Oil to $200? Fundamentals Don't Support It

Here is why Oil shouldn't go to $200 a barrel. Notice I didn't say won't go to $200, as betting against a commodity in this market is tantamount to financial suicide.

1. The fundamentals don't support an accelerating price for Oil. While the U.S is not officially in a recession, growth has slowed down here as well as in the rest of the world. Less economic growth means less demand for Energy. Has supply changed in the last month? Only in the minds of those bulls who believe any time a gun is fired in an oil exporting nation, supply is threatened.
2. The elasticity of demand for Oil may not be linear - that is to say, each 1% increase in the price reduces demand to a different extent. Is it possible that the higher the price, the more demand impact occurs? It is not inconceivable that demand for oil worldwide could flatten out for several years - it has happened before.
3. Many countries subsidize the price of refined products to their citizens to promote social stability. As the price of Oil moves up, the cost of these subsidies increases to the point where it is no longer economically feasible to do so. Once these subsidies are reduced or eliminated, the impact on demand may be tangible. Turkmenistan recently ended subsidized gasoline for its citizens, and others will follow suit as the price of Oil goes higher. While demand from Turkmenistan is negligible in the world market, many countries use subsidies, including China. China is, in effect, hurting itself by shielding its people from increasing prices. Since demand doesn't fall internally as prices rise, this leads to even higher prices.
4. Although demand for Oil is inelastic in the short term due to a lack of substitution, there is a "crowding out effect"; as consumers pay up more for gasoline, they will cut back on purchases of consumer items and other discretionary purchases. This will cause a further decrease in demand for Oil since many products use Oil in the manufacturing process. Many of these products and items are made in China, which still relies heavily on exports. So won't this "crowding out effect" eventually reach the end of the supply chain, and cut demand for Oil?
5. The price of Oil is firmly in the hands of speculators and financial players as everyone knows. This is difficult to prove, but it is clear that technical reasons and momentum are keeping the price elevated. As a trader on the floor said this morning on Bloomberg, the market wants to go up. And we all know that what the market wants, the market gets, at least in the short term. When this momentum ends, the impact will be staggering.
6. Much is made of the growth in demand for Energy from emerging economies, but the United States still uses 30% of the world's oil, and lack of growth here will eventually have an important effect on the market. In other words, a 5% growth in demand in the U.S. is worth 1.1 million barrels a day, while China's much-hyped growth of 7% was only worth 600,000 barrels a day. What if demand in the U.S declined 5%? Could China make that up?
7. Another important reason is less analytical - take a look at the people who are telling you that everything will be OK with Oil in particular, but also with Commodities in general. That prices will stay high. Do they look familiar? They should, as they are the same ones who told you that everything would be OK in the housing market and the Homebuilders. Remember that crap? They didn't buy land any more, they "optioned" the land. They had access to capital, etc. None of these reasons stopped Homebuilders from going down 75% from the peak. Consider your source.
8. Another non analytical reason is this - eventually someone in OPEC will stand up at a closed-door meeting and say this: Is it really wise for us to have oil so high for so long? Won't this eventually lead to permanent long term changes to demand as countries adjust their economies? Won't it stimulate the growth of alternative fuel sources? Or might it cause so much inflation that it will crash the world economy?

What could end the momentum play? Here are a few scenarios:

1. A Democrat in the White House releases oil from the Strategic Petroleum Reserve to bring prices down. The government has twice as much Oil in its inventory as the entire commercial market does. Sure, OPEC might cut production to balance the market, but then there goes the spare capacity argument.
2. A Democrat in the White House pushes a Windfall profit tax through during the first 100 days. This tax is not on Oil companies but on commodity traders and speculators. Or they could push up margin requirements for futures trading on certain commodities.

For those of you who don't remember, TheGlobe.com was the poster child for the start of the Internet boom in the late 1990's. It soared way above its true value as money piled into a speculative play. The company [not to be confused with the Boston Globe] is now long gone, and I am not saying that Oil will one day be "long gone," but might there be some lessons we can learn from our past mistakes.

Comments

[Flash Gordon]

Point #2 this person should consult their economics text book. A change of price results in a change in quantity demanded (a movement ALONG the demand curve. Otherwise you get into circular logic that price went up, demand (quantity demanded) goes down and where does it all end. I think it's valid to argue that energy demand in the United States is more elastic in the long run and we're starting to see that.

