Commodities: Bubble or Not?

Recently there has been a lot of discussion as to whether the run-up in commodity prices is a bubble or not, or whether there is a fundamental factor at work, primarily a sustainable supply-demand imbalance.

A recent WSJ survey of 53 noted economists found that 51% of those surveyed said that demand from China and India was the prime factor for high energy prices, with 41% blaming demand for rising food costs. Supply constraints were listed by 20% as causing higher food prices, while 15% felt that supply was resulting in higher energy prices. Only 11% felt that a speculative bubble was in the works.

So what should we make of this? Those surveyed felt that the supply-demand imbalances were the major cause of higher commodity prices, and not speculation. Furthermore, demand is driving the growth and higher prices, and not simply lower supply. This is something often debated, but those surveyed felt differently on average - we have enough for now to go around, people are just demanding more of it.

This makes sense to me, given that China and India are continuing to increase their energy needs to grow their economies and increase the standard of living for their citizens. This higher standard of living is putting further pressure on food commodities, no only to consume directly, but also to feed livestock as the demands for protein-based foods increases in these areas of the world. Supply may eventually become more of an issue, but demand appears to be driving prices.

As with any survey of economist and analysts, there were "two-handed" inconsistencies. The same survey group felt on average that the price of crude oil would fall to about $105 by the end of next month, and to about $93 by the end of 2008. Demand is high, supply in check, but prices will fall? Possibly, and this course is the argument surrounding the falling dollar. But this is not what the responses feel. Only 15% believed that currency (i.e., dollar woes) were causing higher energy prices, and only 7% felt they were contributing to higher food prices. This is somewhat surprising given the amount of talk recently about how weakness in the dollar is contributing to the high cost of crude oil, with some estimates showing nearly 50% of recent price increases resulting from the falling dollar.

In the end, even with the discussions of crude oil prices being too high, and pronouncements of $150-$200 a barrel prices in the next 6-24 months (bringing back images of Internet valuation calls in the late 1990s - where a yearly price target was raised one day, only to see the stock move to that new level a few days later), it is still difficult to foresee a complete collapse of commodity prices, at least a sustained collapse over the long-run.

Will there be sell-offs and short-term corrections? Yes. Will there be volatility? Absolutely. Will there be adjustments as the dollar strengthens? Most likely. But will there be a total collapse in demand? It is doubtful.

Demand destruction is always a worry, but people will always want to eat, and emerging countries will need energy to continue their growth, just as the United States has in the past, and will continue to in the future.

So as commodity investors, in particular energy investors, what shall we do? The safer investments may still be in the "consequence" plays, i.e. the seed and fertilizer companies for the food commodities, and natural gas for the energy plays. The Potashes (POT) of the world still have tremendous demand and pricing power. Natural gas, while also having a nice run-up recently, is still trading at a lower BTU multiple than crude oil. Using historical comparisons, natural gas still has room to move to the upside, even if crude oil prices level off. If crude reverses its upward trend, this lower than historical multiple may also cushion the fall of natural gas if crude oil was to begin selling off.

The moves in energy have no doubt been sharp, and the prices do seem high, but this may in fact be the issue that we struggle with when considering investments in commodities and commodity-based stocks. We have not seen $125 crude oil before, and the recent spike does seem over-extended, so it certainly seems scary.

Of course, if crude oil was a stock, and the company had the same level of demand, pricing power, growth forecast, future supply issues, and strong technicals, many of the same investors might be jumping into the stock, while at the same time shying away from crude oil. Of course, commodities and stocks are very different animals, and stocks also top and end badly, or at least have large corrections, even for good companies (i.e., Google), but the analogy is not totally lost.

The key is to eliminate the emotion as much as possible and examine the fundamentals and technicals for what they are. When they change, they change - and this could happen today, tomorrow, or next year. But when they are in place, they are hard to ignore. Right now they look pretty good.

Disclosure: Author is long UNG, CHK.

Comments

[Ozarker]

Without all the statistics, Natural gas is the most plentiful, clean-burning, economical fuel we have and long term the outlook has to be very good. It's that simple.

