ship shape and bristol fashion

Is Oil a Bubble? Part One

Yes, oil has got ahead of itself. This weeks capitulation of the oil bears shows it and it will correct. But to call a similar crash like the tech bubble is ridiculous.

It is complete nonsense, to compare wheat to oil. The supply picture for wheat changes every year, oil's doesn't.

And please: To say that AMRs move will cause the oil crash is a bit daring, wouldn't you say? Airlines have been managed incompetently and restrained by unions when oil was 10 bucks and they went broke at 10 bucks a barrel.

The same goes for Ford. A bureaucratic union restraint organization which will hopefully go bankrupt soon along with GM. Why does every carmaker in the world from Mercedes over BMW and Volkswagen to Toyota and so on want to produce cars in the United Sates? Because it pays! Ford and GM simply suck!

Established demand destruction doesn't apply today, because unlike in previous decades the world is out of capacity and the 400.000 barrels we use less are getting sucked up easily from others. May be when the emerging markets stop emerging and go as developed we can calculate as we used to.

As I recall, in January a lot of people called an end to the commodities boom when the Baltic Dry came down rather swiftly. Hoopla, it is at a new high, economies around the world report high growth rates, most of the times against expectations.

May be it is because there are folks out there, who unlike us, don't have to beg for credit so they can buy stuff. They have the money we shipped overseas in exchange for goods, because we are to inefficient to produce these goods ourselves.

So what are we doing: We complain and look for witches we can burn at the stake. Great that always helped - for centuries.

Instead we should buy more efficient cars, trucks and aircraft and we should kick some serious Washington butt until they open up every area for drilling, so may be we get some more oil of our own in 10 or 15 years.

May be our leadership should stop begging the Saudis for more oil. What a humiliation. We saved their butt more than once and know we beg on our knees: Please, please great king. Give us a little bit of oil! Because they worry about what the sight of an oil rig would do to the coastlines at home.

That is why we are loosing. We complain and drown ourselves in selfpity, while others do stuff.

Brazil can do it, we can do it. I think we have more coastal waters than Brazil.