Canuck Economist

World Series of Crude Oil: Winner Decides Winter Gasoline Prices

William Dav said:

"you will get use to $5, $6 and even $7, we have in Europe a long time ago. As there are no really good alternatives"

True we would get used to it - IF this was driven by the taxation wedge, as it has been in Europe. However, if this is driven by supply an demand, we will then have the supply and demand responses that we have observed - witness the huge investments in Canadian Oilsands and the humongous response in carbuying patterns for which the American car industry was so disastrously prepared for. The transition costs of a fast adjustment are huge! The economy will just fall apart, and we have had but a little taste of it in the past year. Sustained high oil prices will engender sustained or worsening economic slowdown.

Regarding the article itself, not sure that I see Goldman Sachs is actually manipulating prices towards $100/bbl, much less succeeding in doing that.

The supposition here is that the company can manipulate public opinion and that will impact the market for oil for a month or two. Hardly believable! The crude oil market cannot be manipulated by Goldman or the "texan oil barons" for more than a few days; only some very select middle-eastern producer countries are able to keep the market under-supplied for a time (but why should they collaborate with Goldman, when they might be better to bet against them - and their big ugly bonuses).

The question is can world economies stand oil prices greater than about $70bbl? I think not. Middle-eastern countries with influence in OPEC have already signaled that they do not believe this and will aim to keep prices $30 lower than the $100/bbl advocated by the author. Current prices will come down!

The Greatest Depression Is Coming

I am amazed at the BS that gets posted! I cant believe that seekingalpha allows this kind of analysis to go on line; and the commentary!

As economic analysis this is bad political stink! As political analysis it is even worse!

As for the comments, Is this a representative sample of US citizenry? Not at all! Americans are thoughtful, kind, educated. Those are the Americans that built the great country that you are.

Shame on you! I hope you are not investing this way....you will lose your shirts! Again!

Why Natural Gas ETF Has Resumed Its Climb

Good article, I think those analysts are right. A lot of the gas is shut-down and it is not a simple matter to turn the stuff back on - equipement needs to be moved, people hired, etc. The gas has to be transported. By the time there is a supply response the price will have spiked up - I believe will happen in February when the winter drilling season is almost over!

dlcnws: my furnace started running in last week in September. Check the temperature lows across the board in Northern States and Canada.

Question: has anyone seen a good article on the economics of shale gas - the full-cycle cost of shale gas will establish the long-term price for gas (cheaper than imports from the far north).

Out of (Natural) Gas

Thanks for the analysis and the info. Would have been good to know what positions you have.

I am long on gas because of exactly what you wrote. Everyone knows that news could not be worse. The farmers almanac has forecast colder than normal weather and the economy is picking up. My gas furnace started kicking in at night in September! The price of gas is at a point where running gas plants for electricity generation is extremely attractive. Industry output is picking up (production not employment drive the gas consumption numbers). Against the very high seasonal stocks are ridiculously low prices. Producers have shut down wells because these levels do no pay and it is not a simple matter to flick wells back on to get the gas to market. I believe that the least supply disruption will take this market to significantly higher levels because those high stock numbers could easily be taken down, in which case the price becomes an allocative mechanism once again. I do no want to miss the big upside opportunity for small profits on daily trading, which is what I think you are looking at, and on that you may be right.

Thanks for the info and the analysis.

Can Water ETFs Be a Profit Bridge?

looks just like a regular type of ETF to me - and does not seem cheap! In fact, the risk is that after the govt financed joy ride is over and it is time to start paying the piper through govt cutbacks (as we did in Canada from 94-98) this here little group is going to do quite badly! I say, stay away from these.

Is the U.S. Dollar Finished?

The US dollar like most currencies fluctuates on technical issues driven by ST demand and supply; I think the article is correct from that perspective.

The dollar will also move based on fundamentals. I believe the US dollar is fundamentally wounded because the US economy is fundamentally wounded. Things will not improve until the govt deficit, and the current acct and balance of payment deficits are tackled. There is a need to resolve the fundamental issues of an economy out of whack, with too much consumption, not enough investment or saving - the wrong signals are being given now in terms of the price of forward money because the printing press has created such high supply of currency. The article would be wrong on that acct. But we are also well aware of all these issues and the market reflects this.

The third reason why the dollar moves is to do with expectations. If the current issues are all factored in; then we should look at what to expect next. The American economy is the most powerful economy in the world (in spite of the stupidity of its bankers, financial industry and Bush's government) and will rev up again in spite of all the negativity currently being experienced. The question is when. If one believes that we have just gone past the bottom (look at production not employment numbers) and that governments will slowly start sopping up the excess currency, then the US dollar should start to recover.

