insideoil's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/39078/comments http://seekingalpha.com/article/173607-why-the-stock-market-should-crash?source=feed#comment-764776 764776 Tue, 17 Nov 2009 23:45:06 -0500 http://seekingalpha.com/article/165108-is-dollar-revulsion-for-real?source=feed#comment-706346 706346 I think the European politicians smell the intent, but are smart enough to try and keep their distance and their independence. Eventually this is going to come down a straight out fight for jobs, and a humdinger of a trade war can only be just round the corner. We are still at the pushing and shoving stage, with a few mannerly thrown fists, just hope we do not get on to knives and guns. ]]> Wed, 07 Oct 2009 01:47:08 -0400 I think the European politicians smell the intent, but are smart enough to try and keep their distance and their independence. Eventually this is going to come down a straight out fight for jobs, and a humdinger of a trade war can only be just round the corner. We are still at the pushing and shoving stage, with a few mannerly thrown fists, just hope we do not get on to knives and guns. ]]> http://seekingalpha.com/article/165026-is-there-really-a-global-cabal-aiming-to-dump-the-dollar?source=feed#comment-706336 706336 Wed, 07 Oct 2009 01:27:45 -0400 http://seekingalpha.com/article/130485-shrinking-market-liquidity-or-the-soon-to-appear-black-swan-of-black-swans?source=feed#comment-461219 461219 If the added liquidity pumps the market, the government program will be seen as a success.
As you rightly point out this is nothing more than a clever scheme backed with tax payers money designed to force you to spend money and/or lose it through inflation. An investment nightmare for "buy and hold" and now a nightmare for traders as well. The game of the last 10 years has to be paid for, and there is no cheap escape, but there will be winners and a lot more losers. I think now the game is up, and unless main street starts showing some benefit - as in real money, real value creation, with real people to offer investors - we are all doomed to paying the price of past follies. Even the trick of getting somebody else to pay is simply not working any more as the "smart" money can smell the manipulation and are simply abandoning the game. Maybe its time to play in 3rd world markets that are not quite so sophisticated, or in physical commodities that are less easy to game.]]> Mon, 13 Apr 2009 04:49:12 -0400 If the added liquidity pumps the market, the government program will be seen as a success.
As you rightly point out this is nothing more than a clever scheme backed with tax payers money designed to force you to spend money and/or lose it through inflation. An investment nightmare for "buy and hold" and now a nightmare for traders as well. The game of the last 10 years has to be paid for, and there is no cheap escape, but there will be winners and a lot more losers. I think now the game is up, and unless main street starts showing some benefit - as in real money, real value creation, with real people to offer investors - we are all doomed to paying the price of past follies. Even the trick of getting somebody else to pay is simply not working any more as the "smart" money can smell the manipulation and are simply abandoning the game. Maybe its time to play in 3rd world markets that are not quite so sophisticated, or in physical commodities that are less easy to game.]]> http://seekingalpha.com/article/130450-earnings-are-horrible-but-it-may-not-matter?source=feed#comment-460208 460208 I guess that leaves something to be said for saving, making things, and having a government controlled financial system. Seems to me the grand old USA is slowly finding the value of the real economy, rather than the virtual one that is disappearing to nothing. Point is we have all been living off the virtual economy, so it makes for a rough change to realise just how hard it is to make a living without leverage off the cheap manufacturing sweat of others. China seems to be spending its stimulus money on building their real economy and is still adding value. The West seems to be spending printed stimulus money on propping up failing real estate, virtual business, and keeping unproductive people employed in value destroying business. That is what is so difficult to believe in the present gains - you can sense it is the same phoney scam being continued. When we see the value system in the USA change - that will be the solid turn of the market, anything less will be a continuation of the confidence game, where the traders can feed but true long term investors never win.
I am still long on oil (and cash) - but realise it may take a while for any positive return to show in real terms.I just keep on buying in the big OilCo's when its cheap and pray it has to work for me eventually. At some point in time it has to work, either through inflation, or the value of easily traded raw material, or both. One catch-me though - I know just how much capital it is going to take to keep capacity on line - so its not just about reserves, it is about how much money it will take to keep the reserves flowing as well. Not all OilCo's are equal.]]> Sun, 12 Apr 2009 02:17:33 -0400 I guess that leaves something to be said for saving, making things, and having a government controlled financial system. Seems to me the grand old USA is slowly finding the value of the real economy, rather than the virtual one that is disappearing to nothing. Point is we have all been living off the virtual economy, so it makes for a rough change to realise just how hard it is to make a living without leverage off the cheap manufacturing sweat of others. China seems to be spending its stimulus money on building their real economy and is still adding value. The West seems to be spending printed stimulus money on propping up failing real estate, virtual business, and keeping unproductive people employed in value destroying business. That is what is so difficult to believe in the present gains - you can sense it is the same phoney scam being continued. When we see the value system in the USA change - that will be the solid turn of the market, anything less will be a continuation of the confidence game, where the traders can feed but true long term investors never win.
