green_cheeks

Remember Those $200 Oil Predictions?

Oil is going to be at $85 in two weeks. Mark my words.

$300/Barrel Oil Is Coming - Barron's Interview

Not every Chinese person has to use a lot of oil to throw prices into the $300 range. It just takes a small growing percentage. And a lot of Chinese are starting to make good money. But then again, a lot of their income is predicated on our consumers buying what they make. And if we can't afford to pay more for oil and start conserving (or are just unable to buy it), the demand destruction will prevent a gross escalation in the price save the dollar inflating like a balloon to the point that a snicker's bar costs $3 and a white bread is $6 (Wonderbread, not some Whole Food's "Rustica" or whatever)
People are just going to get used to colder winters and hot summers.
The only way we got up to 20mil barrels a day was due to easy credit. More people were able to afford and drive cars more. Now more people will be walking, taking mass transit and riding bikes. There isn't going to be an apocalypse, it will just be basic economics. I can be a mindless driver myself. But I know I could drive 50% less than I do if I needed to. Having a fridge full of yummy food and heating and cooling my home are far more important than taking 20 trips a day to buy things I don't need because I am bored.
Look at what is happening right now... Oil is dropping like a brick and so is our economy. Normally oil becoming cheaper would be helpful. The reason it isn't helpful is because it is still too expensive to help our sickly economy gain any ground. If oil went down to $30/barrel tomorrow, it would raise the economy from the dead like a defibrillator. But it would slowly descend and end up at point that makes economical sense. There is logic to all of this.
Honestly, if oil stays above $100 for a year, it would bleed us drier than we are. It might, but I doubt it.
The world uses 87mil barrels a day, right? We use 20mil of that. Well, we have been using less. But the argument is that world will use more. Not exactly. The worlds interdependence on us is tightly woven. We will see relative drops in the rest of the world's use.
If the world could truly afford $100 oil, then OPEC would put the floor in, but in all likelihood they are not.
And yes I am short oil right now. At least until it hits $80.

Oil Drops - But OPEC Looms

At this point, $100 a barrel is too expensive unless the dollar is deflated drastically. The rise to $147/barrel put the screws to our economy and that lasted for a short stint. Simply put, our economy can not afford to pay more than $80-$90 (today's dollar) a barrel for the long term. It has already been kicking our ass. We freaked out when it started to explode around $55. This has happened so fast to our economy that the catastrophic shock waves that were started two years ago are just starting to hit us in a relative sense in the housing market... and there are more to come.... for a while... It is just like a tsunami, the shores dry up and then all of a sudden a wall of financial terror will present it when we realize the reality of our position...
So for OPEC to put a floor on the market is not feasible for us nor them in the long run... the short run alone is economically suffocating.... Companies need to watch their bottoms lines like hawks... Therefore people are starting to lose jobs in increasing rates... What does the average person do when they lose their job and they don't have any savings? This is happening to people I know...

Energy, Inflation and Speeding Tickets

Cops are not losers. I like donuts too. They are so yummy. Yum yum yummy.
It might be a good idea to invest in donut stocks in a time like this. There are going to be less people driving therefore less people speeding therefore less tickets and less patrol. So police will spend more time at their local donut shop sipping and dunking those tasty pastries. The strain on wheat and oil prices are going to get pinched. further.

Oil Bubble Spin

Oil is not a bubble. It is basically the source of all things in our economy and most likely peaking at this point. We have been able to do without most things in the past, so bubbles burst. Houses got to expensive to buy, so we rented, now rents are getting high enough to consider buying again. The economy has had many fashions and bubbles, but now it has a chronic energy disease that is quantitatively different. We need used to need sun, water, air, and earth to live, now we invariably need oil.

Is Oil a Bubble? Part Two

Another comment.... Even if we aren't peaking, there is still the issue of caps for emissions that will keep the price of oil high.

Is Oil a Bubble? Part Two

My predictions....and these are primarily based on what I refer to as "peaking oil" as opposed to peak oil. My hunch about peaking oil is based on the various view points that I have read or heard from people close to the action including the contrary commentary too. I just don't find the contrary viewpoints to peaking oil to be all that convincing.

The price of oil will continue to ascend it's price at a steady acceleration due to the lack of alternatives for current users/addicts.
Due to the high price of oil and it's direct influence on our economic reality, our spending will shift from wants to needs in a progressively gradual manner(needs being food and shelter (rent, mortgage, and/or comfort).... most of us have no need for new clothes). It will be more important to feel somewhat warm and cozy in the winter and somewhat cool in the summer, at least more important than the pleasure we derive from our eyes and hears and all industries that revolve around them. We will still have the American appetite. I know few people that will sacrifice their favorite carbon input loaded diet for much else, me included with my avocados, California salad greens, coconuts and other tropical fruits. We will no longer be able to have our cake and eat it too, in a sense. There will always be the super rich with the ability to buy whatever they please, but the other 95% of us will be choosing to heat or cool our homes moderately, eat our same or similar diet without a lot of changes. Nothing is as close to a person's heart both literally and figuratively as their stomach. We have had a economy that has serving our neurosis and our needs. Well, when push comes to shove, our neurotic selves give way to the needs of the body.
It thus my belief that our economy could focus on consumer needs for a while and that the next bubble will include all of the industries that are required for the production, supply, and distribution of these items, thus oil, ag, natural gas, nuclear, wind, solar, rail delivery as opposed to truck, etc. Some could argue that we have seen a bubble already forming in these industries but then again, it is not like people are pulling ALL of their money out of Apple at this point to invest in our more immediate and basic industries. The market seems to be fairly diversified still, a diversification that resembles the idea that cheap oil will perpetuate into the unknown future.
So I guess my little ramble is this, we have had an economy predicated on cheap oil for a long time and it will correct itself. It is as we have been taking out a loan that is now due. The way it will be paid off is through a more subsistence like lifestyle. It is also my belief that commodities will be the most stable currency. The people that get in early are going to see those investments grow exponentially, even if one starts today.
This is the way Warren Buffet thinks. Ken Heebner, the other, virtually unknown Wall Street maverick (currently on the cover of Fortunre) also is on this track. Both these investors are basic needs investors and virtually no tech to boot.
One other thing I would like to address is the "it is different this time" theme that sometime props up. Well, it actually could be different this time. We now have 6 billion people fighting for dwindling resources.

Is Oil a Bubble? Part Two

WELL