[jcrash]

bubble

[David888]

Economists always give two-sided answers... There is a bubble in commodities and fundamentals are not a good enough reason to explain it. Index funds, large and small specs, the recession in the US -stock markets drop, treasuries unattractive, high inflation - and the USdollar slide are the main reasons.

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[Ali Anani]

Potash prices used to have a five-year cycle. Do you believe under new circumstances the five year cycle would change? And how?

[JREwing]

May be we are just not used to the demand from countries like China or India.

When I was a kid, and I've seen something on TV from China, all I have seen on their roads were scooters and old bicycles. When I see stuff from there now, all I see is traffic jams with lots of cars. I don't know about you guys, but I always thought that the average car needs more raw materials and once it's on the road more gas than the average scooter or bicycle. Since it takes years to develop new mining projects (The Rio Tinto website has interesting videos on stuff like that) or oil fields, I asked myself: 'Why wouldn't commodities appreciate in price?' Just because Jim Rogers says it? Hardly. It is just supply and demand.

Of course there are speculators involved, including myself. But I wouldn't invest in commodities, if it wasn't making sense to me.

There were lots of people, who told folks in October, that this was a once in a lifetime opportunity to buy financials. I didn't, because it just didn't make sense to me. Luckily so. Financials obviously were a bubble, back then.

What I am saying is: Speculators may jump on booms like the commodities boom. But they don't cause it.

This commodities boom is for real. Just because we didn't have a boom in commodities for so long doesn't mean this is a bubble.

Think about it. The last hundred years or so the western nations enjoyed the mineral wealth of the entire planet. Is that normal?? It's not. On the contrary: I think the way it is today, is normal. Demand from all parts of the world not just demand in the west and supply in the rest of the world.

The fact that this sucks for us here in the west, doesn't make it less true.

[blackbody]

Just look at USO for example. If an investor buys into USO, then that creates demand for crude oil. Same is true for UNG, UGA, DBV, etc etc. The commodity have turned into investment vehicle where even average retail investors can speculate on commodities. As more and more people choose to hold position in USO or GLD, the added demand created will further skew the supply/demand. But just as added speculation added to the demand, the other side of the same coin is surge in supply as the speculative funds leave the commodity market at some point on profit taking. Each day, as commodity hits record after record, the defenders of price are beginning to sound exactly like the real-estate defenders of few years ago; this time it's different, that this is for real and price will never come down. I give it 12 month for commodity market to become another burst bubble.

[JREwing]

blackbody

I am not saying, that prices will never come down. That would be illogical.

I am saying that the world is not used to the additional demand from emerging economies. If the entire world economy were in recession prices will come down. Since this not the case, as the Baltic Dry shows impressively, I will stick with my investments until I come to the conclusion, that the boom is over.

Considering, that the economic boom of Germany and Japan after WWII lasted more or less 20 or 30 years, I think, this one's gonna keep goin' for a while.

Hell, they are building almost a hundred major airports in China. Lots of stuff to be consumed there. Love it!

This is not house flipping. The Chinese fought with Rio and BHP for month now about the price for iron ore. And now they pay what Rio and BHP asked for anyway.

There is real demand. They are building actual stuff over there and not just the silly olympic crap.

I know, that this has never happened in our lifetimes, but nevertheless it is happening.

Many key minds throughout history predicted, that the world would tremble, when China awakes.

[paultaut]

There is no commodities bubble.....just because prices are up does not a Bubble make....

Except for OIL, all...ALL of the other commodities rely on energy for extraction...from infrastructure to mining and transportation or irrigation, fertilizer and transportation...The prices of commodities are all dependent on the energy costs involved...

Oil is not in a Bubble either...there is plenty of oil...unfortunately, most of it is curently unuseable. WTI is the US contract quoted...that particular grade HAS Peaked...Oil Sands/shale oil are not the answer if our refineries can not refine them...We need multiple state of the art refineries throughout the USA...they should be free of EPA regs until they are up and running....NO fines allowed until after the Fact and then time to make alterations if needed.

