Like the illusion of Wall Street, with its vast and powerful investment banks, now shuttered, China too is an illusion perpetuated by the Globalists that gave us the 15,000 mile Caesar salad, poisoned cat food and lead based paint on babies' pacifiers. Like the illusion that money would come from thin air to always push housing prices higher, China has spent a generation pursuing its illusion. Pursuing an unattainable dream to be like the West, while 6000 years of its carefully shepherded top soil blows into the sea.
Joined: Jan 24, 2007 Posts: 189 Location: Pacific NW USA
Posted: Mon Aug 18, 2008 9:35 pm Post subject: Re: $65 oil is coming (maybe)
MadScientist wrote:
i would propose that speculation adds to volatility IN BOTH DIRECTIONS, but is not the cause of it.
Sure, if you zoom out far enough with your time-line. We are talking about a turbo-charged plunge, after a pretty damned steep rise. Without the dollar and oil speculation, do you think we would have hit $140 this year? $100? Impossible to know really, but I expect the next ramp up in oil to be a bit gentler, since there will be FAR less credit available for speculative bubbles after the Credit Crisis becomes the Credit Disaster. _________________ To a man with a bunker, every problem looks like Armageddon.
Posted: Mon Aug 18, 2008 9:51 pm Post subject: Re: $65 oil is coming (maybe)
the only thing that will curb demand is price.
so next time demand exceeds the supply cap (around 75Mbpd), speculators or not, the price will rise until demand destruction occours. Our historical precedent at this point is $150ish. _________________ "The future power is manpower"
Joined: Jan 24, 2007 Posts: 189 Location: Pacific NW USA
Posted: Mon Aug 18, 2008 10:08 pm Post subject: Re: $65 oil is coming (maybe)
MadScientist wrote:
the only thing that will curb demand is price.
Really? Sorry to keep harping on the same point, but the imminent implosion of the credit markets is going to have devastating consequences for the economies of the world. Do you think a recession, depression, or outright deflationary collapse might not affect demand for oil? The price could go back to $25, and demand may still plummet in a worst-case scenario. _________________ To a man with a bunker, every problem looks like Armageddon.
Posted: Mon Aug 18, 2008 10:33 pm Post subject: Re: $65 oil is coming (maybe)
yes you are right. My assumption was that demand would eclipse supply again. If we experience economic conditions that keep global demand below 75Mbpd, the price could continue to drop.
Which reminds me, I had an interesting conversation with an Air Force member at the bar last weekend. He had a pretty convincing argument that the US gvt. was in the process of turning us into "mexico"... although maybe Argentina is a more apt comparison _________________ "The future power is manpower"
Posted: Mon Aug 18, 2008 10:36 pm Post subject: Re: $65 oil is coming (maybe)
There's a concept called contrary opinion. By the time they start putting articles on MSN about oil prices plummeting, it's probably time to go long again. Mainstream media is virtually always the last one to come around to a new financial happening, and by the time they publish it, it's time to do the opposite. _________________ "We were standing on the edges
Of a thousand burning bridges
Sifting through the ashes every day
What we thought would never end
Now is nothing more than a memory
The way things were before
I lost my way" - OCMS
The price of oil rose so fast it cannot bear any reasonable relationship to the actual supply, which hasn't changed all that much or has actually increased. Similarly, demand has increased but not by an amount enough to justify the one-year increase in prices.
But that's exactly the point, no? Oil may become cheaper, but the effect of high oil prices are already curbing demand. The wipeout of accessible credit, giving so many an easier lifestyle will soon be extinct. Some mitigation is also made due to increased energy effiency.
Also, has the production of light sweet crude risen? Or, as predicted on this site many times, the production heavy sour crude?
Joined: Apr 06, 2006 Posts: 3626 Location: 3 miles NW of Champoeg, Republic of Cascadia
Posted: Tue Aug 19, 2008 3:10 am Post subject: Re: $65 oil is coming (maybe)
Graph of megaproject additions for 2008-11:
The big spike in 2011 isn't an error - it's Khurais coming online. There are clusters around projects for which a month isn't specified - i.e., they just say "2009" - but this gives a general sense of what's on the horizon. We seem to be entering a brief era of bounty, assuming these projects really start up on schedule that is. Khurais weighs 2010 rather heavily, and the Megaprojects task force sees that year as the peak, too. The two next big KSA projects are dependent on new refinery capacity firing up to process their oil, also.
The new NYT piece As Oil Giants Lose Influence, Supply Drops points out that massive share buybacks aren't exactly a healthy long term strategy. Tightening credit may impact smaller companies' E&P as well. Could these affect supply? (Being rhetorical there. ) _________________ Cogito, ergo non satis bibivi
C'mon man, who're you gonna believe?
Joined: Dec 04, 2006 Posts: 251 Location: End of the plateau
Posted: Tue Aug 19, 2008 3:31 am Post subject: Re: $65 oil is coming (maybe)
Slightly off topic, but does anyone think a collapse in oil prices may re inflate the housing bubble? _________________ Machines are what distinguish modern man from the savage.
Joined: Sep 14, 2004 Posts: 6625 Location: Rural Virginia
Posted: Tue Aug 19, 2008 8:15 am Post subject: Re: $65 oil is coming (maybe)
BigTex wrote:
Something has changed.
I don't know what it is yet, but some kind of shift occurred.
We were gaining momentum in a definite direction, and now we have changed course and I'm just not sure what's happening right now.
