except of course that it did this EXACT same thing last year...and fell to around $55/barrel around November/December.
not a divine right. but our entire economy is based on it. there is no segment that isn't touched on some level by a rise in the price of getting goods from place A to place B. we've invested billions and billions of dollars into interstate highway systems and local roads. i think it's a ridiculous market. i think it's hyper-sensitive right now. and given its prominence in this market in particular (houston) i'm concerned with what happens when the bubble burts....just as it did before when they told us we were running out of oil in the 70's.
Do you guys know that Canadian dollars is now almost at parity with US dollars? 1.02 CAD = 1 USD now: http://finance.yahoo.com/currency/convert?amt=1&from=CAD&to=USD&submit=Convert It used to be 1.57 CAD = 1 USD back in 2002. Apparently printing money for Iraq War is not good for us. But the Fed just announced they are going to print even more yesterday.
On a side note, your name is the only one I was reminded at Burning Man due to the THUNDERDOME on the playa
MadMax - please read the book Twilight in the Desert, by Matt Simmons. That can serve as a starting point for helping you to understand supply/demand in the oil markets. Judging by your posts in this thread, you do not understand them at all, and appear to be making overtures that the price is being manipulated (a popular extreme liberal conspiracy theory). A few things to speed your education of the fundamentals: 1) Many think oil production has peaked worldwide. It peaked in the US around 1970. 2) Markets that are close to being in balance can display wild swings when they tip over towards one side or the other. The worldwide oil market was at this point around 2003. 3) The largest oil fields have been found. While there is plenty of oil in the world, there is not plenty of cheap oil . It is very expensive to find new supplies when you are looking at rapidly depleting fields, smaller fields, deepwater exploration, politically sensitive locations, etc. 4) Political risk = a price premium in the market. Would you like to do business in Venezuela, Iran, Iraq, Saudi, or Nigeria? That's were a lot of oil is located. 5) Worldwide economic growth has put tremendous pressure on demand for oil. Demand = up. Supply = down. Uncertainty premia = up. There it is for you.
The CAD exchange rate is also relevant to this discussion because Canada holds the largest tar sand reserve in the world. Once the oil runs out in ME, they have to get oil from tar sand. Apparently, in addition to tar sand's higher drilling/refining cost, more expensive CAD will make it even worse.
It irks me that it will go up but will never *quite* make it back down to PRE-Crisis prices Rocket River
MadMaximillian, you should retire and become a full time Oil hedger/shorter, then you can retire rich, and your post count will forever remain thousands ahead of my own, which is what I really care about.
People aren't talking about how the FEDs constant increases of liquidity have helped pushed up the price of oil. I think it is a bubble to a certain extent. Also, there is just a lot of fear in the market. Prices went up in further after yesterday's cut.
Some of that is because oil is traded in US Dollars, but some of it is due to the fact that lower interest rates likely strengthen the demand side of the oil price equation going forward as economies get stronger.
Ok. Tell me when USD lose 30%+ of value of last four years but in the mean time the economy only grew 4% a year (ie 17% in four years), do you think our economy is getting stronger or not???
Of course. I can't believe I didn't think of this. We all know that supply has dwindled and demand has increased enough to where market equilibrium has QUADRUPLED over the last 48 months. We all also know that there are just a handful of oil companies refining this stuff. We all know that the barriers to entry in the market make it so that those players can have an oligopolistic pricing scheme. The countries you listed are the same countries we have been doing business with in the oil industry for decades now. That argument is simply bogus. Nice job Trader_Rookie. I think this is where I should say something inflammatory like "OWNED." But since I am not a 4th grade mentality talking big behind a computer keyboard, I will refrain...but I digress. Carry on with the lunacy.
then i guess you'll be throwing your support behind political candidates that are seriously pursuing alternative energy sources, huh? thanks for the book tip. i never claimed to be an expert on this. just what i perceive. i'll tell my good buddy, alan greenspan, to read it too. he's a bit of a leftie these days.
Environmentalists are partly to blame for high oil prices. The efforts to block nuclear power means more demand for fossil fuels - thus a double whammy of hitting our pocket books in higher prices for fuel as well as more CO2 in our atmosphere. All because they are against the bomb. Other factors driving up the price of oil is of course China and India, Venuezula and their wacko leader, war in the middle east, and increased demand in the U.S. during the summer months. People are driving more miles as a result of the issues with flying as well. Why fly on a 300 mile trip when it's now faster to drive considering you have to burn two-three hours before the flight, and all the mess with canceled flights.
Just something I read today by Thomas L. Friedman: Yes, “Americans” are popping up all over now — people who once lived low-energy lifestyles but by dint of oil wealth or hard work are now moving into U.S.-style apartments, cars and appliances. Our planet cannot tolerate so many “Americans,” unless we take the lead and change what it means to be an American in energy terms. Attention Kmart shoppers: the world consumed about 66.6 million barrels a day of oil in 1990. We’re now consuming 83 million barrels a day. “Demand for oil has grown 22 percent in the U.S. since 1990. China’s oil demand has grown nearly 200 percent in this same period,” Margo Oge, director of the Environmental Protection Agency’s office of transportation and air quality, told the Tianjin China Green Car conference that I attended. “By 2030, the global thirst for oil is forecast to increase by another 40 percent if we maintain business as usual.” Such an appetite would devour every incremental green initiative we make. http://www.nytimes.com/2007/09/19/o...em&ex=1190347200&en=38b512898e874f29&ei=5087 D&D. Impeach the Idiot!
Ok why does Friedman badmouth Americans when China's consumption growth is exponentially higher. Bomb China?
What better way to promote investment than to lower the capital gains tax? So yes. Actually, instead of crying about oil being high and why I can't put two-and-two together to understand how the oil market works, I'm out investing in the space and doing quite well. The_Conquistador is a man of action.
I was just kidding. I agree with his concerns. Wow, NYTimes isn't pay anymore! "Without a transformational technological breakthrough in the energy space, all of the incremental gains we’re making will be devoured by the exponential growth of all the new and old “Americans.” - Friedman Yeah, pretty much.
