Oil $200 by the end of the year! (buying, tax, unemployment)

[ViewFromThePeak]

Originally Posted by sskkc

Oil prices have dropped mainly due to the lifting of the offshore drilling ban - which is one of those pesky executive orders that Obama has "promised" to get rid of.

Expect gas to go back to $4/gal or higher beginning in late January. From there, the sky's the limit.

[floridasandy]

Originally Posted by Humanoid

If the credit markets collapse the economy will collapse. The credit markets are just starting to ease up from being essentially frozen in October.

During the depression they just let things fail....the consequence wasn't pretty. They aren't really interested in seeing what happens this time around if they just let everything fail.

that's just another myth that keeps the public from seeing what's really going on. As Jon Hilsenrath points out in his Wall Street Journal article, "Banks Keep Lending, but that isn't easing the crisis", that is not the case:

"Banks actually are lending at record levels. Their commercial and industrial loans, at $1.6 trillion in early November, were up 15% from a year earlier and grew at a 25% annual rate during the past three months, according to weekly Federal Reserve data. Home-equity loans, at $578 billion, were up 21% from a year ago and grew at a 48% annual rate in three months.

[StoneOne]

Originally Posted by floridasandy

i am an advocate of free market (and no bailouts) but certainly we have to deal with the reality that our government is in the process of using taxpayer money to bail out mortgages, banks, auto, etc. i always thought that incentives for private industry were the way to go but we are certainly not on that track anymore (with either administration). i never believed the frozen credit market story, either.

How can you be an advocate of the free market yet want incentives for private industry? --- Unless of course you by incentives you mean a low tax regime all around and no government subsidies that prop-up inefficient companies that would fail on their own.

[Philip T]

Originally Posted by sskkc

Oil prices have dropped mainly due to the lifting of the offshore drilling ban - which is one of those pesky executive orders that Obama has "promised" to get rid of.

Expect gas to go back to $4/gal or higher beginning in late January. From there, the sky's the limit.

Ok, I will bite as this seems just silly.

But I could be way off, so maybe connect the dots for me?

How in the world would lifting a ban cause prices to drop a month later? I am not saying like a couple years later where any of these "banned" drilling sites suddenly came into production -- causing a rise in available produced oil. (which btw, is not likely to happen).

But how could sites that are not yet producing anything influence the prices . . . .

And how does not the real margin leading to the present glut -- a LARGE reduction in demand and use -- be the largest cause?

[StoneOne]

Originally Posted by Philip T

Ok, I will bite as this seems just silly.

But I could be way off, so maybe connect the dots for me?

How in the world would lifting a ban cause prices to drop a month later? I am not saying like a couple years later where any of these "banned" drilling sites suddenly came into production -- causing a rise in available produced oil. (which btw, is not likely to happen).

But how could sites that are not yet producing anything influence the prices . . . .

And how does not the real margin leading to the present glut -- a LARGE reduction in demand and use -- be the largest cause?

I agree. The lifting of the ban might have had some initial impact into the oil bubble being popped, but this decline has been all about demand destruction and an increasing dollar. Whether both scenarios will last is anyone's guess, but until they turn around, oil has to go lower.

[Filet Mignon]

Originally Posted by Humanoid

Sorry, couldn't help myself.

Man, oil is getting cheap. Currently at around $46/barrel. I wasn't expecting it to get much less than 70-ish a barrel.

I can fill up my tank with a twenty now.

Yep. And this summer it was costing me $20 to fill the tank on my motorcycle!

But alas, I'm afraid the cheap oil won't last. And when it goes back up, it's going to do so with a vengeance. It seems like we never learn our lesson. Now that the price at the pump is lower, we're driving more miles and people are buying big vehicles again.

[Filet Mignon]

Originally Posted by sskkc

Oil prices have dropped mainly due to the lifting of the offshore drilling ban - which is one of those pesky executive orders that Obama has "promised" to get rid of.

Expect gas to go back to $4/gal or higher beginning in late January. From there, the sky's the limit.

Actually, I think that the drop off in China buying crude oil has a LOT more to do with it than that.

[StoneOne]

Originally Posted by Filet Mignon

Now that the price at the pump is lower, we're driving more miles and people are buying big vehicles again.

I haven't seen any evidence of that. I don't think the Big Three would be in DC now begging for money if people were buying their cars.

On a side note, oil has always been inexpensive for society in general, even this last summer. Had oil been truly expensive, it would have been replaced and people would have significantly changed their habits. People altered their habits because oil wasn't as cheap as it used to be, but no significant change took place on the macro level.

[njguy]

Originally Posted by sskkc View Post
Oil prices have dropped mainly due to the lifting of the offshore drilling ban - which is one of those pesky executive orders that Obama has "promised" to get rid of.

Expect gas to go back to $4/gal or higher beginning in late January. From there, the sky's the limit.

Originally Posted by ViewFromThePeak

In every post about gasoline prices I've always said pretty much in essence that it's a mistake to be complacent and that oil & gas prices will go up again.

Now $4.00/gallon in January may be a bit much too fast - but then again, any instability in the oil producing nation areas could spike up those prices in less than a NY minute I suppose.

[GregW]

Has anyone considered that the price run up was a world wide marketing experiment to get a real example of a price - demand curve for petroleum products? There is still world wide surplus pumping capacity so the monopolists want to find the price that will maximize revenue to the suppliers without encouraging either alternatives or conservation. I suspect oil will stabilize around $80 – 100 per bbl with gasoline selling around $2 per gallon. This will continue until we return to our profligate ways and are ripe for another “experiment”. The oil cartel is run by some very smart and well trained people that want to maximize their returns on investment and their oil reserves. They know that once the oil is pumped they will have to find some other way to maintain their power and privilege.