I am still long on oil (and cash) - but realise it may take a while for any positive return to show in real terms.I just keep on buying in the big OilCo's when its cheap and pray it has to work for me eventually. At some point in time it has to work, either through inflation, or the value of easily traded raw material, or both. One catch-me though - I know just how much capital it is going to take to keep capacity on line - so its not just about reserves, it is about how much money it will take to keep the reserves flowing as well. Not all OilCo's are equal.]]> http://seekingalpha.com/article/117726-humility-of-realism-ii-seven-thoughts-about-our-whole-system?source=feed#comment-373057 373057 Clearly many others have a long way to go to get to this point, and judging by the increase in general anger ( and yes - starving is a good reason to be angry) we have a lot of troubles to work our collective world through. I hope we make it through the angry stage - I not really sure I want to be too close if China, Iran, ...( add whoever is your personal bogeyman country) gets angry as the USA cops it for "stealing" their money, even if they made bad investments choices.
For me - I 'd like to know where all those lawyers are that normally chase ambulances - have I got a clean up job for them, but then again I already know the bankers will have paid them off as well. I guess the natural reaction is to blame someone to justify your own anger, and getting the bankers to cough up their ill-gotten gains would be my preference.
Having said that, it would be no solution as then by the looks of things there would be no one left to do anything at all, as the lot of them appear collectively very guilty of a minimum of greed to outright fraud and theft.
Getting past my own personal blame preferences, letting the whole system naturally reset to the worst lowest common denominator position seems so excessive, but I have to agree with David that the prognosis for any other solution does not seem that good right now. Maybe hope has to be a strategy choice after all. ]]> Mon, 02 Feb 2009 07:52:59 -0500 Clearly many others have a long way to go to get to this point, and judging by the increase in general anger ( and yes - starving is a good reason to be angry) we have a lot of troubles to work our collective world through. I hope we make it through the angry stage - I not really sure I want to be too close if China, Iran, ...( add whoever is your personal bogeyman country) gets angry as the USA cops it for "stealing" their money, even if they made bad investments choices.
For me - I 'd like to know where all those lawyers are that normally chase ambulances - have I got a clean up job for them, but then again I already know the bankers will have paid them off as well. I guess the natural reaction is to blame someone to justify your own anger, and getting the bankers to cough up their ill-gotten gains would be my preference.
Having said that, it would be no solution as then by the looks of things there would be no one left to do anything at all, as the lot of them appear collectively very guilty of a minimum of greed to outright fraud and theft.
Getting past my own personal blame preferences, letting the whole system naturally reset to the worst lowest common denominator position seems so excessive, but I have to agree with David that the prognosis for any other solution does not seem that good right now. Maybe hope has to be a strategy choice after all. ]]> http://seekingalpha.com/article/112720-who-can-lenders-trust?source=feed#comment-343141 343141 Thu, 01 Jan 2009 02:29:53 -0500 http://seekingalpha.com/article/112406-the-banker-s-dilemma?source=feed#comment-341062 341062 The two kinds of USD need to remain boxed where they are until the "main" street system can afford to meet the "wall " street USD. The first kind of USD is trapped off balance sheet in toxic assets/liabilities and the second kind are those USD used for daily trade. At this time the overall system cannot afford to let them meet, hence the freeze up of the system. The trick - as we see as being played out now - is how governments can push enough money into the main street, without it being siphoned off to pay off the wall street problem.
My bet is on the slow but steady recovery of those commodities that have seen the worst of the recent price drops, while those that have seemed less affected will remain at remain flat at least.
As for anything financial - be it bonds, banks or whatever - its going to be toast for a long time to come as governments are forced to keep the financial service industry in the fridge to keep those two kinds of USD apart till they can afford - through controlled inflation and hopefully resurrected main street growth - to let them get together again.
Lets hope the patient work out approach will work, as the other approach of starting wars - either of the physical or the trade variety - to fight over the scraps of what remains, will certainly lead to a great deal more suffering by the world at large.
]]> Tue, 30 Dec 2008 00:46:13 -0500 The two kinds of USD need to remain boxed where they are until the "main" street system can afford to meet the "wall " street USD. The first kind of USD is trapped off balance sheet in toxic assets/liabilities and the second kind are those USD used for daily trade. At this time the overall system cannot afford to let them meet, hence the freeze up of the system. The trick - as we see as being played out now - is how governments can push enough money into the main street, without it being siphoned off to pay off the wall street problem.
My bet is on the slow but steady recovery of those commodities that have seen the worst of the recent price drops, while those that have seemed less affected will remain at remain flat at least.
As for anything financial - be it bonds, banks or whatever - its going to be toast for a long time to come as governments are forced to keep the financial service industry in the fridge to keep those two kinds of USD apart till they can afford - through controlled inflation and hopefully resurrected main street growth - to let them get together again.
Lets hope the patient work out approach will work, as the other approach of starting wars - either of the physical or the trade variety - to fight over the scraps of what remains, will certainly lead to a great deal more suffering by the world at large.
