bowman711

How $30/Barrel Oil Could Save the World

Michael, I have heard you virtually every week on Michael Campbell's program for years, and I think this is about the most stupid assertion I've ever heard you utter.

When, in the history of history, has a government controlled program produced a better result than the laws of economics?

Wasn't it price controls in the seventies that had us sitting long lines to buy a few gallons of gasoline? At the time, I was in the Coast Guard and had to make a long move; we didn't dare let out gas tank get below half lest we could not find another filling station that even had gasoline.

If $30/barrel oil would be good, wouldn't $10/barrel be even better?

Simple economics will not let the price of oil go below the cost of production, plus profit, for very long periods. A government forcing a lower price, below the cost of production, plus profit would simply shut down exploration . . . and even production from wells (or oil sands) with a higher cost, PLUS PROFIT.

I think you need to drive over to UBC (Univ. of British Columbia) and see if you can audit their Economic 101 class next semester. I am not educated in political science, but it looks to me like you could use a few courses in political science as well, considering your statements on the Middle East.

Oil's Slide: A Result of Capitulation Selling?

With governments around the world throwing trillions of dollars into the economies to try to 'save' the economy, is there ANYONE who thinks they wouldn't be doing all the can to lower the price of oil, probably the single most critical commodity needed by every industry? [Even a church youth pastor is dependent on oil so his parishoner's parents can bring them to church.]

Oil Won't Drop Forever

There is an interesting observation about a quirk in DXO (and probaby similar ETFs) here: finance.google.ca/grou...

Oil Bubble Continues Its Burst

A barrel of oil produces the same number of miles traveled no matter what its price is at the moment. It powers the same number of machines. As the economy goes down, and fewer miles are traveled or fewer machines are producing products, the price of oil will go down as well. But, when the economy turns around, and more people are driving to work, to work on more machines producing products, oil should be one of the first commodities to go up.

Many people will come out of this economic mine field holding stock in companies that no longer exist, or holding dollars that will then be worth much less than when they were received as governments try to inflate their way out of the situation. But, the person holding any interest in oil still in the ground, will still own the same number of miles travel or power for the same number machines.

Which would you say is the safer preserver of wealth for the average person not extremely skilled in trading - stocks, dollars or commodities such as oil?

A $40 Bottom in Oil?

How low does oil have to go to bring about a 1973 type oil embargo by OPEC?

Let me tell you from experience it is no fun to sit several hours in line to get a few gallons to last you until you have another several hours to spen waiting in line.

Where Will Oil Go From Here?

One needs to keep in mind that oil will produce the same number of miles traveled or pieces of plastic, etc. per barrel whether the price is inflated or deflated. Therefore, my contention is that when whichever scenario takes place, oil should eventually find its same relative value in the 'new' economy. It may take a few years to find that level, but stocks where the bulk of its value consists of oil in the ground should find the same relative value to the rest of the economy as 'always.'

I'll throw into the discussion one other scenario that hasn't received much, if any, discussion. What if the U.S. Government, looking at the $10+trillion national debt, and with the Baby Boomer's greatly increased Social Security benefits looming, defaults on its obligations? Unlike with Mexico twenty years ago, there won't be any 'super economy' to bail out the U.S. In my reading, over the past few weeks I'm seeing more and more tiny hints that something huge is coming in relation to the monetary system. It could be described as a tectonic shift.

One possibility is a U.S. default on its national debt, along with the creation of a new currency to serve world trade. Such a default could be whole or partial. Would China accept, for example, accept a partial default in exchange for making the Yuan a major part of the new world currency? The G-7 countries are said to be discussing a world currency that would replace the dollar in trade. This past weekend Joe Biden said that in the first few months of an Obama administrations there would be a huge test, and then went on to say that what Obama's solution would be would seem wrong at the start, but that his listeners should stick with them. Everybody seems to be thinking such a test might be a terrorist attack. It could just as easily be a U.S. Government default on its financial obligations.

