon Epperson who is on the floor of the commodities exchange each morning during the “Squawk Box” segment on CNBC stated “supplies” were at a fourteen year high.”
It would not surprise me, but the fact is that inventories are not the same thing as supply. It’s a mistake made every day by journalists, businessmen, even careless economists. Inventories might be huge, but if the owner of the inventories isn’t selling, then it means nothing.
The truth of the matter is that there is no way to measure supply at any given point in time, because any measurement of supply requires knowledge of the sellers’ willingness to sell at various prices, which is virtually impossible to know. So journalists use inventories as a proxy for supply, but that is very misleading since it does not consider the price factor at all. It assumes that all of the owners of inventories are willing to sell all of their inventory at the prevailing price, which is an absurd assumption.
That is one of the reasons that demogogues like O’Reilly are so effective at arguing that the laws of supply and demand are not operating correctly in the oil industry. They confuse supply with inventories, and it is very difficult to make your average non-economist understand that they are not the same.
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