Use National Emergency, Emminent Domain, whatever...to make it happen. Any State that protests will not be a recipient of the refined products after the Fact...share the pain or forget the gain.

[bill d]

Now if we could just get China to piss of Israel.

[JREwing]

Excuse me?

[yank]

Crossing:
Nicely said. I guess what I would say to those trashing the commodity sector is to listen to Louise Yamada's comments about it. Louise is a technical stock strategist (30 years with Smith Barney) who interprets future sector price action based on past trends. Interestingly, one of her main points is that the longer a sector remains in a downtrend (for commodities see 1980-2000) the LONGER the recovery period when it bounces back. So typically since commodities were down for approximatley 20 years, we will most definitely see at least a 15-20 year bull cycle for this sector. This pretty much confirms what Jim Rogers has been saying all along. The longer the Wall St. community remains in "denial" about commodities as a viable asset class, the longer this uptrend will last. Bunch of whining crybabies. And by the way, Louise remains strongly NEGATIVE about the Financials and Technology sector for the exact opposite of what she said about commodities. Namely, since Financials have boomed for a relatively long period (1982-2000), they will remain in a confirmed downtrend for at least the next 5 years. Sorry CNBC, Cramer, and the other "shills" who can't stop talking about Financials. They are done. Stick a fork in them. Toast.

Yank

[e2800]

I have a masters in Economics, and my experience with economists is that they spend too much time in offices looking at models. Very few actually take the time time to look at smaller details. How many saw a housing bubble, how many saw the tech bubble, how many predicted a soft landing? 11% say speculative bubble in commodities, that means 89% say no speculative bubble? I'll go with the 11%

[Ali Anani]

There is no commodities bubble.....just because prices are up does not a Bubble make....

Except for OIL, all...ALL of the other commodities rely on energy for extraction...from infrastructure to mining and transportation or irrigation, fertilizer and transportation...The prices of commodities are all dependent on the energy costs involved...
I quote the above from Paultaut comment.
Just a pasing comment the potash from the DEAD Sea is not affected to a large extent by energy prices. Solar ponds are employed in extracting potash salts and so potash is less sensitive to enrgy prices in this part of the world.

[unseen]

What people forget is that prices are impacted by the margins. In other words if there is one barrel more supply of oil than is needed than their is over supply and if there is one barrel of oil less than is needed then there is undersupply. Since oil is showing high inventory numbers every weds at 10:30am and increasing inventory numbers every week, since the SPR is now almost totally full and since growth in the USA, China, India, Europe all have fallen in the last couple of months. We have an increasing supply of oil with a corresponding decrease in demand. the USA decreased demand for gasoline 7% last month alone. Basic econ 101 states that increasing supply and decreasing demand requires a decrease in price. Yet oil is going up not down. In other words oil is no longer trading with its underlying fundementals. In history whenever something starts to trade above or below its fundementals the price will over time revert to those fundmentals. As of now the bulls in oil contend that it is a "threat to supply", an "increase in demand in the future as China/India comes on line". As long as the bull case is made than the price is fair because supply will come down or demand will rise. If however any of their future predictions are wrong than the price of oil will fall and fall hard until supply and demand are in sink. Oil in other words is climbing the "wall of worry" It can continue to climb until the bull story falls apart. This is why bubbles are so hard to spot. It's only a bubble after the correction. During the run all the words and theories are confirmed and allow the run to continue. Oil could go to $150-$200 easily has more "end of the world"/ "peak oil" thinking emerges. The bubble starts when the underlying price breaks from the fundementals story. Which oil has done. The more the price rises in disregard to the fundementals the harder the fall will be. With every dollar oil moves up the risk to the downside increases and the reward to the upside decreases. There is most likely a lot of upside left in oil but we have come to the end of the beginning. It is now entering the begining of the greed phase. As we all know this phase never ends well but if you can get off before the ride comes to a stop millions can be made.

[VSD]

If all economist agreed it was a bubble, it would not be a bubble. Bubble is when everybody thinks there is some economic factor driving the prices higher and in reality it is just a speculative frenzy.