At any rate, I thought I'd throw into the discussion an 'unthinkable' event that could also affect the price of oil . . . and of gold.

5 Reasons Why the $700B Bailout Could Translate to $250 Oil

If a bailout is passed, and it is anywhere near as inflationary as some people think, then 'depressed' oil stocks should be a good investment. It is important, however, to limit purchase of oil stock to those whose bulk of their value is oil in place in the ground. T

he oil income trusts specialize in buying oil fields, and replacing the ones that start to run dry with new fields. On top of any capital gain, they pay great dividends. One I have, PGH, is paying $255/1,000 shares for October. That is a rate of 20.55%/year at the current share price of $14.89.

Canadian oil sands stocks would be a good choice since most of them are valued according to oil they have in place, ready to be produced when the spot price of oil is right. My favorite is Oilsands Quest (BQI).

Ike vs. Refining Capacity and Oil Price

The report isn't out yet for last week, but I got the numbers for the most current period oil report (Sept 5):

The percent utilization of operable refinery capacity - 78.21% - down 10.41%
US crude oil stockpiles fell by 5.8 million barrels
Gasoline stockpiles fell by 6.4 million barrels
Distillate stockpiles fell by 1.25 million barrels
Gasoline stockpiles down 3.7 million barrels
ULS diesel stockpiles (<15 PPM Sulfur) fell by 1.1 million barrels
Kerosene-type jet fuel down 2.3 million barrels

& Heating oil stockpiles down 15.7% from year ago

This in the week that OPEC cut production by 500,000 barrels. What did oil do - it went down. I guess it doesn't operate under the laws, or even theories, of basic economics.

Maybe by the time you read this, the new report will be out here: tonto.eia.doe.gov/dnav...

Commodities in Bear Market Mode

As everyone knows, the Chinese (and others in a similar position) hold hundreds of billions of the U.S. debt. They also see what is happening in the 'credit crisis' and that the U.S. is facing it by printing untold more dollars, thus devaluing every dollar-denominated entity already held in by the Chinese. Not wanting to see further erosion of their wealth, they have let the Fed and the Bush government know that they want out of dollars.

A sudden dumping of hundreds of billions of dollar debt would likely cause the end of the 'full faith & credit' in the U.S. dollar. [The Euro would likely take its place as the world currency.] So, to save the dollar, the Government might have made an agreement with the Chinese to suppress commodities so the Chinese could exchange their dollar for commodities. The 2008 G8 Foreign Ministers Meeting was in late June, and it seems that the real attacks on commodities started a couple of weeks later. Coincidence? Maybe not.

Oil's Sixth Largest Point Drop

All information is worth something; just some is worth more than others. I'd rather have too much information than miss that one critical piece that costs me . . . . As an expert in my field, I sometimes have to read a 500 page book to find just one new idea or thought I hadn't observed before.

$200 Oil, $2000 Gold?

Since others are giving their recommendations for stocks for this new portfolio, I agree with Pengrowth Energy (PGH). I would suggest, for a longer-term investment, that you consider Oilsands Quest (BQI). As I write this, the last trade was at $4.64 - but several independent analysts who have written on the company say it has $24-$32 per share proven reserves. Also, if there is ever any kind of serious disruption in the world oil supply, owning shares in a company with huge reserves a couple hundred miles north of the border would be highly desirable.

Peak Oil, Gold and the U.S. Dollar

I would submit that many of the Canadian Energy Trusts are a good oil investment right now. For example, Pengrowth Energy Trust (PGH) has gone from under $17 to over $19 since February 1 . . . as well as paying $225 dividend per 1000 shares EVERY month! That's an annual 14.2%, not including any capital gains. And, it is comforting to know that even if the stock goes down $1/share, it takes less than five months of dividends to earn it back.

This is just one example of many Canadian Energy Trusts. Take your pick from them!