]]> http://seekingalpha.com/article/94237-oil-stock-and-housing-declines?source=feed#comment-247970 247970 Fundamentals now support $80/bbl (based on marginal new production costs) - even with declining demand, and new increased Saudi production on line in the last few months. My simple view is that the OPEC members also keep their eye on return of capital, rather than just return on capital - so we will see production line out to demand by just cutting back to quota levels after the Sep 9 meeting. The loudest OPEC members in favour of production cuts will be those without investment portfolios - they need the cash to run their countries, and they are seriously struggling with $ induced import inflation.
The worst that can happen if the USA does not get its house in order is a bail out from the US$ by OPEC members, in favour of a currency basket for these oil producers.
My simple view is that the dominant OPEC decision will be taken one by one based on return of capital i.e a fear based defensive action looking at investment portfolios, rather than pure income only. We will see a dip to the $80/bbl level short term, but as soon as as any strength in demand returns, prices will jack up again as greed returns. That strength in demand can come from East or West, or from hurricanes or politics - it matters not from which cause, only when, as supply does not exceed demand by any comfortable margin.
The lower the price falls and the more jawboning on green alternatives, nuclear, drilling USA or whatever, the more real oil/product projects will be slowed - leading us closer to that supply/demand balance problem again.
I'm betting the energy sector will fall just as everything does during this downturn, but its pick up on the next cycle upwards will be faster and even more furious than the last rise from $10/bbl to $140/bbl.
Aaahh - but the only problem is the timing !!!]]> Mon, 08 Sep 2008 00:54:44 -0400 Fundamentals now support $80/bbl (based on marginal new production costs) - even with declining demand, and new increased Saudi production on line in the last few months. My simple view is that the OPEC members also keep their eye on return of capital, rather than just return on capital - so we will see production line out to demand by just cutting back to quota levels after the Sep 9 meeting. The loudest OPEC members in favour of production cuts will be those without investment portfolios - they need the cash to run their countries, and they are seriously struggling with $ induced import inflation.
The worst that can happen if the USA does not get its house in order is a bail out from the US$ by OPEC members, in favour of a currency basket for these oil producers.
My simple view is that the dominant OPEC decision will be taken one by one based on return of capital i.e a fear based defensive action looking at investment portfolios, rather than pure income only. We will see a dip to the $80/bbl level short term, but as soon as as any strength in demand returns, prices will jack up again as greed returns. That strength in demand can come from East or West, or from hurricanes or politics - it matters not from which cause, only when, as supply does not exceed demand by any comfortable margin.
The lower the price falls and the more jawboning on green alternatives, nuclear, drilling USA or whatever, the more real oil/product projects will be slowed - leading us closer to that supply/demand balance problem again.
I'm betting the energy sector will fall just as everything does during this downturn, but its pick up on the next cycle upwards will be faster and even more furious than the last rise from $10/bbl to $140/bbl.
Aaahh - but the only problem is the timing !!!]]> http://seekingalpha.com/article/93521-global-stock-markets-going-nowhere-fast?source=feed#comment-245106 245106 Another casual observation of course is how long the turn in one market has taken to work its way through to other markets. We may live in a global economy ( linked markets), but it sure has seemed to take awhile for all to realise that.
Looking around in the GCC at all the crazy activity that has yet to even pause, one cannot help but feel something has yet to crack. But, then again, there is one huge energy bubble that may have to burst first. ]]> Thu, 04 Sep 2008 01:43:31 -0400 Another casual observation of course is how long the turn in one market has taken to work its way through to other markets. We may live in a global economy ( linked markets), but it sure has seemed to take awhile for all to realise that.
Looking around in the GCC at all the crazy activity that has yet to even pause, one cannot help but feel something has yet to crack. But, then again, there is one huge energy bubble that may have to burst first. ]]> http://seekingalpha.com/article/93242-options-trader-friday-outlook?source=feed#comment-242384 242384 As for the Chinese operating in Iraq - supported by Russians, well perhaps someone else should share the load in getting shot at. I am pretty sure its no fun, no matter where you come from. If they manage to improve the flows from Iraq, it will just make the overall balance that much more manageable for everyone. Why the great bias that it has to be done by the USA if you feel so badly about these US based IOC's?
As for the politics - as an outsider it does seem important, but as smart people recently pointed out , like drunks on a booze binge, it only matters if someone can get folk to dry out a little, and manage the realities of living within their means.]]> Sun, 31 Aug 2008 04:50:08 -0400 As for the Chinese operating in Iraq - supported by Russians, well perhaps someone else should share the load in getting shot at. I am pretty sure its no fun, no matter where you come from. If they manage to improve the flows from Iraq, it will just make the overall balance that much more manageable for everyone. Why the great bias that it has to be done by the USA if you feel so badly about these US based IOC's?
As for the politics - as an outsider it does seem important, but as smart people recently pointed out , like drunks on a booze binge, it only matters if someone can get folk to dry out a little, and manage the realities of living within their means.]]> http://seekingalpha.com/article/83809-fishing-for-an-answer-energy-energy-energy?source=feed#comment-199526 199526
"The US dollar remains under pressure as 'old Europe' and other emerging country investors have figured out that the US is just all rhetoric when it comes to financial discipline. The Fed is hoping to print our way out of our oil driven financial deficit. Each time the price of a barrel goes up a dollar, Ben just rings up the printer and tells him to ship another batch of hundreds out the loading dock."

