Dr. No

Oil, Gas, Electric Cars, the Market and the Economy

Muddling Invester: I love your calcualtion and reality check. So how does the electro-magnetic field look like around a thigh-thick conductor at 200V and 4000Amps?

tyklakewalker: Last time I checked sugar cane gorws only in Florida, Louisiana and Hawaii domestically. We should replace middle east oil dependence with brazil ethanol dependence ??? Further: You make lemonade with lemons: The midwest agriculture grows what it can given the long and harsh winters and the hot and humid summers. It ain't Hawaii and it ain't California there. You need to look at land effeciency and corn is pretty darn good for that.

Oil Approaching Bear Market Territory

No figure how much value you create at all oil-depending industries by droping oil prices (into just 60% more than last years price).

On Oil and Its Manipulation

ronmac/dan: you small potatoes trader settle at the end of the month. if you would be a big potatoes trader you would roll over your deal at the end of the month because there is a bigger idot to buy. which is the reason why there is ten times the volume traded than delivered.

dan: all that is being asked is that you trade/speculate the same way AS IN equities, ie put up 50% margin and not 5-7%. Or even better gamble as in the casino, where the bank ALWAYS wins and you have to put up 100% of your chip value and not just 5-7%.

We Can Lower Gas Prices Now If We Drill, Drill, Drill

If there is any truth to the hypothesis of "more drilling = lower oil/gas price", then yesterday's announcement by the Iraqi's to increase oil production from 2.5 million barrel to 4 million barrel by accessing four new oil fields (as in NOW) should have sunk the oil price like a stone.
Lemme go check at the gas station right a way....

Even the Gas Crisis Needs a Culprit

Just to more points:
* Systems can be put into resonance mode which leads to catastrophic failure. So the Sanford Bernstein comment sounds intelligent but actuallty is wrong. You can have catalysts leading to catastrophic failure, think resonane, think nukes.
* The CFTC also admitted that they do neither have enough people nor the data to actually comment on the situation. In fact the very definition of the Enron loophole puts the CFTC out of monitoring ICE and DME, the prior being controlled by GS and MS, talking about fox in the henhouse...

Even the Gas Crisis Needs a Culprit

As opposed to Tim and redbaron, Masters actually delivered numbers ad nauseam. Only numbers are the facts. While Tim reiterated all qualitative arguments which are not facts then, the point Masters and Greenberg make is that if you care to look at the actual proportions and numbers they do not add up to justify the jump in the ENTIRE commodity sector, including oil. Further, even seasoned economists are not anymore defending the effecient market hypothesis. Finally, what we are seeing is a time delay in the system, much like other systems we may need to differentiate between the stochiometrics and the kinetics of the reaction. The kinetics do take time. The CDO and dot.com bust also did not happen over night, it was a six months long implosion.

Speculation and the Price of Oil

Banks was careful to cite himself several times in his lengthy and wordy piece of self-appreciation, pointing to other sources he likes. But why skirting around the testimonies of Masters and Greenberg, which in detail lay out the isssues in the factually uncontrolled commodity markets refuted all his theory? ICE/IPE and DME use the same legal loophole created in 2000 to allow Enron energy trading without FTC/CFTC/SEC supervision. A market without supervision is certainly trustworthy?

World assets under management increased by 50% since 2000, this money has to go some place and creates demand for new asset classes as old ones (stocks, bonds) are perceived as tainted. With GS & MS setting up commodity exchanges they kindly marketed those to their clients and demand for investable assets first created the CDO bubble and then the commodity and energy bubble.

If please someone would look at actual numbers of physical and financial/index speculators and their demand and supply, you would realize what is going on. You can overlay the dot.com, housing and CDO and commodity bubbles and will see the not so strange similarities.

That said, long-term, i.e. over the next 10-15 years we may see real issues covering the global demand. But if the increase in oil demand from China is roughly that of financial speculators trading on ICE/IPE/NYMEX etc., and as long as Morgan Stanley holds two entire annual wheat harvest, we are likely seeing other phenomena at play.

Why Is Oil Going Up?

Unfortunately the assertions do not take into account the mechanics of a futures driven market, that is dominated by index/financial speculators in an environment where more and more assets are chasing "unique" investment opps and create positive feedback loops.

KL's assertions would work if there was no such thing as a commodities exchange and if we would have a straight physical market. We don't. In fact the physical market is between 10-25% of trades.

Why Did Crude Oil Spike So High?

I am with sivere: Let's all go pray. That has really worked last time when my portfolio was in the dumps. Also, praying helps with any diseases (read the bible if you do not believe) and food, like I pray and there is food. It really works!