I believe it is perfectly consistent to have higher growth relative to trading partners and a observing a strengthening of the currency (actually that is what the theory predicts). Overall, I think the article is right.

The Looming Threat of Peak Water, Part II

scarcity is a relative concept. Overcrowding could be defined in terms of water availability;
if worried about water move to Canada - but not to Southern Alberta, Saskatchewan or Manitoba.
for the drier places here or US, need to use markets for water allocation - a must. Farmers will then invest in high-tech water infrastructure, stop growing water hog crops, and sell their unneeded entitlements
As for the daily shower.... it is a phony issue...you will need to pay for the water used and remember: reduce, reuse, recycle will get you everywhere.

U.S. vs. Canada: Banking Edition

About the Canadian Housing and Mortgage Corporation....it requires a minimum of 10% equity (except for a small period when the govt as a copy cat of Bush's sillyness allowed 5% - but not for long); also note that CHMC is a government entity, it is backed directly by the govt. No pretense that there is a private investor holding the bag. It does not spin mortgages on unsuspecting investors that would create a falling dominoes effect. Yes, this is in part why the Canadian realestate market is also more stable - large numbers headed out of the burning building and all that. Are there lessons in this "regulatory" set up?

and yes, Canada has carried more than its fair share of the load in Afganistan - in human and financial terms.

The 30 Best U.S. Traded International Dividend Stocks

Good list; if I were in the US, I would put some of my eggs in foreign baskets; in foreign markets "close to home" in the sense that the countries have to have equal or greater safety to US investments. I believe US investments are likely to move sideways relative to foreign equivalent investments which will hold their value quite well but which are likely to appreciate a lot once the flight for safety of US currency is over and foreigners take a second look at the huge imbalances that still exist in US financial accounts (large current deficit; larger fiscal deficit - US continues to live beyond its means).

Bear Market In Its Final Stages?

No way Joseh! You have just gone through the stimulative government checks which your govt timed slightly ahead of the election. You have lost half a million jobs and there will be more to come now that the stimulative package has gone by. Your government cannot afford to keep spending and will be forced by financial markets to either cut expenditures or increase taxes.

Just like one would expect a stimulative package pre-election you should expect the tough medicine just after one. I think this is not the time to go buy stocks; it is time to be prudent. The mood does not look good from where I stand, investors will figure out that they need to crop their riskier bets. I don't know about you, but I will wait to see a solid panic sell-off.

Intrepid Potash IPO: Soaring Shares Signal Fertilizer Bubble?

Wow! Lots of fertilizer in these comments!

I wonder if some of you are still puffing your stock so the poor little investors get in while some of you are getting out!

Yes, get in now buy high! buy high!

Yes, you are probably investing the money you got left from having just sold banks!

I think the author is right to raise the question; at some pt. the commodities buble will pop; maybe not tomorrow, but pop it will. Does this market look past its peak? Looking risky to me!

Has the Dollar Hit Bottom?

Good article; Purchasing Power Parity does have the US dollar as undervalued. However, the Canadian dollar remained undervalued for years until now!

I think we need to consider the fundamentals. The US is currently on or before the point that Canada was in during 1994 when the government allowed a current account, balance of payment and government spending deficits - the triple deficit. We fixed it; at the cost of a lot of economic pain to Canadians! You do not have to be an economist to understand that a country, like a household, cannot continue to spend more than it earns for extended periods of time before lenders stop lending, and God help you if they decide the want to call their loans! China needs to do its part - trying to maintain its currency on a similar track as the US dollar is in is simply untenable - they are just rising higher so the fall will be bigger; it will not be a soft landing for them if this needs to be resolved by crisis!

Bottom line, I believe things will continue to get worse in the US until the people (thus the government) decide to get serious. US citizens are very similar to Canadians, they will demand change once they start suffering the consequences of government innaction - which by the way was also worse during conservative govt here much as is happening in the US. Address the Deficits; address the structural imbalances and the govt miss-incentives e.g. agricultural; etc.

The positive side: once the going gets tough and the tough get going, you will too get back to economic sanity. Canada is now in great finanacial health - now all stripes of govt are fiscally conservative; we improved incentives e.g., employment insurance and we are now cutting taxes while running surpluses. This will eventually happen in the US also but I just do not see Americans paying attention yet. I believe the US will continue deteriorating until citizens say enough! That will be the bottom - I give this two years.