Maybe the US needs to realise no-one else is coming to play with them this time. They would all rather burn in hell, and take their chances on their own. It must be really bad for that to happen - one would think. The solution has to be that the US raises interest rates - burns its banks, but gets the oil price to fall to at least tolerable levels for the world as a whole.
]]> Mon, 07 Jul 2008 01:22:45 -0400
"The US dollar remains under pressure as 'old Europe' and other emerging country investors have figured out that the US is just all rhetoric when it comes to financial discipline. The Fed is hoping to print our way out of our oil driven financial deficit. Each time the price of a barrel goes up a dollar, Ben just rings up the printer and tells him to ship another batch of hundreds out the loading dock."

Maybe the US needs to realise no-one else is coming to play with them this time. They would all rather burn in hell, and take their chances on their own. It must be really bad for that to happen - one would think. The solution has to be that the US raises interest rates - burns its banks, but gets the oil price to fall to at least tolerable levels for the world as a whole.
]]> http://seekingalpha.com/article/80438-preparing-for-the-fall?source=feed#comment-181089 181089 The markets will wobble and sway their way downwards as the pont of indifference between losing your cash on inflation or losing your capital altogether varies based on sentiments and manipulation of central bankers.
If you have the cash in hand - you may have to do a little hard work these days - and directly find, buy and manage companies with positive cash flow - using actual money. These are the only guys who will be the winners. The rest of us will be fleeced to pay off the bankers and the feds of this world - as they both need each other to survive, and they have the rules on their side to make sure they survive, and at your expense.
What is needed is a clear and delivered message of putting interest rates UP - to put some back into the US $. It will flush out the bad loans and all those who took a fat chance will pay for their mistakes and (unbacked) greed.
If this does not happen, it will be a slow slide to hell, and you will pay for it anyway in stagflation. However the bankers and the Fed will always prefer the slow boiled frog to the quick leap into the fire -the first way they get to stay in their jobs and plead that they had no choice. The result is the same - but the process even more protracted and painfull. Easy money is over - the system is striking back. Have an nice day.]]> Sun, 08 Jun 2008 00:51:18 -0400 The markets will wobble and sway their way downwards as the pont of indifference between losing your cash on inflation or losing your capital altogether varies based on sentiments and manipulation of central bankers.
If you have the cash in hand - you may have to do a little hard work these days - and directly find, buy and manage companies with positive cash flow - using actual money. These are the only guys who will be the winners. The rest of us will be fleeced to pay off the bankers and the feds of this world - as they both need each other to survive, and they have the rules on their side to make sure they survive, and at your expense.
What is needed is a clear and delivered message of putting interest rates UP - to put some back into the US $. It will flush out the bad loans and all those who took a fat chance will pay for their mistakes and (unbacked) greed.
If this does not happen, it will be a slow slide to hell, and you will pay for it anyway in stagflation. However the bankers and the Fed will always prefer the slow boiled frog to the quick leap into the fire -the first way they get to stay in their jobs and plead that they had no choice. The result is the same - but the process even more protracted and painfull. Easy money is over - the system is striking back. Have an nice day.]]> http://seekingalpha.com/article/75959-how-much-worse-can-it-get-for-oil?source=feed#comment-165687 165687 Oh - and by the way - just watch out for that Iran war thing. Ever since time began it is the big wild card that really makes the difference. Hezbollah making coup in Lebanon is just getting a bit too close to absolute mayhem for financial comfort.]]> Sun, 11 May 2008 07:01:21 -0400 Oh - and by the way - just watch out for that Iran war thing. Ever since time began it is the big wild card that really makes the difference. Hezbollah making coup in Lebanon is just getting a bit too close to absolute mayhem for financial comfort.]]> http://seekingalpha.com/article/76251-toward-a-u-s-energy-policy?source=feed#comment-164059 164059 Thu, 08 May 2008 09:26:24 -0400 http://seekingalpha.com/article/76289-record-high-crude-free-markets-meet-the-cartel?source=feed#comment-164040 164040 ]]> Thu, 08 May 2008 09:12:12 -0400 ]]> http://seekingalpha.com/article/67631-two-explanations-for-surging-oil-prices?source=feed#comment-124127 124127 3 sets of analysis are still missing for me.
a) total liquid hydrocarbons - supply & demand
b) total energy supply/demand - with an estimate at what price, switching will occur and in what applications/energy supply media, and
c) countries listed by demand level that subsidise oil prices - with an estimate of own supply.
The first will give an idea of what can be used short term to fill growth gaps, the second the longer term position, and the third to identify where ongoing growth will not be impacted by price change -so determining the completely inelastic high growth part of the demand.
I/m not smart enough - or do not have time enough - to do this work, but I think the results ( if actually obtainable) will tell the scary tale.
I personally believe there is plenty of energy available - the only variable being the cost of investment, extraction and delivery - with the cost not always being in money. Non-money factors are attitides to CO2 emmission generally, environmental managment of nuclear waste, and "clean" processing of "dirty" coal. Wind and solar can never make up the gap (time, availability of resources, and lack of scale make this impossible) - but will still help. Even if OPEC can encourage its memebers to increase demand - face it - there is little incentive for them to do anything else but manage their resources for the longer term.