We will know more in the next few weeks and months (obviously the election will shift the mood), but it's really interesting to be watching a cultural and economic situation play out in a very specific way, and then all of the sudden--poof--the mood seemed to evaporate and now there is just a sense of waiting for the next pattern to begin forming.
1975 may be a good comparison to where we are right now. You think the worst is behind you...but it's not.
Apparently the stock market has at last unhitched itself from the oil market. That is, stocks are falling despite falling oil prices.
This may fit in to what you said, Tex, in some way. _________________ "Actually, humans died out long ago."
---Abused, abandoned hunting dog
"Things have entered a stage where the only change that is possible is for things to get worse."
---Me and my brother
Posted: Tue Aug 19, 2008 8:44 am Post subject: Re: $65 oil is coming (maybe)
BigTex wrote:
All peak oil promised us was extreme price volatility.
It's keeping its promise.
Campbell and Deffeyes said as much - constrained supply would bring wild swings up and down in price, until some new equilibrium was reached, probably on the back of a weakened global economy. Others have mentioned that before actual shortages we would first see price shocks. So perhaps what we have today is the euphemistically called "Peak Lite"?
A few other points;
From a technical perspective there is serious support anticipated at $100.
OPEC would probably defend this price vigorously by withdrawing production.
A lot of expensive to produce oil would be shut in around the $65 mark, or higher. Vale the Campos Basin in Brazil, or Jack 2?
Moves towards so-called liquid fuel alternatives made from coal, bio etc. would also be shelved at this price, or even higher, as psychologically many would presume the low prices meant that there was no real problem with the existing supply.
Posted: Tue Aug 19, 2008 9:35 am Post subject: Re: $65 oil is coming (maybe)
peripato wrote:
A lot of expensive to produce oil would be shut in around the $65 mark, or higher. Vale the Campos Basin in Brazil, or Jack 2?
Moves towards so-called liquid fuel alternatives made from coal, bio etc. would also be shelved at this price, or even higher, as psychologically many would presume the low prices meant that there was no real problem with the existing supply.
Thats what I hate about it. First the drop in price as I said kills alternatives pretty damn fast. As said earlier it isnt the first time alternatives have been burned and as they say "Once bitten twice shy". Well, alternatives have been bitten more then once.
Secondly, and perhaps more importantly, the psychological effects of announcements of more drilling or slight decreases in demand cause noticable and substantial price drops. This convinces "John Q. Public" that there is indeed no problem and we can drill our way out of it. Then the "solution" becomes not getting off or finding alternatives to oil but simply producing more. And when the price spikes the public will scream "Drill more!". _________________ "Battle not with monsters, lest ye become a monster, and if you gaze into the
Abyss, the Abyss gazes also into you."
Ammo at a gunfight is like bubblegum in grade school: If you havent brought enough for everyone, you're in trouble
Posted: Tue Aug 19, 2008 9:37 am Post subject: Re: $65 oil is coming (maybe)
Heineken wrote:
BigTex wrote:
Something has changed.
I don't know what it is yet, but some kind of shift occurred.
We were gaining momentum in a definite direction, and now we have changed course and I'm just not sure what's happening right now.
We will know more in the next few weeks and months (obviously the election will shift the mood), but it's really interesting to be watching a cultural and economic situation play out in a very specific way, and then all of the sudden--poof--the mood seemed to evaporate and now there is just a sense of waiting for the next pattern to begin forming.
1975 may be a good comparison to where we are right now. You think the worst is behind you...but it's not.
Apparently the stock market has at last unhitched itself from the oil market. That is, stocks are falling despite falling oil prices.
This may fit in to what you said, Tex, in some way.
Or perhaps the stock market is once again hitching itself back to the price of oil. Perhaps the stock market, due to the housing market due to the credit market had inflated way beyond any realistic levels. What we are seeing is the deflation of the markets and the balloon will come to rest again at realistic reasonable levels resting on the pillers of commodities?
Who knows. I certainly wont pretend to understand this market AT ALL! _________________ "Battle not with monsters, lest ye become a monster, and if you gaze into the
Abyss, the Abyss gazes also into you."
Ammo at a gunfight is like bubblegum in grade school: If you havent brought enough for everyone, you're in trouble
Joined: Dec 04, 2006 Posts: 251 Location: End of the plateau
Posted: Tue Aug 19, 2008 12:34 pm Post subject: Re: $65 oil is coming (maybe)
[quote="Specop_007"][quote="Heineken"]
BigTex wrote:
Something has changed.
Yup, a contraction in the money supply, which is why we're in a deflationary environment and we'll see sub $100 oil fairly soon. _________________ Machines are what distinguish modern man from the savage.
Joined: Aug 03, 2006 Posts: 4338 Location: Graceland
Posted: Tue Aug 19, 2008 1:27 pm Post subject: Re: $65 oil is coming (maybe)
[quote="EndOfGrowth"][quote="Specop_007"]
Heineken wrote:
BigTex wrote:
Something has changed.
Yup, a contraction in the money supply, which is why we're in a deflationary environment and we'll see sub $100 oil fairly soon.
In the short to intermediate term perhaps, but if you are the largest debtor in the history of the world (the U.S. government), you're not going to let deflation be what finally gets you and causes you to default on trilllions of dollars of obligations.
Even if it had to start sending out monthly stimulus checks, it seems like the U.S. government would do whatever was necessary to prevent a serious deflationary episode.
We may be in a "deflation trap" in the midst of a long term inflationary period.
The fact that the cost of housing is dropping is sure not suggestive of serious inflation, though.
The Swiss franc may be the best measure of value to keep your eye on, since gold and silver seem to have disconnected from reality.
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