[CommodityBubbleproponent]

Nice article. Oil is simply the new internet. If you actually read the report that Goldman Sachs issued, in the section regarding oil speculators they basically undermine their own point when they say that oil inventories are at comfortable levels and that increased fund flow is the primary driver of the price increases.

[Bart Divanot]

Reality Check: Oil price today (5/13/2008) is $127 a barrel. If Iran and Venezuella will cut oil production, the price will go even higher. $200 is a realistic price for oil, however other alternative technologies will take off when gas become more than $4-5 per gallon. I am waiting for Chevy to come up with Volt model that does not use gas for 60 miles.

[Matthew S]

The rise in gas prices are caused from the weak dollar and the lack of oil refineries here in the U.S.. Our dollar is simply buying less oil. Keep in mind that our stormy summer a few years ago still has refineries that are not back to 100%. We have not built an oil refinery in the U.S. since 1978.

Suggesting that a democrat in office will fix these problems is almost as insane as relying on OPEC to do something about the prices. Whatever happened to OPEC's promise to keep oil at $28 a barrel? Have we honestly seen either political party seriously approaching this issue? No that is due to the fact that it is a complete liability.

America wake up, build some new facilities and begin to drill offshore and in Alaska. We’re relying on some of the most turbulent places on the planet to get our oil. The situations that spawn in those places aren’t the best for the investor. In the mean time conserve, and stop making everything from plastic. It won’t hurt you to slow down and drive something that only has 160 horsepower. Oil will most definitely go to $200.

[JREwing]

Hmmm... strange article, which backs up my suspicion, that supporters of the Dems really are economically less competent, then the rest of the political spectrum.

The author states correctly, that high prices kill high prices - at least in the long run.

But what he doesn't understand is the oil business. As everyone ought to know: Oil companies face enormous cost increases as the revenue growth of the oil field service sector shows impressively.

Oil companies use different methods to increase production of old fields, for example salt water injection. As I wrote above, all of these methods increase the cost of every barrel pumped.

Should the oil price come down significantly via demand destruction as the author proposed, oil companies will shut down cost intensive fields, because they will become less profitable or even unprofitable.

People have to realize: Since the oil business (along with most of the commodity businesses) has been in depression like state for the last 25 years, investment in every aspect of the business has been at a minimum.
That makes maintaining or even increasing production that more expensive, now.

It is not a coincidence, that new significant fields have only been discovered, since the steady oil price rally began.

One could say: Not only do high prices kill high prices. But also the opposite is true. Low prices will kill low prices.

About the SPR intervention thing:

Lefties really cannot think around the next corner.

If you 'Karl Marx' in all your wisdom release oil from the petroleum reserve, then yes prices will come down for as long as you release oil from the SPR.
But how long can you release oil until you seriously endanger National Security.(The SPR grows in size along with the geopolitical risk). And when you need to refill the SPR (which you will have to), your gonna pay a higher price (Dem in the White House or not), because every trader will go long long before that. And since, by lowering the price through your 'oil printing', demand will pick up sooner or later, prices will rise and you are back were you started, with the difference, that your whole SPR maneuver will have cost Uncle Sam a fortune.

In fact, I guarantee prices will be even higher, because oil companies will think twice before they invest in new production (investments in the oil business are usually big and long term in nature), if every time a 'Karl Marx' groupie is in power, they get buttf***ed. They will cut their E&P budget and hereby reduce the available supply on the market.

So how about this. You 'men of the people' could get in your head, that cheap oil was an unnatural state, made possible by the discovery of huge and easily to develop fields in the 40s to 60s. This is over. Over and out.
Really, really over. Please understand: Even if via demand destruction oil prices came down, oil companies would cut production, for it won't be profitable any more.

About the 'anti futures market thing':

Do you reds even realize that futures trading makes oil cheaper? Take Occidental Petroleum: Their average first quarter barrel price was around 85 bucks. WHY? Because their costumers bought their contracts for Jan-Mar 09 long before it breached the 100 $ mark.
So what's your problem, it works. Today I heard porschedriving oilmaniac Joe Kernen on CNBC: 'Why don't refineries pass their higher input costs on to the consumer?' BECAUSE there is a futures market for gasoline, too.

The futures market works.

And lastly: OPEC couldn't produce one barrel a day more. Not a barrel not a cup. HINT: If you believe someone who tried to blackmail you twice, you are a pretty naive dude.

[JREwing]

Sorry, that must be Jan-Mar 08.

[coaster]

JREwing makes some accurate observations but it is too bad he has convinced himself that this is a left vs. right subject, especially when you consider that it was the current administrations middle east blundering (along with a half dozen other blunders) that got us were we are today. Hey drop some bombs on Iran and watch how $200 will look like the good old day.