The lack of certainty over the "elasticity" of demand in the first world is only an excuse for delaying investment - as it is always taken as the first cure to the problem. For a start - much of these savings on demand have been made already, and for seconds - its not where the growth problem exists.
The article above - in my view- has started to capture the rapidly growing collective wisdom that the energy problem has shifted, both in cause and in cure. Let us see the real bankers step up to the plate to get the real investing done in real projects for a real demand for real people. ]]> Sun, 09 Mar 2008 00:25:54 -0500 3 sets of analysis are still missing for me.
a) total liquid hydrocarbons - supply & demand
b) total energy supply/demand - with an estimate at what price, switching will occur and in what applications/energy supply media, and
c) countries listed by demand level that subsidise oil prices - with an estimate of own supply.
The first will give an idea of what can be used short term to fill growth gaps, the second the longer term position, and the third to identify where ongoing growth will not be impacted by price change -so determining the completely inelastic high growth part of the demand.
I/m not smart enough - or do not have time enough - to do this work, but I think the results ( if actually obtainable) will tell the scary tale.
I personally believe there is plenty of energy available - the only variable being the cost of investment, extraction and delivery - with the cost not always being in money. Non-money factors are attitides to CO2 emmission generally, environmental managment of nuclear waste, and "clean" processing of "dirty" coal. Wind and solar can never make up the gap (time, availability of resources, and lack of scale make this impossible) - but will still help. Even if OPEC can encourage its memebers to increase demand - face it - there is little incentive for them to do anything else but manage their resources for the longer term.
The lack of certainty over the "elasticity" of demand in the first world is only an excuse for delaying investment - as it is always taken as the first cure to the problem. For a start - much of these savings on demand have been made already, and for seconds - its not where the growth problem exists.
The article above - in my view- has started to capture the rapidly growing collective wisdom that the energy problem has shifted, both in cause and in cure. Let us see the real bankers step up to the plate to get the real investing done in real projects for a real demand for real people. ]]> http://seekingalpha.com/article/66606-deutsche-banks-150-call-peak-oil-light?source=feed#comment-121037 121037 2. I agree that "hoarding" is a negative, and not a correct view - oil producers are looking to the long term, as opposed to providing immediate gratification at lower prices to lower value users.
The producers are quite capable of doing their own economic assesments to maximise their returns - at present the prices of products versus ever higher costs of extraction, coupled with the risk that demand does indeed slow, makes for poor investment.
3. The issue is what price level will supply meet demand - and then to ask what marginal supply, and what marginal demand. As reflected this could provide a wide range - as low as $30/bbl - to as high as the Hugo Chavez $200/bbl. Quite a level of uncertainty - and substantial risk.
4. If you have all the petropesos you need for your local needs, if you find investment doors in the USA and Europe being difficult to enter, what possible sense is their for oil producers to invest high, with an expectation of low returns both on the added revenue and what you can do with the revenue?
5. My bet - $150/bbl oil is very possible - and mostly because investment will not happen in advance to make the outcome any different. Demand for oil is robust and has not even flinched at $100/bbl, but the risk of the downside remains a wild card that has to be played through. Take pity on poor countries without oil.]]> Sun, 02 Mar 2008 04:22:07 -0500 2. I agree that "hoarding" is a negative, and not a correct view - oil producers are looking to the long term, as opposed to providing immediate gratification at lower prices to lower value users.
The producers are quite capable of doing their own economic assesments to maximise their returns - at present the prices of products versus ever higher costs of extraction, coupled with the risk that demand does indeed slow, makes for poor investment.
3. The issue is what price level will supply meet demand - and then to ask what marginal supply, and what marginal demand. As reflected this could provide a wide range - as low as $30/bbl - to as high as the Hugo Chavez $200/bbl. Quite a level of uncertainty - and substantial risk.
4. If you have all the petropesos you need for your local needs, if you find investment doors in the USA and Europe being difficult to enter, what possible sense is their for oil producers to invest high, with an expectation of low returns both on the added revenue and what you can do with the revenue?
5. My bet - $150/bbl oil is very possible - and mostly because investment will not happen in advance to make the outcome any different. Demand for oil is robust and has not even flinched at $100/bbl, but the risk of the downside remains a wild card that has to be played through. Take pity on poor countries without oil.]]> http://seekingalpha.com/article/66260-stuart-staniford-two-mysteries-of-oil-supply-data?source=feed#comment-120006 120006 Thu, 28 Feb 2008 00:32:42 -0500 http://seekingalpha.com/article/66217-the-minotaur-the-labyrinth-and-the-icarus-rally?source=feed#comment-119608 119608 Maybe just the USA is in denial over having a cancer that needs to be treated. Funny things these analogies, they really do get you thinking.]]> Wed, 27 Feb 2008 06:30:30 -0500 Maybe just the USA is in denial over having a cancer that needs to be treated. Funny things these analogies, they really do get you thinking.]]> http://seekingalpha.com/article/66185-look-to-the-markets-to-assess-inflation?source=feed#comment-119593 119593 Maybe you could do the same analysis, but from the perspective of the Euro ? I for one would be most intrigued to the outcome.
Perhaps also add to this the inflationary impact all those extra petrodollars will have - unless GCC/Opec players switch to Euro's or a basket of currencies.
So many options - so little time !!!]]> Wed, 27 Feb 2008 04:03:48 -0500 Maybe you could do the same analysis, but from the perspective of the Euro ? I for one would be most intrigued to the outcome.
