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To: adm5

Hard to predict price, but the price you have suggested would probably require a massive depression. If you are not predicting a depression, where is the new oil going to come from?


42 posted on 05/11/2008 8:25:43 PM PDT by R W Reactionairy ("Everyone is entitled to their own opinion ... but not to their own facts" Daniel Patrick Moynihan)
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To: R W Reactionairy
If you are not predicting a depression, where is the new oil going to come from?

You're right, I don't thing supply is the answer. But I think looking at prices just two years ago we were in the high $60's/bbl, so it's not unrealistic to think that we could correct that much two years from today.

And I don't necessarily think a "massive depression" would be the root cause. (maybe a 4 to 6 quarter recession would contribute)

Reverse Engineering Crude Oil Prices:

Let's chalk $25 of the $125 price to the futures traders being futures traders.

So now we're down to $100, $25 can reasonably be attributed to the weak dollar (inflation). The dollar is in uncharted terrority. Most commodities, including precious metals, have all gone insane in the last two years partly because of this.

Now we're at $75, and that 4 or 6 quarter recession that is coming will give the U.S. economy a sniffling sneezing coughing aching stuffyhead fever which will, of course, cause the rest of the world to need to be rushed to the E.R., thus driving down crude oil demand worldwide AND causing our dollar to make strong gains vs. those weakening currencies, which is bearish for commodities.

I know this is overly simplistic, but I just don't think it's as far-fetched as you and others might think.

50 posted on 05/11/2008 9:41:42 PM PDT by adm5 (Roger That. - MA2 Michael A. Monsoor, USN - Medal of Honor Recipient Posthumously)
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