[pockyclips2020]

Wow! I'm still waiting for my trickle down tax rebate from the '80s.
You could see this train wreck a-coming when the Hummer tax rebate was passed. Further compounded by not passing an import tax on oil when it went below $20/barrel. This started out as an orchestrated fear and greed PR campaign to benefit the party in power that has horribly backfired.

Go out to the San Juan or Permian Basin. You don't see the majors doing much exploration. It's the independents doing the bulk of the work. The majors are taking their "exploration"... dollars and buying up
the most productive mineral rights, forcing up the development costs
for everyone else. And you want to give these jokers the rights to the last 10% of Alaska they don't own?

Hardly a drop of Alaskan oil makes it east of the Pacific Time Zone.
Alaskan oil is the most expensive in the world to produce. That's the main reason why gas is so expensive on the West coast.

As for big oil suffering, spare me. These guys are still living off of
$25/barrel oil from the '80s. And getting tax breaks to boot.
My employer doesn't get breaks for products we develop today, much less 20 years ago. The only way big oil should be subsidized is to get us off all oil.

[JREwing]

coaster, I did not make this a left-right issue, the author did that for me.
He's the one who suggested, that it would take a Dem in the White House.

I am well aware of the fact, that the GOP isn't what it used to be, when it comes to freemarketeering.

[kinghubbert]

Two words to support $200/barrel. "Peak Oil"
If you don't understand- Wiki it and it will all come together.

[JREwing]

May be the author has some kind of magic SPR. You know, the kind that never runs out.

[givargi]

this article makes ridiculous effort at suggesting what OPEC "should" be thinking, and at linking housing bubble people with oil "bubble" people? Housing bubble people are the ones who are saying that prices will come down and we'll be back to "normal" giant SUVs and McMansions 50 miles away from work.
And the end of the article, comparing a dot com company with no real intrinsic value with Oil? That was LAME! Wall street clowns have deluded themsleves and believe each other's delusions, I bet Mr. Eric Fox would NEVER in his wildest dreamed imagined paying $4.00 for a gallon of gas in 2008.

[DSB]

I stopped reading at the word "tantamount"

so sorry.

[Eric Fox]

Don't know where to start on this...so many comments.

Flash Gordon…point #2 - I was suggesting that a move up in price by 1% will have more impact on demand when the price is above $100 than when the price is in the $30 range. I actually didn't declare this definitively; I was just opening it up for debate. Sorry, if I phrased it incorrectly. Also, like you said, one of the points of the article is that demand is elastic in the long term and we are starting to see it. Look at recent stats on miles driven in the U.S. It is starting to flatten and will turn down.


Mathew…“The rise in gas prices are caused from the weak dollar and the lack of oil refineries here in the U.S.” Traders using the dollar as an excuse for oil prices is a recent phenomenon. You will see that once the dollar starts moving up, oil traders will come up with another excuse for high oil prices. I agree with your other points….I think we should drill off the coast of Florida, California and the ANWR.

JREwing….I think that they will cut back drilling of high cost fields as you state, but existing wells that are on line that operate profitably will still pump out oil since the costs are sunk. On the SPR point, I agree it will be a short-term fix but it might break the momentum and flush out the traders. The government will make money on the sale; the average cost is much lower than current prices.

[Eric Fox]

Coaster…I agree that it is not a left-right issue. Maybe I shouldn’t have put the word Democrat in the last part. If you knew me you would know that I am not a left-winger. In fact, I am insulted by this. I voted for Reagan twice, Bush twice and then Bush twice again.

Mr. Hubbert…I’m sorry but not convinced that peak oil is imminent. I know that this will upset you and I am sorry again. I do agree that one day we will have peak oil. Just like one day I am sure that I will die.

Givargi…I obviously don’t know what OPEC discusses in closed-door meetings, I was suggesting that it is possible that a minister may make an argument that high prices are not good in the long term for them as suppliers. The housing bubble analogy was speaking to the tendency for the sell side to present the most optimistic arguments in support of an investment. I have seen it in Internet stocks, CLEC’s and Homebuilders. As for the globe.com comparison, I admitted in the same paragraph that it wasn’t applicable, but I needed some sort of catchy headline. This article originally appeared in my blog with the globe.com in the headline.

DanB…Tantamount? I didn't realize that the word was so out of fashion. How about canard? Or Zarf? I’m sorry you stopped reading; maybe you could have contributed something to the debate.