Perhaps also add to this the inflationary impact all those extra petrodollars will have - unless GCC/Opec players switch to Euro's or a basket of currencies.
So many options - so little time !!!]]> http://seekingalpha.com/article/64378-cutting-off-oil-to-spite-your-face?source=feed#comment-116027 116027 As for encouraging the rest to follow - there are many looking for a good excuse not to put money into added production. It costs investment money just to maintain production, never mind meet the needs of a growing world economy - and others outside of the USA are clamouring for that supply.
If the oil price goes up due to reduced supply - there is not a lot to drive oil based economies to invest in more supply right now. The downside of reduced demand simply has not happened - and has been so far an empty caution. Project costs are overpriced right now - and every oil economy has been looking for ways to avoid immediate investment on added oil discovery or even downstream processing. Chavez will not find voluble support - more like just provide a convenient excuse for supporting countries to quietly overide or obfuscate past committments made on a political level.
The issues are not nearly as linear as you perceive them. I can readily believe $200/bbl - just as I believed $100/bbl when we were at $30/bbl just a few years back.]]> Wed, 13 Feb 2008 05:34:16 -0500 As for encouraging the rest to follow - there are many looking for a good excuse not to put money into added production. It costs investment money just to maintain production, never mind meet the needs of a growing world economy - and others outside of the USA are clamouring for that supply.
If the oil price goes up due to reduced supply - there is not a lot to drive oil based economies to invest in more supply right now. The downside of reduced demand simply has not happened - and has been so far an empty caution. Project costs are overpriced right now - and every oil economy has been looking for ways to avoid immediate investment on added oil discovery or even downstream processing. Chavez will not find voluble support - more like just provide a convenient excuse for supporting countries to quietly overide or obfuscate past committments made on a political level.
The issues are not nearly as linear as you perceive them. I can readily believe $200/bbl - just as I believed $100/bbl when we were at $30/bbl just a few years back.]]> http://seekingalpha.com/article/44634-supply-and-demand-still-guiding-markets-equities-not-overpriced?source=feed#comment-93788 93788 Thu, 16 Aug 2007 07:09:26 -0400 http://seekingalpha.com/article/44272-big-ben-panics-and-gold-responds?source=feed#comment-93613 93613 Under this understanding - what happens to asset inflation and living cost inflation ? Are you saying that living cost inflation has to kick in to cover the cost of the "free" money being dispensed so liberally, or that the gap will be covered by having to produce more to be paid the same or less than before i.e that higher productivity is the way that living cost inflation will be kept under control? With interest rates not changing much, is the assumption then that asset pricing will have a soft landing - i.e a gentle deflation, or a stage managed slow increase that the investor is still willing to stay in the market. I guess as you say - it is business as usual - but you know you are paying the price while being productive and working for a living. It seems to me that the flexibility to manage such a tightrope have been significantly reduced - so we should expect volatile times - no-brainer for that one.]]> Tue, 14 Aug 2007 04:39:55 -0400 Under this understanding - what happens to asset inflation and living cost inflation ? Are you saying that living cost inflation has to kick in to cover the cost of the "free" money being dispensed so liberally, or that the gap will be covered by having to produce more to be paid the same or less than before i.e that higher productivity is the way that living cost inflation will be kept under control? With interest rates not changing much, is the assumption then that asset pricing will have a soft landing - i.e a gentle deflation, or a stage managed slow increase that the investor is still willing to stay in the market. I guess as you say - it is business as usual - but you know you are paying the price while being productive and working for a living. It seems to me that the flexibility to manage such a tightrope have been significantly reduced - so we should expect volatile times - no-brainer for that one.]]> http://seekingalpha.com/article/44272-big-ben-panics-and-gold-responds?source=feed#comment-93607 93607 Why does American sub-prime get all the blame - surely each and every entity with a positive cash flow has been pumped up as investors compete and chase up the asset price leveraged by cheap credit (hedge funds ?)- perhaps with the knowledge of a Greenspan "put", that has now become Benanke free cash from helicopters. If risk and the real cost of money has been underpriced and hidden by skillful (and plain deceitfull) packaging of unpayable debt in "mark to model" scams, then we have a general asset bubble - not just housing in sub-prime in America. I hope we are talking jail time here - not just "oops" we made a very profitable - thank you- mistake !!]]> Tue, 14 Aug 2007 01:29:55 -0400 Why does American sub-prime get all the blame - surely each and every entity with a positive cash flow has been pumped up as investors compete and chase up the asset price leveraged by cheap credit (hedge funds ?)- perhaps with the knowledge of a Greenspan "put", that has now become Benanke free cash from helicopters. If risk and the real cost of money has been underpriced and hidden by skillful (and plain deceitfull) packaging of unpayable debt in "mark to model" scams, then we have a general asset bubble - not just housing in sub-prime in America. I hope we are talking jail time here - not just "oops" we made a very profitable - thank you- mistake !!]]> http://seekingalpha.com/article/44165-energy-stock-trader-friday-outlook?source=feed#comment-93476 93476
Are you going to take a stab at how the futures market is going to react ? Will all the speculators just close out their positions and go on holiday, or sit and stare at their screens and wait ? If so, what event aside from printing billions of digital money can hold back the fear, and then for how long ?

