Oil Spills Over the Edge 8 comments
December 05, 2008
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Per my articles on Monday and Wednesday, oil has continued plummeting all week. It closed Thursday below $44, and is now down 70% in the past five months.
What this means for those with an awareness of history is that we're staring at a fantastic opportunity to put several trends in place for your portfolio. They are:
- Growing demand from China, India, and other emerging economies for more oil,
- Diminishing oil reserves,
- A temporary recession that will end, putting developed-economy demand for oil back at the high levels that drove the price per barrel over $145 last summer.
In one week, we're almost at my target buy price for oil. I didn't expect to be this close for several more weeks or even months.
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This article has 8 comments:
oiltradersblog.blogspo.../
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China proposes bumping up consumption tax on gasoline, diesel
Shanghai. December 5. INTERFAX-CHINA - China's central government has released a draft policy to raise the consumption tax on gasoline and diesel as of Jan. 1, 2009, as part of the country's plan to reform its fuel pricing system, state media reported on Dec. 5.
Under the proposal, the government would raise the consumption tax on gasoline from RMB 0.20 ($0.029) to RMB 1 ($0.15) per liter, and the tax on diesel from RMB 0.10 ($0.015) to RMB 0.80 ($0.12) per liter, Xinhua news agency reported.
The government would also stop collecting six kinds of transportation fees, including the fee for highway maintenance.
In addition, the government would cap the retail prices of gasoline and diesel, instead of allowing fuel prices to float within a range, the report said. Under the current system, gas stations are allowed to set retail prices within 8 percent of a benchmark decided by the government.
Three Chinese ministries and the National Development and Reform Commission (NDRC) will collect comments on the draft proposal from the public from Dec. 5 to Dec. 12.
-TW
Oil price had little to do with US Demand. Stable for the last 4 years.
China net import/export chart
you're exactly right about china. the chinese don't give a damn about anyone or anything except what's good for china. that's their culture. travel to nearly any country in southeast asia and ask them what they think about the chinese and you'll get an earful...they're as reviled as the soviet union was and is to eastern bloc countries.
general comment on oil:
i have to chuckle at those who would stay short oil at $43 a barrel. i bet they're the same crowd that was long oil at $140. didn't hear too many posts from the legions of long speculators who were burned as the price collapsed...i guess they all had brilliant timing, huh?
there is a floor in price for any product and for oil, that floor is $10 of the late 90s. we're $100 from the ceiling set just months ago. both floor and ceiling were outliers. a reasonable equilibrium price in normal economic conditions strikes me as $40-$70.
for my part, i've bought a small amount (1/3 of a full position) of UGA to hold in my portfolio as a hedge against rising gas prices that will ultimately come with economic recovery. if the price drops further, which it could, i'll buy more. i'm also averaging into exploration companies like HAL and SLB. history repeats, you know....