[JREwing]

Eric thanx for your response.

I pull the 'Karl Marx' thing then, since you voted for Reagan. May be I got a little carried away.

[pcull]

Just to throw this out there, and please don't flame me if I am mistaken, but weren't there Windfall Profit Taxes implemented in the past? I seem to remember a very similar situation at an earlier time, but there was a difference. We had a Democrat in the White House, named Lyndon Johnson. So while that is different, the common denominator is that it was another Texan in the White House.

I guess my point is this: Our nation will continue on a downward spiral for as long as the two party system remains in place, and is used to manipulate the general populous to stay at odds with one another. I think Eric Fox may be like many Republicans that are a little upset with the party right now. Traditionally, we have worn the white hat and saved this country from economic ruin. I am not sure we can do it again, but one thing I am definitely sure of is that putting a muslim in the white house is surely not the solution.

[CommodityBubbleproponent]

Supply and demand fundamentals between today and last year have actually improved.

1. Increased spare capacity: Up from a little over 1 million b/day to 2.3 million.

2. Iran situation: The dopehead traders on the NYMEX apparently didn't get the memo that Iran has 28 million barrels of oil sitting in tankers off of their coast that they can't sell. They've paid oil tankers to basically idle daily with the oil. In any business, when you have unsold excess inventory that you want to unload, the first thing you need to do is cut production to tighten the supply line. This further demonstrates that the market has too much oil, not too little. And oh btw...guess what happens when the shutter the 500,000 barrels of oil production capacity? MORE SPARE OIL.

www.guardian.co.uk/bus...


I know this concept is so outlandish to the perma oil bulls that there would actually be an oil surplus, so I gave you guys a link from a credible news source, just so you guys don't think I'm blowing smoke.

3. Oil price subsidies are coming down in Indonesia and eventually may happen elsewhere.

4. Demand growth has basically been cut in half from the original forecast for the year according to the IEA (and they tend to be on the aggressive side of demand forecasts). The call on OPEC crude for the year is now 300,000 to 500,000 LESS than what is actually being produced.

So what is fueling the oil market you may ask?

1. Cheap money from the major economies. Even the ECB is too accomodative with their interest rates right now. The Fed is a joke with their liquidity injections to the investment banks that got us in the mess were are in right now.
2. Securitization of commodities.
3. Rampant speculation in the oil market. This is not created by any one party, but rather a herd mentality. The investment community PR machine is in and has been in full gear about how the impending oil shortage for the past 3 years to the point where everyone just accepts it as fact.

JREwing- If the price goes down in the future, oil companies may not shutter their expensive fields. When a market contracts, companies are forced to do whatever they can wherever they can to generate cash. And that means pumping oil from unprofitable fields. This is why low prices don't always cure low prices. Why do you think GM puts Hummers on sale?


My analysis- This oil market will crash horribly once the credit mess alleviates and the fed can raise interest rates.

[BrianPursley]

KingHubbert: Peak Oil is laughable. How many fossils does it take to make a barrel of oil?

JREwing: Excellent post. You communicate with rare clarity and understanding.

[User 179796]

The problem STARTED With the Rep. Oil Men in the White House and Congress - think again...they started it with the war and the Fostering of the oil co. mergers in 2003/4 - which should have been protested for anti-trust violations...(BTW - there is more refinery capacity today than 8 years ago). Add to this their pledge to the oil companies to make it painful enough so that they would get drilling in the US through Congress - which I favor, since we can do this responsible now - NOW it is GOLDMAN SACHs being the GREEDY DOGS - ginning up rumors and false speculative analysis - who don't care about the pain they cause or add to worldwide starvation - only concerned with making a billion per key traders/hedge fund manager..obscene is too nice a compliment for them...and IRAN & RUSSIA who favor the high prices...they "trade" now too...as it helps their production sales..
WE NEED regulations on the commodity markets...35% margins & higher taxes on non-supplier/producers would help -BTW, Goldman Sachs even owns a refinery...Hmmm
Oil should be $75- at present

[maher]

What? "Someone in OPEC will stand has stand up in a closed door meeting" and face the Iranians? Are you kidding me??! You are in La La Land, baby.

It has nothing to do with fundamentals, buddy boy, it has everything to do with the coming military strikes on the Iranian regime and its terrorists-

Wait until Hormuz strait is mined or bombed, and I will tell you if $200 is a bargain then or not.