My hypothesis is that we do not just have a housing bubble - we have "anything that had a positive cash flow that looked like an asset "bubble, driven by cheap money since 2002. That is an awfull lot of money to unwind with no real value fundamentals underpinning it. It has been fun while it lasted, but asset inflation is a tough play to unwind - ask the Japanese after years of stagflation. Everyone has felt wealthy and raided the house mortgage account for a free ride to make even more, be it another house, a new car, more equities etc.

Even if we see valuations going from mark to model to mark to market, the burn on the market will do its own damage on liquidity, be it personal or company, and all the extra money being pumped into the system can only bring on inflation, but now in a low growth environment.

My bet - crude will be back to the $50/bbl as Opec blinks at the thought of a demand side meltdown - even if a few nutters like Chavez try to turn off the tap - they cannot - they will need the cash like everyone else to keep going !!!

We all better hope the Chinese and Indians do not blink - and carry on consuming. If that slips it is game over, as this is one fundamental real physical growth that has underpinned the market this last few years. Question is how much has been driven by internal Asian market demand - and how much by the USA. I do not know, but I guess we are soon going to find out.]]> Sun, 12 Aug 2007 03:41:24 -0400
Are you going to take a stab at how the futures market is going to react ? Will all the speculators just close out their positions and go on holiday, or sit and stare at their screens and wait ? If so, what event aside from printing billions of digital money can hold back the fear, and then for how long ?

My hypothesis is that we do not just have a housing bubble - we have "anything that had a positive cash flow that looked like an asset "bubble, driven by cheap money since 2002. That is an awfull lot of money to unwind with no real value fundamentals underpinning it. It has been fun while it lasted, but asset inflation is a tough play to unwind - ask the Japanese after years of stagflation. Everyone has felt wealthy and raided the house mortgage account for a free ride to make even more, be it another house, a new car, more equities etc.

Even if we see valuations going from mark to model to mark to market, the burn on the market will do its own damage on liquidity, be it personal or company, and all the extra money being pumped into the system can only bring on inflation, but now in a low growth environment.

My bet - crude will be back to the $50/bbl as Opec blinks at the thought of a demand side meltdown - even if a few nutters like Chavez try to turn off the tap - they cannot - they will need the cash like everyone else to keep going !!!