[richjoy]

Sorrry I'm late to this excellent discussion.

When oil increases by 40% in a few months, this is a BUBBLE!...OK, I've said it.

But more needs to be said:

Basically, oil responds to supply/demand fundamentals--however, demand didn't increase by anything like 40% in a few months. But, like other investments, commodities do responds to speculation.

I'm investing in oil, natural gas, and base metals stocks and ETFs, but for no purpose than to make a profit--so, I guess I'm a speculator...arn't you also?

Bubbles burst, and the oil bubble may burst next week; but the bursting of these commodity bubbles are but brief temporary "corrections"... that constitute buying opportunities to higher price levels.

This bubble-and-burst situation will continue until either supply increases sugnificantly (which will take decades), or demand is met (also may take decades).

With respect to grains (and unlike the other commodities), supply can be increased rather quickly, even within 1 year in some cases. Therefore, gain bubbles should be burst much faster than those for oil, steel, nat. gas, etc. Still, worldwide demand for grains continues to grow, and prices tend to rise again. Thus, I also continue to invest in grain ETFs.

Finally, I don't care what you call it--bubble, or fundamentals--it will continue to be a good investment.

[Alpha Seeker]

No bubble yet, wait for 2010
wallastoninvestments.c.../

[Silver-Bullet]

e2800 - Forget what others says, since you are an econ major let's talk about supply and demand.

A bubble is defined as an inordinate increase in price of an item where there is EXCESS supply.

With that in mind, please point us to newer and larger oil wells, please show me where the extra grains and wheat and commodities are? We simply do not have enough supply (we as in the world) of any of these commodities. The manufacturing facilities oil rigs and mines are decades old, and few, if not none, are built in the recent past. These facilities take years to be in full production. So, please, know your facts and not let your emotions run wild.

I'll tell you what a bubble is:
- The US dollar
- Financial stocks and bonds
- Housing
- World consumption - Lead by USA

I dare say gas will be at $8/gal in 2009. When that happens, all commodities will shot way, way up.

If things get bad (gas line, riots etc.) we may all see world war III - that will be the inclination of our political leaders. This will make going into Iraq seem like a walk in the park.

Do not forget: China, India, Russia, USA all have nuclear capabilities. It WILL be a fight for survival.

There is no bubble

[Silver-Bullet]

BTW for all who wants to bet against Soros and Buffett, you should have very VERY LARGE short positions on oil, commodities, precious metals and agriculture. And large long positions on financials and the US dollar.

[Paulo]

So, does global nuclear war start at $150 a barrel, $200 a barrel or $250 a barrel.

And what will that do to producers and supply? Or will these be strategically avoided?

Very large short positions may not be very useful, no?

Okay, I admit that my mind would turn to shorting somewhere between $150 and $200 a barrel, but I am not sure that I would short producers, including oil sands.

So what exactly would be shorted and in what time frame?

[marketslueth]

I have not heard the mention of ethanol. Fortune magazine says that is what is driving up food prices. Is ethanol a bubble too? $6.50 a bushel for corn is unheard of. Will that help energy prices?

[richjoy]

We are making a big deal of the spot price of a barrel of oil at the wellhead. As consumers, our main use of oil is fuel, mostly gasoline. After driving 513 miles since my last fillup, I filled my car a few hours ago at $3.549 at a nearby Walmart. (Incidentially, no one mentions that SHARP 46-inch 1080i LCD HD televisions are now sold there for only $1300!).

So the issue is -- when is the price of gasoline going to hurt to the extent that it will change my lifestyle so much that I stop buying HD TV and other items?

I don't know the answer, but I well recall waiting in lines a block long for gasoline during both the 1970s Arab Oil Embargos, when I was glad to get gasoline--at any price!...and so would you! (There was no Strategic Oil Reserve)

Maybe one measure of our pain limit is the % of income devoted to purchasing gasoline. For most of us, $50 or $75 per week is far less than 5% of our gross income...it clearly hasn't hurt most of us yet, and another $25 a week (50% increase) may not hurt either.