You novice writers take one face out of a hundred faces of a cut diamond and claim to "have the truth"??! Puaaah!

It's Iran stupid!

[JREwing]

Commodity Bubble Proponent

Iran has sitting tankers full of crude sitting off their coast, because it is the height of asian maintenance season. Iran, which has very low quality crude is dependent on the asian market (most of all Japan), because there are a lot of refineries in asia capable of processing that sort of crude. Once the maintenance season there is over those tankers will sail eastward. BTW Iran is losing production for decades, since they peaked in the 70s. they are not cutting back, they get cut back.(Another perfect example of underinvestment.)

Once again you make the mistake of poring all sorts of oil into one barrel. NYMEX LIGHT SWEET CRUDE is a basket of low gravity low sulfur crudes. These sorts of crude are rare.(North America, North Sea, Nigeria)
When You'd take a look, not only at he overall inventory, but especially at Cushing, OK (the bellwether for NYMEX LIGHT SWEET CRUDE) inventories are a lot lower, than last year.( last year this time: 27.7 million, this year: 20.2 million barrels)

And, yes in cases, where there is too much of a sort of crude, yes they cut prices. Like the Saudis for their bad stuff.(But there aren't a lot of refineries in the US, that can process the 'Bad Stuff')

Or in other words, there could be a sea of crude out there, if it is the wrong kind of crude, no one gives a hoot in hell.

HINT: If you get your information from the communist parties very own 'The Guardian', you devalue your arguments before you even made it.

And a little business 101:

There is not a whole lot of cash generated by an unprofitable field. Just a thought.

You are obviously one of those people, who are franticly looking for the passage in the bible, where it says that gas ought to be for free. Oh I found it:

Gasjunkie 13,1: Gas should be for free, because the archangel 'of last century V8 engine technology' said so.

Hope I could help.

[maximax]

As I commented on another article on this site there are quite a few contributions in the energy section of this website that are pure lobbying talk but yield little to no insight for investors. The author of this article appears to be a seasoned investor, but this nonsense makes me wonder how he can earn money in the markets. Drops several economics terms (crowding out etc), but gets it so wrong with economic reasoning. The author seems to have no understanding of the oil markets. I have little to add to JREWing's statements although I do agree that this issue shouldn't be politicised. I am not American but if those who are have only the slightest respect for their own country, then do not touch the SPR just to bring prices down. Lobbying OPEC is useless. Reduce demand, no one needs as much oil per capita than the US. Also, S/D fundamentals are not the only determinants of the oil price. Real interest rates, exchange rates, perceptions of the future S/D balance...

[Eric Fox]

maximax....I stated in the first paragraph that I wasn't going to step in front of this momentum train so that is how I make money or rather don't lose money. I'm not sure what is wrong with "crowding out" term. Consumers have a limited amount of money to spend so if oil/gas prices go up they may spend less money on clothes or put off that furniture purchase. High gas prices crowd out spending on discretionary consumer goods. Here is bottom line, ignoring all the political comments here. The world's largest economy and biggest consumer of oil has seen growth go from 3% to 0%, and yet oil prices have gone up $35 since January. Why is it so inconceivable that oil can be treated the same way by the market as the market treats a momentum stock? A momentum stock continues to go up because it continues to go up. Last, why do oil bulls get so angry when people try to have rational discussions on an issue. We are getting to the point where discussing oil is like discussing climate change.

[JREwing]

Eric

One cannot compare a stock to oil or any commodity for that matter. Simply impossible.

While I agree, that things are a bit crazy in the pits, I stick to my opinion, that a long term uptrend in oil is justified.

[Eric Fox]

I agree that stocks and commodities have many differences. What I mean is that there is a large amount of money on Wall Street managed to price and/or momentum models. When a financial instrument ranks in its model, then it will be bought regardless of valuation or fundamental analysis. This may move the price higher than current fundamentals warrant. I never meant to suggest that oil will end up like globe.com - losing 99% of its value. It is a commodity that we can't live without. When you listen to the traders being interviewed on bloomberg or CNBC, they try to use fundamental reasons to justify price moves, but it usually ends up being technical reasons that it is going up.

[Eric Fox]

Another concern I have is that the market is psychologically asymmetrical - meaning if the U.S. stopped buying 50,000 barrels a day for the SPR, it will have no impact on the market because it is so little. Yet, if a strike in Nigeria took 50,000 barrels off the market, the price of oil would tick up a couple of dollars.

