JREwing

Who's Really to Blame for Rising Oil?

You do have a point.

Who's Really to Blame for Rising Oil?

richjoy, it is a joy to read your comments.

Who's Really to Blame for Rising Oil?

e2800's last words: 'Why did those chinamen have to get the same standard of living, we have...?'

Who's Really to Blame for Rising Oil?

Well, at least a bit of improvement over your last article.

First, considering, that the only thing you read for at least two years, is: Oil is a bubble - there is no reason for oil to be that high- blablabla..
so, considering this makes it almost impossible for oil to be a bubble.

Dude, I am not that old, but come on..

'Somalia is the latest to join the growing list of African countries where rising food prices have led to violence.'

Are you serious, man? I can't remember a time, where there was no violence in Somalia.

The reason for the rice shortage in Asia is that there are price controls in place. Come on, when you are a rice farmer, you not gonna sell your product for the set price. You want to sell it for the maximum. When you don't get the maximum, you sit on it. Field work is pretty exhausting, those guys really deserve a decent price for their product.

Another great example, why governments should not interfere in the economy.
Or like Jim Rogers put it in a German newspaper interview: How many of your college buddies are farmers? None huh? That's because being a farmer sucked for the last 30 or 40 years.

Just as almost every raw-material and energy business sucked for the last 25 to 30 years. Looks like they are gonna be great for the next 25 or 30 years.

About this oil inventory data last week. It was not bearish, it was BULLISH.
Even if most folks don't get it.

I will try to explain again, because it is Sunday and I am bored.

1. Inventories may have been up, but they are still lower than last year.
2. Imports where up compared to last week.
3.(important part) Refinery utilization was a very low 85%

Hmmmm. The simpler minds among us may think: Why the hell goes oil up when inventories are up and refineries don't work as much?

Here it comes: Refiners know that driving season is coming (and yes: this year again people will drive across the country and visit folks and stuff), so they try to get there refineries in good shape. That's why refinery utilization is down now. But imports are up. Why is that? No it's not for fun. Refiners order that oil, because they know they need that during driving season.

And on top of that: Distillates inventories are really low and demand around the world is very strong. Seems more and more vehicles around the world a diesel powered. The Goldman guy explained that pretty good last week: Gasoline is not the most important factor anymore. (Yes things change.)

About your oil company jealousy.

First, when you are convinced that the oil majors are practically printing money. Why don't get a piece of that action by investing in them?

Second, did you even look at their earnings? If you did, you would know, that their downstream business (the one that ends at the pump) sucks and the consumer doesn't pay as much for gas as the oil companies would like. Their input costs (oil) rose faster than the price of gas.

So consumers are raging mad. Here is what consumers really should do, because cutting back on stuff like you are suggesting sucks:
Invest in the companies, who profit the most from high prices for all the stuff you mentioned.

I am thinkin' about a BHP, RTP, RIO, ADM , POT, MOS, OXY, APA, APC, RIG, NE, SLB, HAL,...........

Lots of money to be made.

The Crude Oil Price Disconnect

This article is total crap and that NYMEX floor trader was probably short and got his ass kicked.

The author is another one of these 'Joe Kernen' types, who think that once an oil field is discovered, it produces instantly at an maximum daily rate and does so until the end of time. And anyhow, oil should be for free. People, who think that is true, probably believe in Santa Claus, too.

Yes, there are still nice discoveries made, and to be made. But new discoveries take a long time to come online. However,in the time new fields come online, existing field are being depleted. For the 'Joe Kernen' types, this means, that they run out of oil. So much for the supply picture.

Now for the demand picture. Just a few things here. China imports of diesel/heating oil quadrupled year over year. Even Japan import a lot more than the year before. India Up.... thailand up....... Australia up and so on. And to make bad things worse: There is no demand destruction in these emerging markets, because the millions and millions of people there don not feel the Pain at the pump, because they get a painkiller from the government in form of price controls. Just check out the Petrochina numbers from yesterday.

So, when you consider the above and the fact that US supplies are 30 million barrels less than last year at this time, THERE IS NO REASON, why OIL PRICES should not be higher than last year.

P.S. I stopped watching CNBC, because i couldn't stand the daily question: What is the 'real' price of oil? What are these people communists? The real price is the latest tick at NYMEX front month contract. Not what you wish for!!

In Oil we trust!