It is embarrassing that Americans think cheap gasoline is their right. Gasoline is taxed even more heavily in many countries, and costs the equivalent of $8-$10 per gallon (including Europe); they don't like it either, but they have learned to accommodated it...and it is very likely we will too.

Riots?...nuclear war?...I think not! (Besides, we can't spare the troops from our other 2 wars.)

Whimps! Stop your whinning and war mongering!

Some good may come of this. Hopefully, we will finally get serious about alternative energies (and because it will take years to bring significant amounts of wind, solar, geo-thermal, etc. alternatives on-line, we should start drilling in ANWAR and our coastal areas ASAP). If Clinton had not vetoed ANWAR drilling 10 years ago, we would have 1.5 million barrels more oil today!

[richjoy]

ETHANOL?...it is a cruel joke!

It is bad enough that a few farm state Congressmen and Senators (Grassly in particular) with seniority were able to ram through this legislation to the benefit of farmers and Archer Daniels Midland (gigantic campaign contributor); but they also included a 60 cents/gallon taxpayer subsidy, and prohibited cheaper ethanol from Brazil.

Than there is the matter of efficiency--it takes almost as much energy to make corn-based ethanol as what is produced. There are more negatives, but you get the idea; ethanol is politics at its worst!

[AmesTiedeman]

When Oil surges 8% in one week we have a bubble. This is nuts. No gas lines and oil is at 126? Come on. This thing is in the last innings of a major surge and then a collapse. Commodities always collapse after they run like this. This is madness.

[JREwing]

The price of oil is not determined from week to week. At the end of the year it will become clear, why oil is so expensive.(Remember Q$ 07/ 10 big ass draws in a row)

All those above, who call this a bubble based on the supply and demand of the last few weeks, have no idea whatsoever of how the oil markets works, how refineries work. Why and when they do their maintenance. And why they buy oil now, while they are doin' maintenance. Because fellas, when driving season is underway 125$ will be bargain.

Since markets discount future events, it is not surprising that oil goes up.
What is surprising is the extent of the move. May be they take 10 bucks of the price next week, who knows.

But the general trend is justified.

To all who complain about the price of oil. You all do still fill up your cars and heat your homes do you. So, it can't be too expensive.

And: The world is bigger than the United States. As in the Goldman&Sachs piece: gasoline is no longer the dominating factor in oil.

[VP ofCommon Sense]

I believe this year's 'summer driving season' has been canceled due to budget constraints.

[richjoy]

Global demand for oil exceeds supply by 1 billion barrels daily; thus the price goes up.

Some seem to (still) cling to the belief that gasoline demand in the USA influences price. For them, it seems there is no better wake-up than that gasoline demand is actually falling here (down by 7%), while the global price of oil is still rising.

If GLOBAL demand falls, it will first bring demand back to even with supply; than if there is a further falling of demand can bring down the price of oil significantly.

In the face of global growth in living standards, conservation can only produce limited (and temporary) results. I'm betting on increased demand (and thus prices) until alternative sources are actually widely implemented.

[Farmer448]

BUbble, but currently (and I don't know when) if think it will deflate instead of burst.

[sawgill]

Ethanol is a POX on our economy. End the subsidy now and for all farm subsidies.

As for Nuke wars, etc. Climate change trumps all. LATimes Opinion front page 5-11-08 "Civilization's Last Chance" is a recent recap of the situation.

USA will not be able to plant the corn crop in time this year and a 7% shortfall is predicted. It is still too cold, or too wet to plant.

Our largest demand for oil is for diesel that runs our transportation system and it runs 24/7: trucking, trains, farm equipment. Gasoline is secondary.

I'm long on oil, but have been taking profits during the past month's run-up.

