Mr Bigfoot

Blame It on Oil Speculators

Although oil appears to be a good hedge against inflation, the low dollar and a low oil supply, the truth is, our oil supply is becoming less of an issue with a surplus possible soon. Inflation is the reason for this. Right now, the main thing driving inflation is high oil prices. As inflation goes higher investors buy more oil driving inflation higher again. Some experts predict this will trigger the world recession. This will result in lower gas consumption and it will free up more gas supplies, perhaps even creating a surplus in my estimation. The US dollar is in a good position to rebound to the top of the heap. Why? Because the EU will drop in value. There's just too much turmoil in the European Union right now. Investors will see the US dollar as the only alternative. I am no expert but even I can see the writing on the wall. Investors are going to loose their shirts on oil just like the recent housing credit crunch. We may be looking at another ENRON only this time on a much bigger scale. Hedge funds that have invested mostly in oil will topple leaving old age pensioners with nothing. The government won't be able to bail them out this time because the cost would be far to great. The CFTC and FSA will probably be too slow to react to the cracks forming in commodities trading so the govenment will finaly step in. By this time of course it will probably be too late and the damage will already be done. You said it yourself Kevin: qoute: "Typically, when speculators push the price of a good beyond reasonable level, producers begin producing to capture excess profits" The reason they don't produce more is because wolrdwide demand is dropping. China just raised it's gas and deisel 18 percent so consumption is dropping right now and it makes no sense to produce more oil in an economic climate we are experiencing now. Do you honestly thiink by raising oil output a few hundred thousand barrels a day that this will have any affect on prices. It would be minimal price change and only phsycologicaI in nature if it did. Take part in our gas price poll at nbtv.ca