Jason
Pluto
May all your hits be crits
Posts: 5,579
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Post by Jason on Nov 12, 2008 16:43:42 GMT -4
Oil closed at $59.33/barrel yesterday. Getting closer to Illuminati Dude's prediction that oil will hit $50 before it's over. Before what's over? The election is over already.
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Post by Dead Hoosiers on Nov 12, 2008 19:57:13 GMT -4
In an interview I listened to, a man claiming to have "insider" information said he was told (1) McCain had been selected as the next president (wrong); and (2) oil would drop to $50/barrel. No time frame given. I take that to mean it will drop to $50 before it begins a climb back to more normal prices.
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Post by PhantomWolf on Nov 12, 2008 19:58:32 GMT -4
So what happens if it hits $50 and keeps going? (BTW the "normal" price of oil over the past 5 years has been close to $25-30 and barrel.)
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Post by laurel on Nov 12, 2008 20:04:49 GMT -4
Anyone can claim to have "insider information."
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Post by gillianren on Nov 13, 2008 0:11:36 GMT -4
Well, I do have insider information, but who listens to me?
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Post by PhantomWolf on Nov 13, 2008 2:29:34 GMT -4
It's just as well no one listens to you gillanren, otherwise we'd have to send the black helicopters your way.
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Post by echnaton on Nov 13, 2008 9:03:26 GMT -4
The most important factor in determining world oil price is what is called excess supply. This is the amount of oil that can be delivered in excess of consumption. In other words oil in th ground that can be pumped execpt for the fact that no one would buy it.
As excess consumption rises, producers are willing to reduce price to defend market share. The amount of excess consumption was quite high during the last recession and oil was cheap. As we came out ot the recession and into a big boom, oil demand expanded rapidly and prices went to abnormal highs. This triggered demand destruction. People trading in big cars for smaller ones over period of years and more starting using public transportation. Manufacturers choose to ship good by more fuel efficient means (railroads) and made capital investments to reduce energy consumption in production processes.
Now we are in a recession again, and demand is falling. Fewer goods are moving and people are scared for their jobs and are conserving funds. This has triggered lower demand. Over this same time we have spent an enourmus sum of money finding new oil and bringing it to market.
This all leads to an increase in excess supply and puts downward pressures on prices. There is nothing magical about this process. The oil business has been a boom and bust business since it was started. That will not change.
If you want to actually look into something interesting. Try to uncover the actual contribution of speculation in oil by financial participants in the futures market. No one to my knowledge has a well grounded estimate as to the contribution to prices from speculation.
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Post by gillianren on Nov 13, 2008 13:24:18 GMT -4
It's just as well no one listens to you gillanren, otherwise we'd have to send the black helicopters your way. And then who'd take care of my cat?
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Post by lazarusty on Nov 13, 2008 16:56:16 GMT -4
It's just as well no one listens to you gillanren, otherwise we'd have to send the black helicopters your way. And then who'd take care of my cat? Your cat is a spy. For your own protection, you must eliminate him.
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Post by PhantomWolf on Nov 13, 2008 17:29:39 GMT -4
The most important factor in determining world oil price is what is called excess supply. This is the amount of oil that can be delivered in excess of consumption. In other words oil in th ground that can be pumped execpt for the fact that no one would buy it. As excess consumption rises, producers are willing to reduce price to defend market share. The amount of excess consumption was quite high during the last recession and oil was cheap. As we came out ot the recession and into a big boom, oil demand expanded rapidly and prices went to abnormal highs. This triggered demand destruction. People trading in big cars for smaller ones over period of years and more starting using public transportation. Manufacturers choose to ship good by more fuel efficient means (railroads) and made capital investments to reduce energy consumption in production processes. Now we are in a recession again, and demand is falling. Fewer goods are moving and people are scared for their jobs and are conserving funds. This has triggered lower demand. Over this same time we have spent an enourmus sum of money finding new oil and bringing it to market. This all leads to an increase in excess supply and puts downward pressures on prices. There is nothing magical about this process. The oil business has been a boom and bust business since it was started. That will not change. If you want to actually look into something interesting. Try to uncover the actual contribution of speculation in oil by financial participants in the futures market. No one to my knowledge has a well grounded estimate as to the contribution to prices from speculation. Actually I have to disagree. This might be a valid senario in some cases, but not in what we have just seen. All through the boom years of the 1990's and into the mid 2000's, oil prices were low, down in the US$20-30 a barrel range. True that the price was coming up slowly due to increased demand, especially in India and China, but because demand was not yet outstripping possible supply this trend was generally slow, even with the Iraq War threatening supply and a number of gulf hurricanies shutting down American production and causing jitters in the market. The price didn't really start to spike until the investment markets started to collapse, starting with the sub-prime mortguages and bad risk credit companies. Once those areas of investment started to decline banks and hedge funds that want quick high returns started looking elsewhere and entered the commodities market, mainly oil. With predictions in June of oil hitting US$200 a barrel by the end of the year, it was still apparently a safe investment to buy oil at $130 a barrel then wait the six months to sell at US$70 a barrel profit (nearly a 50% gain in just 6-months). What the high oil prices, the credit crunch, the stock market crash, and the r-word have done is changed that playing field. Demand certainly dropped for oil, meaning that there was no longer an insentive to buy huge amounts, and even the speculators couldn't hold the prices up, they themselves were over stocked and no one was willing to buy at the higher prices. So the market crashed, exactly the same as the share market, and as the investors attempted to divest themelves of fast becoming worthless oil, they have created a bigger glut in the market which pushes prices down even further. Of course with shares plumeting most of the investeors hurting from their oil prices dropping through the floor will be able to make some of it back by buying shares while they are low and waiting for them to recover, but even so there is a lot of hurting out there. Not that I can say I am that sad for some of them, but others will find that the company that was managing their retirement savings has taken some pretty big hits, and that's unfortunate for those people.
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Post by Ginnie on Nov 13, 2008 22:55:29 GMT -4
It's just as well no one listens to you gillanren, otherwise we'd have to send the black helicopters your way. And then who'd take care of my cat? Is it black?
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Post by gillianren on Nov 13, 2008 23:55:35 GMT -4
Alas, no. He's tabby. And, I assure you, he is far too dumb to be a spy for anyone.
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Post by laurel on Nov 14, 2008 0:25:49 GMT -4
Maybe acting dumb is just a cover.
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Post by gillianren on Nov 14, 2008 0:50:01 GMT -4
If he's that good an actor, he's wasting his talent at spying.
You know, in some ways, I really do wish one of these damned prophecies would come true. It would give some point to the thing. Still, that's not going to happen any time soon, because these people have no clearer view of the future than I. Less clear, I think, since I seem to be in better touch with the past and present.
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Post by Dead Hoosiers on Nov 14, 2008 20:21:52 GMT -4
Those 2 items I posted weren't prophecies. Just predictions by somebody. No higher power was involved.
I'd like to do (biblical) prophecies, but I wouldn't have anyone to talk to.
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