[phillips49]

OPEC is working very hard to produce only what is necessary to meet demand. They can keep oil prices at current levels for the foreseeable future. Some nations, including the USA have already reached peak oil production and output is in decline.
The dot com bubble was based on speculation over assets and demand that existed only in the minds of the participants. The real estate bubble was based on demand for tangable but optional assets, that are worth only what someone else was willing to pay for them.
Natural resources are very real needs, the demand is very real, and the supply is limited and controlled. It is not in the suppliers best interest to flood the market with product.
There may be some froth due to speculation, but bubble, I think not.
I like investments with solid demand for products that people NEED, where there is limited supply that provides some pricing power, with limited competition and high prospects for continued growth. For me, oil, natural gas, oil field services, pipelines and distribution, metals, mining, mining equipment, seed, fertilzer, weed and pest control all satisfy these criteria and in my opinion are the investments to be in for the long haul because a growing world needs these things.

[StateofConfusion]

Phillips, richjoy and others have stated reality well.
What is lost in these discussions is the population explosion which was warned about and was openly discussed in the late 80's and early 90's (I think). Now, you rarely hear this discussed because religious groups only gain power by having lots of kids. This is true of Islam and Mormons (I know one Mormon that has 10 kids) and some other fundamental groups. Growing population demands more of everything and we do have limits on providing them as well as accomodating the pollution and waste.

Climate change (regardless of cause), demand, resource limits will drive competition for energy and food. The US government continues to allow high immigration here and this will create more problems of us.
Idiotic policies (when did Bush ever promote anything but more oil and finally corn ethanol?), the Iraq war, huge deficits, illegal immigration, too much legal immigration, etc. are destroying the economic super power. Most countries (in the west at least) want the US to shoulder world burdens while they work on their economy.

We can't control world population but we can control ours. It may be too late with all the religious, latino activist groups and political pandering, to save ourselves. Because of the above issues, we need population growth control, massive investment in renewable energy, conservation and a ban on development of farm land to have a chance. It may not be a straight line up but commodities and energy will stay in demand for a long time to come. In the U.S., Bush will be known as a destroyer of worlds, ours.

[investorslive]

Whats hot for Monday?

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[investorslive]

Whats hot for Monday?

www.investorslive.com/.../

[JREwing]

To those above who blame the Iraq War for high oil prices should read one of the pieces on STRATFOR once in a while.

The real reason for the Invasion of Iraq was to make sure, that Iran never ever controls the oil reserves of Iraq, Kuwait, Saudi Arabia and the Emirates.

Iran obviously tries to gain influence over the countries of the region from Lebanon to Pakistan.

If you think the Invasion of Iraq is responsible for the rise in oil, think how high the oil price would be, if Iran would control the bulk of the worlds oil reserves.

Democratically elected governments don't go to war unless they absolutely have to, for the peoples of the world hate wars. Since the goal of every politician is to get reelected, it is illogical to think they go to war for the fun of it.

[doodle]

The conspiracy theory says that oil prices are set politically behind the scenes, and the current run-up is meant to pay back the gulf states for bailing out our failing banks. Thoughts on this?

[Xyrus]

CrossingTheT, you are incorrect.

Democratically elected governments go to war whenever they damn well feel like it. They just have the additional hurdle of convincing their population that there is a clear and present danger that has to be dealt with. Once you have the population believing in whatever boogeyman you've created, you can get them to do pretty much anything you want them to do. As an example of this, look at Hitler's rise to power. He didn't slash and burn his way to the top. He got the people to believe in him and they WILLINGLY gave him all the power he wanted.

The same thing has happened many times throughout history, even in democratic regimes. And, more than likely, it will continue to happen many years into the future. Our current set of "problems" we have started over 50 years ago when we decided that securing our oil supply was more important than some nations soverignty (Iran), so we decided to help overthrow a democratically elected government (in Iran) and replaced it with the Shah (made Saddam look like a cute cuddly teddy bear). Yeah, couldn't see that one coming back to bite us on the ass.

Nuclear war? For what? What would they gain? The point of any sort of resource war is to capture the the resource. Nuclear weapons do not capture anything, thy destroy. What good is an oil field if it is irradiated to the point of lethality for the next 10000 years? Nuclear weapons are used for mass destruction of infrastructure (cities, manufacturing centers), production (people who work there), military centers (bases and such), and under certain conditions ship and troop conglomerations. Nukes are really a useless weapon unless you're talking about obliteration. Annihilating a country gains you little. Sure you have a victory but then what? A radiated wasteland full of charred remains is hardly what one would call a spoil of war.

