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Most popular demand of a personalized license plate in Dubai, "US Bought It"
Posted on 07/03/2008 3:47:17 AM PDT by CarrotAndStick
LONDON: London's Brent crude oil hit 146 dollars a barrel for the first time on Thursday, as traders reacted to Middle East tensions, falling US crude reserves and the weak dollar.
Brent North Sea oil for August delivery surged to a life-time peak of 146.34 dollars.
New York's main oil contract, light sweet crude for August delivery, meanwhile surged past 145 for the first time to reach an all-time pinnacle of 145.43 dollars a barrel.
Analysts said a weaker US dollar, and data that revealed a drop in stockpiles of US crude, helped push prices higher.
The US Energy Information Administration said on Wednesday that stockpiles of crude had fallen by 2.0 million barrels in the week to June 27.
Global oil prices have doubled in the past year and have risen by 45 per cent since the start of 2008 when they breached 100 dollars for the first time, triggering fears over inflation and slower economic growth.
You traded in a Cadillac that had the potential of maybe 80,000 miles before a complete engine overhaul including the suspension and any other wear and tear items, for two Corollas that probably could go well over 200,000 if you treated them right and kept them around. The US cars weren't just taking a pounding for lousy gas mileage back in the 70's and 80's. I wouldn't be surprised if you hated driving the small cars after living the big life in a Cadillac, since back then the Corolla was a stripped down utilitarian model of what a car needed to be.
I'm not buying a gas sucking monster regardless of the price, because I'm planning for the worst case scenario of gas prices not just going up, but compounding upward to where a gallon will be twice what it cost every year. July 2009 - $8.00 / July 2010 - $16.00 until the US once again becomes a oil producing power or my Corolla is looked at as a gas sucking monster because there is a new energy source used to cars and trucks. These are the times when you plan for the worst and hope for the best.
I was going to pump $15, all I had on me at the time. Put in the nozzle, turned to answer a question one of my kids asked through the window, turned around and had pumped $30 dollars. Boy,it doesn’t take long to pump $30 worth of gas. Thank goodness I had my credit card with me.
Haha, Yes, they DID! We marvelled at them..nothing but tires and oil changes, and the only reason we got rid of them is that we got TIRED of looking at them.
They could still be roaming around somewhere, for all I know. One of the jokes we used to make about their longevity was, "You know, the MOON is only 248,000 miles away. Both these cars have done that."
I think that right now we could announce a find of a 3 Trillion barrell oil field off the Texas coast, with Oil rigs already pumping oil, and the price would continue to rise.
There is an unexplained inertia to the oil market right now. China just announced a couple of weeks ago that they were removing the state subsidy to oil prices and it had NO EFFECT WHATSOEVER on the price of oil.
Most popular demand of a personalized license plate in Dubai, "US Bought It"
I understand the concept of supply and demand, but did China and India really start buying so much gas in such a short amount of time for oil to double in less than a year? And if so, why are the car manufacturers hurting? It would seem the extreme auto purchasing going on over there would be lifting them up if they are using so much that now the oil prices double almost overnight.
The MOST popular auto in Dubai and the UAE is the Ferrari and the Lamborghini. They must also be building roads to accommodate them, curves etc, I would imagine.
The rapid price increase is mostly due to the value of the US Dollar. Partly created by the Sub-Prime Lending scam.
Add to that, the fact that our lack of response to our own Domestic supply has caused us to import more refined product. And there you have it in a nutshell.
And yes, the Middle East (India) and the Indochina/Chinese industrial expansion has had the biggest impact on demand as well as supply.
Because many of the big car manufacturers haven't really understood these markets well to realise that only small cars sell well here.
Tata, the Indian auto maker, did so well, that they now own the Jaguar and Land Rover brands.
That reminds me of a time back in the mid 70's when I only had $5.00 in my pocket, had no credit cards, and had an almost empty gas tank in my C10 pickup truck. I had to get exactly $5.00 worth of gas into the tank, and got to $4.99 and gently squeezed the extra penny with the nozzle to $5.00 exactly. When I let go of the lever, it jumped an extra 2 cents. I handed the $5 dollars to the attendant, and he asked for 2 cents. What he got was 2 cents worth of my telling him what I thought of his gas nozzle lever. I stormed off and left him there to pay for it. I'm still a fugitive from the law on that one.
Unlike the stock market, where there are a limited number of shares for each company, futures markets have no limits on contracts available. As long as a buyer can find a seller for each contract, investment opportunities are virtually unlimited.
Critics say retirement funds that accumulate contracts are artificially driving up commodity prices. In the case of oil, that means higher gas prices and more expensive food and other goods. "If they're going to be in the futures market they need to trade rather than take this buy and hold strategy," said Michael Masters, portfolio manager of hedge fund Masters Capital Management. "That is the worst possible thing for the futures market."
From a March Article:
As far as “buying on margin” consider this summary from author William Engdahl:
“A conservative calculation is that at least 60% of today’s $128 per barrel price of crude oil comes from unregulated futures speculation by hedge funds, banks and financial groups using the London ICE Futures and New York NYMEX futures exchanges and uncontrolled inter-bank or Over-The-Counter trading to avoid scrutiny. US margin rules of the government’s Commodity Futures Trading Commission allow speculators to buy a crude oil futures contract on the Nymex, by having to pay only 6% of the value of the contract. At today's price of $128 per barrel, that means a futures trader only has to put up about $8 for every barrel. He borrows the other $120. This extreme “leverage” of 16 to 1 helps drive prices to wildly unrealistic levels and offset bank losses in sub-prime and other disasters at the expense of the overall population.”
I think those things are rigged for OCD people. You get to $24.97, tap it and it bumps to $25.03. So then people don’t want to pay an odd amount and keep going to $30.00, but Noooooo, it’s $30.04. And on and on and on. And I do not speak from experience on this phenomenon. hehe
Just do the math. The difference in the cost of the cars vs the number of miles driven times the savings in fuel.
I almost NEVER see it work out.
“The rapid price increase is mostly due to the value of the US Dollar.”
Exactly, except exporting petro dollars is a big contributor to the weakness. Drilling at home would be a big help to the demand/supply problem AND the dollar.
“oil prices double almost overnight.”
demand supply are not linear equations. Marginal demand can move prices way up the curve.
Plus oil is up only in the low teens in constant currency. Not that big of a jump.
You took all of the fun and enjoyment out of a post that should have made you chuckle and enjoy the bit of truth in the statement.
LLS
I agree completely with your post. Most people have a hard time with math and economics. Or they defy the obvious due to a bogus gut feeling.
That is why some of us are hedged against higher prices for oil and others are not.
Plus if you think there is a radical price jump (double) in gas you should take the savings from buying the cheaper car and invest in crude. Much better economic decision.
Too bad Thomas Sowell is not required reading.
“I’m not buying a gas sucking monster regardless of the price, because I’m planning for the worst case scenario of gas prices not just going up, but compounding upward to where a gallon will be twice what it cost every year. July 2009 - $8.00 / July 2010 - $16.00 until the US once again becomes a oil producing power or my Corolla is looked at as a gas sucking monster because there is a new energy source used to cars and trucks. These are the times when you plan for the worst and hope for the best. “
This makes no sense. You should consider price if your decision is economic. If you can save money on a gas guzzler you could invest the savings in crude.
I am not saying do this or do this. But take out a pad of paper or fire up excel and do the math. I think you may be either surprised or maybe just happy in knowing your decision is correct. Don’t forget the time value of the money in the case of the extra/lower price for the cars.
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