We all better hope the Chinese and Indians do not blink - and carry on consuming. If that slips it is game over, as this is one fundamental real physical growth that has underpinned the market this last few years. Question is how much has been driven by internal Asian market demand - and how much by the USA. I do not know, but I guess we are soon going to find out.]]> http://seekingalpha.com/article/43734-energy-stock-trader-tuesday-outlook?source=feed#comment-93127 93127 Just a thought on the distillate vs gasoline balance in the USA - now that the USA seems to be pushing very hard to switch from Fuel Oil to low sulphur diesel for shipping, can you estimate what impact this might have on increased utilisation of US refining capacity. The legislation is known as SECA - and if widely expanded to cover more US ports - as is anticipated- there is a call for a complete switch which may impact that 20-30% in the bottom of each barrel of oil. I do not have enough knowledge to pull apart how US refining offloads the bottom of the barrel - and how much of the heavy sulphurous and horrible stuff winds up in shipping fuel - but I would like to know if the change will be material and what the consequence might be on diesel being shipped back to Europe.]]> Wed, 08 Aug 2007 02:38:14 -0400 Just a thought on the distillate vs gasoline balance in the USA - now that the USA seems to be pushing very hard to switch from Fuel Oil to low sulphur diesel for shipping, can you estimate what impact this might have on increased utilisation of US refining capacity. The legislation is known as SECA - and if widely expanded to cover more US ports - as is anticipated- there is a call for a complete switch which may impact that 20-30% in the bottom of each barrel of oil. I do not have enough knowledge to pull apart how US refining offloads the bottom of the barrel - and how much of the heavy sulphurous and horrible stuff winds up in shipping fuel - but I would like to know if the change will be material and what the consequence might be on diesel being shipped back to Europe.]]> http://seekingalpha.com/article/42720-what-s-behind-the-market-s-instability?source=feed#comment-92451 92451 Can someone calculate the potential leverage that may be involved, to see what the multiplication factor might be from sub-prime debt to overall debt, based on the possible impact to required bank liquidity covenants ?
I do not know enough - and would like someone with the smarts to do the numbers - so us plebs out here can get an idea of the scale of the problem. Then we can all judge whether and then when and for how long it will matter !!!]]> Mon, 30 Jul 2007 03:16:57 -0400 Can someone calculate the potential leverage that may be involved, to see what the multiplication factor might be from sub-prime debt to overall debt, based on the possible impact to required bank liquidity covenants ?
I do not know enough - and would like someone with the smarts to do the numbers - so us plebs out here can get an idea of the scale of the problem. Then we can all judge whether and then when and for how long it will matter !!!]]> http://seekingalpha.com/article/37959-ethanol-has-opec-publicly-concerned?source=feed#comment-88309 88309
Also what incentive to invest at all if you know you will remain mega profitable if the current growth continues. No one can ramp up faster or cheaper supposedly to meet this growth than OPEC, and many that claim they have added reserves either do not have it or will have to pay substantially in ultra high capex costs to get the product available. What incentive can there possibly be to challenge the status quo.

The fear of facing a drop in demand from recession - is no real challenge - as it will under such circumstances be possible to build new capacity for a more reasonable capital price. The NOC's are effectively neutral to the cost/benefit of making investments under growth or recession circumstances.To invest however when costs are high and the potential exists for prices to fall sharply once you have spent the capital makes little sense strategically as it high risk, with no added benefit.

OPEC is no charity - they will do what makes sound investment sense for them. I doubt they have any major concern over a growth slowdown. Fact is they know the customers are short, but they are still willing and able to pay the price. So until the USA really does something significant like decrease fuel consumption per mile, I very much doubt OPEC is going to be overly concerned. If the USA cannot even get a few refineries built - then I guess there is not much for oil providers to worry about nuclear or coal exploitation - which anyway will take 6-8 years to bring on-line. Plenty of warning time for OPEC to crank up output - if they can that is !!

Short term output increase is a dream - there is nothing in it for any of the players - so the price will crank up until the consumer pops. Be they American, Chinese, Japanese, Indian or whatever. The only fear America should have is that the Russians are also making a ton of money, and are rebuilding their country to be a formidable future competitor on a global basis.]]> Tue, 12 Jun 2007 08:56:46 -0400
Also what incentive to invest at all if you know you will remain mega profitable if the current growth continues. No one can ramp up faster or cheaper supposedly to meet this growth than OPEC, and many that claim they have added reserves either do not have it or will have to pay substantially in ultra high capex costs to get the product available. What incentive can there possibly be to challenge the status quo.

The fear of facing a drop in demand from recession - is no real challenge - as it will under such circumstances be possible to build new capacity for a more reasonable capital price. The NOC's are effectively neutral to the cost/benefit of making investments under growth or recession circumstances.To invest however when costs are high and the potential exists for prices to fall sharply once you have spent the capital makes little sense strategically as it high risk, with no added benefit.

OPEC is no charity - they will do what makes sound investment sense for them. I doubt they have any major concern over a growth slowdown. Fact is they know the customers are short, but they are still willing and able to pay the price. So until the USA really does something significant like decrease fuel consumption per mile, I very much doubt OPEC is going to be overly concerned. If the USA cannot even get a few refineries built - then I guess there is not much for oil providers to worry about nuclear or coal exploitation - which anyway will take 6-8 years to bring on-line. Plenty of warning time for OPEC to crank up output - if they can that is !!

Short term output increase is a dream - there is nothing in it for any of the players - so the price will crank up until the consumer pops. Be they American, Chinese, Japanese, Indian or whatever. The only fear America should have is that the Russians are also making a ton of money, and are rebuilding their country to be a formidable future competitor on a global basis.]]> http://seekingalpha.com/article/37697-stop-blaming-oil-for-high-gasoline-prices?source=feed#comment-88176 88176 The solutions are there - but it seems the pain is not geat enough yet to get the US consumer to make the changes that need to made. Quit blaming others - you only have yourselves as consumers to blame ( en masse).]]> Sun, 10 Jun 2007 03:27:35 -0400 The solutions are there - but it seems the pain is not geat enough yet to get the US consumer to make the changes that need to made. Quit blaming others - you only have yourselves as consumers to blame ( en masse).]]>