There is no bubble. But there is a series of events which have happened at the right time to jack prices. The dollar has lost a good percentage of its value, which in turn drives up the price. There is also an increased demand. In some cases, there is ample supply but there isn't enough infrastructure to move it around or refine it. Whenever there is a bottleneck in a supply chain, the prices will go up.

PaulTaut, you have no idea what you're saying. Suspending EPA regulations for refineries? Do you have the slightest idea how dangerous the chemicals are coming out of a refinery? Let me guess, as long as thy don't build it near you it's okay, right? Even with the regs, no one wants to be near a refinery and they still pollute the environment.

So in summary, we have a decreasing currency, and increasing demand. In some cases, we have the supply but lack the infrastructure to move it/refine it. All that leads to higher prices. Bu don't kid yourself. A good chunk of that profit your seeing isn't profit, it's just offsetting inflation.

~X~

[richjoy]

I appreciate the compliment from StateofCon, but I must respond to his comments on population growth:

Population growth in the USA is (fortunately) a bit above maintenance; it has declined over the last couple decades. Our growth is in large part due to peoples who have come here from other countries...both illegially and legally. (In fact, it is because we need population growth to support our economy, that our government, either democrat or republican, will only give lip service to border enforcement).

Europe is in a much more serious situation with respect to population -- many European countries, including Italy!, have declining populations. European social welfare costs are going to become staggering in a few years.

Yes, we do have a few Mormons here, and they do tend to have large families; however, their contribution to our population growth is not significant.

[bkinn]

On May 12 03:46 AM JREwing wrote:

> To those above who blame the Iraq War for high oil prices should
> read one of the pieces on STRATFOR once in a while.
>
> The real reason for the Invasion of Iraq was to make sure, that Iran
> never ever controls the oil reserves of Iraq, Kuwait, Saudi Arabia
> and the Emirates.
>
> Iran obviously tries to gain influence over the countries of the
> region from Lebanon to Pakistan.
>
> If you think the Invasion of Iraq is responsible for the rise in
> oil, think how high the oil price would be, if Iran would control
> the bulk of the worlds oil reserves.
>
> Democratically elected governments don't go to war unless they absolutely
> have to, for the peoples of the world hate wars. Since the goal of
> every politician is to get reelected, it is illogical to think they
> go to war for the fun of it.

I wish I could believe that

[bkinn]

On the other hand, if commodities are all that we hold valuable in a growing society, how much progress will we be making?

During the late 90's OPEC had a hard time keeping oil above $20 a barrel. At $120 a barrel, do you really think that our supply line has changed that drastically within a 10 year period? If we continue to live in a commodities bubble, valuation for innovation outside of commodities related interests will continue to flounder and we will suffer due to a lack in demand for technology growth. Where will that leave our economic development when one of the most valuable assets the US has traditionally offered has been innovation? Sure, innovations on greater food sources is fantastic, but I don't see a blossoming economy based soley on food nor tech based on defending our energy positions, do you?

My point here is that we need to look at history to find the answer to the question: "are we in a bubble or will this commodities based market simply continue forever?". Historically, we have always seen periods like this. Each time someone has said "yes but it is different this time because... blah blah blah". Sure there are differences .. if there weren't there would not be repeat markets. This commodities boom will pass .. just as it always has. Tech and innovation will return, just as it always has. People don't want to live their lives within a context of simply "finding enough food to eat". As humans, we always reach for more; we always have, and we always will.




On May 11 04:14 PM phillips49 wrote:

> OPEC is working very hard to produce only what is necessary to meet
> demand. They can keep oil prices at current levels for the foreseeable
> future. Some nations, including the USA have already reached peak
> oil production and output is in decline.
> The dot com bubble was based on speculation over assets and demand
> that existed only in the minds of the participants. The real estate
> bubble was based on demand for tangable but optional assets, that
> are worth only what someone else was willing to pay for them. <br/>Natural
> resources are very real needs, the demand is very real, and the supply
> is limited and controlled. It is not in the suppliers best interest
> to flood the market with product.
> There may be some froth due to speculation, but bubble, I think not.
>
> I like investments with solid demand for products that people NEED,
> where there is limited supply that provides some pricing power, with
> limited competition and high prospects for continued growth. For
> me, oil, natural gas, oil field services, pipelines and distribution,
> metals, mining, mining equipment, seed, fertilzer, weed and pest
> control all satisfy these criteria and in my opinion are the investments
> to be in for the long haul because a growing world needs these things.