[JREwing]

Lack of shorts

I think one reason oil is so resilient is, that one has to have a lot of guts to short oil. Every time a shot is fired in the Straits of Hormuz, Chavez hooking up with the chinese, someone gets killed in Lebanon oil goes through the roof. You gotta be kamikaze to go short, even if you thought the fundamentals would justify a decline in price.

May be that's one reason Nat Gas underperformed oil since Katrina. The only risk to Nat Gas is the Hurricane season.

[JREwing]

Just read in the WSJ.com, that the ministry of interior declared the polar bear an endangered species, making almost impossible to drill in ANWR.

Guess we're a little bit closer to 200$ a barrel.

[Kunst]

"one thing I am definitely sure of is that putting a muslim in the white house is surely not the solution"

pcull, you are so stupid. Worse, I imagine perpetuating this lie is intentional.

[muhammadbillal]

i think the auther has done well related to supply and demand issues of the energy sector. i do believe it will come down if the US negotiates with saudi arabia and iran government to bring the prices at the normal level. at this point of time the greenback is strong and the economy is recovering at the same time slow growth is seen all over the world. its best time to have good relations and the brotherhood to iran. it is the only solution of all problems. us should develop some new refinaries. we hope so it will come down today or this week

[epoch]

Correct me if I'm wrong, but I thought it was fairly common knowledge that most OPEC members produce as much as they physically can/want (the agreed production limits are basically bull)? Greed and human nature would likely dedicate full production, especially during times of high price and high need for those bucks in the producing countries? As apposed to Iran and Venezuela whom say production should be cut. Why, because they can't produce anywhere close to there assign quota, so it's in there best interest that $/br price stay (go) as high as possible by trying to limit production of others. If Iran and Venezuela could produce more they would? Would OPEC countries actively work to increase production through major infrastructure investment (oil patch, refining, etc.) if they intend to be limited by a quota in the future? Venezuela seems to be doing a good job killing off any future investment in their oil patch so maybe they really plan to observe their assigned production limits.

[tuj]

There is only 1 opec member who can increase production; the Saudis. Do some research on how their megaprojects are proceeding and compare that with the IEA demand forecast. Jack #2, tar sands, shale oil, and the Orinoco belt are all expensive sources of oil. ANWR, in the most optimistic case, is only 6% of the Saudi's reserves. In all likelihood, its more similar to Dubai's reserves.

As for geopolitical risk, look where we're getting our oil from:
11% Venezuela
12% Nigeria
7% Iraq
5% Angola
2% Columbia
3% Algeria
1% Congo
1% Chad

All countries with major geopolitical risk, and I've ignored Kuwait and the Saudi's.

[Eric Fox]

A recent study on elasticity of demand for gasoline:

www.econ.ucdavis.edu/f...

[Mmarrkk]

"one thing I am definitely sure of is that putting a muslim in the white house is surely not the solution"

pcull, I am not a fan of the Hussein Obama man, but this isn't the right way to do it.

You should have said "one thing I am definitely sure of is that putting a MARXIST with an extreme SOCIALIST IDEALOGY in the white house is surely not the solution"

Obama's dad's muslim roots don't scare me. The color of his skin doesn't scare me. His pastor, he scares me but for other reasons. Obama's promises, his legislative record in the Senate, his proposed programs, etc...now those SCARE THE CRAP OUT OF ME. He is basically just left of Lenin and will drive taxes on working/producing Americans through the roof, will royally screw up our medical care and will screw the US energy industry. If you liked the old USSR, you'll love the Obama vision for the US. PS, Hillary and McCain aren't much better. But if my choice is a cruise missile up the rear end, a rifle to the head, or a 12-inch knife to the chest, I'll take McCain the knife.

[Eric Fox]

This article came out yesterday:

Iraq could have largest oil reserves in the world.

"Iraq dramatically increased the official size of its oil reserves yesterday after new data suggested that they could exceed Saudi Arabia’s and be the largest in the world. The Iraqi Deputy Prime Minister told The Times that new exploration showed that his country has the world’s largest proven oil reserves, with as much as 350 billion barrels. The figure is triple the country’s present proven reserves and exceeds that of Saudi Arabia’s estimated 264 billion barrels of oil. Barham Salih said that the new estimate had been based on recent geological surveys and seismic data compiled by “reputable, international oil companies . . . This is a serious figure from credible sources.”

[maher]

B. Hussein Obama is abought & paid for Islamist sleeper agent in the US senate; the Iranian terrorist regime pays him off like they do Hamas Hezbollah and all the other Islamist Terrorists in the world.