[JREwing]

Xyrus

Excuse me, fella. Since I am a German I know a little bit about Hitlers rise to power.

Journalists, who disagreed with the Nazi parties views were 'convinced' otherwise. As long as there was a parliament in place, the SA (a gathering of urban street thugs) prevented all MPs, who were likely to oppose the Nazi party, from entering the parliament.

After this 'parliament' gave Hitler absolute power, there was essentially only one newspaper, only one radio channel, only one party and everyone, who opposed Hitler was imprisoned and/or executed.

Excuse me again. But none of the above happened during the Bush administration. I guess, that about 90 out of a 100 journalists in the US share an intense hatred for Mr. Bush and criticize him on a daily basis. Of course they are well within their to do so and no one prevents them from exercising their rights.

So don't You ever compare Mr. Bush to Adolf Hitler, for You do not know what You are talking about. If You had to live under the rule of the Nazi Party, you would pray on your knees for a live under the Bush Administration.

[thinkink]

Unfortunately JREwing is ignorant of the parallels between Bush and Hitler and even more ignorant of the Bush family history!

Time and space do not permit a detailed summary of the Bush Bastards and their apparent agenda. Here's a few high lights - Rather than attack ME for making this claim, do some basic research for yourself.

Prescott Bush (Father to George H Bush) Profits from Hitlers rise and embraces Fascism.
Prescott Bush attempts coup on U.S. President!
From the Bay of Pig's, JFK assassination, Watergate, assassination attempt on Reagan, S&L scandal, stolen elections, Enron, 9/11 - YOU NAME IT and somehow the facts always reveal at least one of them has some demonstrable involvement. Either directly or through a 3rd party such as DICK Cheney, these guys are raping U.S. Finances, robbing U.S. tax payers and murdering people who get in their way.

You think if this was true "you" would know about it? Dumb ass!! they have the media in their pockets. They have political movers and shakers in their pockets, they have the big bankers in their pockets (or is it the other way around?), they have the high courts in their pockets.

This isn't "conspiracy theory," nor speculation, all the facts are readily available from credible sources who use legitimate government documents to support their reports.

YES, Fascism is alive and well, it's already taking hold in U.S. - YOUR FEARS are making YOU demand everything that BUSH is bringing upon this country!

People have been trying to warn you, they are still trying to get you off your lazy ass and find out for yourselves. But you'd rather sit around playing petty tit for tat, spewing unsupported b.s. and endorsing their agendas through complacencies.



On May 15 04:23 AM JREwing wrote:

> Xyrus
>
> Excuse me, fella. Since I am a German I know a little bit about Hitlers
> rise to power.
>
> Journalists, who disagreed with the Nazi parties views were 'convinced'
> otherwise. As long as there was a parliament in place, the SA (a
> gathering of urban street thugs) prevented all MPs, who were likely
> to oppose the Nazi party, from entering the parliament.
>
> After this 'parliament' gave Hitler absolute power, there was essentially
> only one newspaper, only one radio channel, only one party and everyone,
> who opposed Hitler was imprisoned and/or executed.
>
> Excuse me again. But none of the above happened during the Bush administration.
> I guess, that about 90 out of a 100 journalists in the US share an
> intense hatred for Mr. Bush and criticize him on a daily basis. Of
> course they are well within their to do so and no one prevents them
> from exercising their rights.
>
> So don't You ever compare Mr. Bush to Adolf Hitler, for You do not
> know what You are talking about. If You had to live under the rule
> of the Nazi Party, you would pray on your knees for a live under
> the Bush Administration.
>
>