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In a dramatic move yesterday President Bush removed the executive-branch moratorium on offshore drilling. Today, at a news conference, Bush repeated his new position, and slammed the Democratic Congress for not removing the congressional moratorium on the Outer Continental Shelf and elsewhere. Crude-oil futures for August delivery plunged $9.26, or 6.3 percent, almost immediately as Bush was speaking, bringing the barrel price down to $136.
Democrats keep saying that it will take 10 years or longer to produce oil from the offshore areas. And they say that oil prices won’t decline for at least that long. And they, along with Obama and McCain, bash so-called oil speculators. And today we had a real-world example as to why they are wrong. All of them. Reid, Pelosi, Obama, McCain — all of them.
Traders took a look at a feisty and aggressive George Bush and started selling the market well before a single new drop of oil has been lifted. What does this tell us? Well, if Congress moves to seal the deal, oil prices will probably keep on falling. That’s the way traders work. They discount the future. Psychology and expectations can turn on a dime.
You may have made a leap of logic. I'm not sure that Bush lifting a symbolic ban is THE cause of the drop. It dropped that much last week and went back up. It may be due to the Freddie and Fannie debacle, the GM cutbacks, the drop in retail sales and the predictions by Bernanke that tougher times are ahead. Demand for oil is also dropping and that's bound to dampen prices.
If congress gets its head out of its ass and kills the Enron loophole, thus ending speculation in commodities, we may well see oil drop back to $100 BBL within 90 days. Before the Enron loophole, if you speculated in commodity futures, you'd better be ready for a truckload of corn, pork bellies, or crude to end up on your lawn. If we go back to those reasonable times, speculation in all these items will end and we'll probably see prices for all these items decline.
You may have made a leap of logic. I'm not sure that Bush lifting a symbolic ban is THE cause of the drop. It dropped that much last week and went back up. It may be due to the Freddie and Fannie debacle, the GM cutbacks, the drop in retail sales and the predictions by Bernanke that tougher times are ahead. Demand for oil is also dropping and that's bound to dampen prices.
If congress gets its head out of its ass and kills the Enron loophole, thus ending speculation in commodities, we may well see oil drop back to $100 BBL within 90 days. Before the Enron loophole, if you speculated in commodity futures, you'd better be ready for a truckload of corn, pork bellies, or crude to end up on your lawn. If we go back to those reasonable times, speculation in all these items will end and we'll probably see prices for all these items decline.
Who made a leap of logic? Me? I just posted an article.
INDEED!! I thought this was the most encouraging part of Kudlows article,( There’s also a “gang of 10” in the Senate, five Republicans and five Democrats, that is trying to work a compromise deal on lifting the moratorium. So it’s possible a lot of action on this front could occur much sooner than people seem to think.) Who know's maybe a little common sense and fortitude could come over the Senate and we could actually see something miraculous happen. I am cautiously optimistic! Which is really saying something when we are talking about the US Senate!
INDEED!! I thought this was the most encouraging part of Kudlows article,( There’s also a “gang of 10” in the Senate, five Republicans and five Democrats, that is trying to work a compromise deal on lifting the moratorium. So it’s possible a lot of action on this front could occur much sooner than people seem to think.) Who know's maybe a little common sense and fortitude could come over the Senate and we could actually see something miraculous happen. I am cautiously optimistic! Which is really saying something when we are talking about the US Senate!
I hear you, but if they lift that ban today, it would be 7-12 years before a drop of that oil flows to market, and that cannot possibly be a reason for the drop in prices that are short term futures. I've seen estimates that it might be as far off as 2023 before any new offshore oil reaches us. If they were talking about killing the Enron loophole, THAT would put fear into the speculators, who'd start heading for the exits and drop the price of oil.
Doesn't matter who made a leap of logic, I'm not criticizing, but I don't see a cause-effect relationship between today's events.
I hear you, but if they lift that ban today, it would be 7-12 years before a drop of that oil flows to market, and that cannot possibly be a reason for the drop in prices that are short term futures. I've seen estimates that it might be as far off as 2023 before any new offshore oil reaches us. If they were talking about killing the Enron loophole, THAT would put fear into the speculators, who'd start heading for the exits and drop the price of oil.
Doesn't matter who made a leap of logic, I'm not criticizing, but I don't see a cause-effect relationship between today's events.
While you are right Mike, I think it is the signal of a willingness to get serious that has some impact on pricing. Will it stick, who knows?
My call still is a drop to about $70-$75 per barrel.
While you are right Mike, I think it is the signal of a willingness to get serious that has some impact on pricing. Will it stick, who knows?
My call still is a drop to about $70-$75 per barrel.
Agree. The Saudi's have been saying that $70-100 BBL is where it SHOULD be and that they cannot understand why prices went up and stayed up. They say supply is meeting demand, that there are NO shortages anywhere and that they can pump all the oil the world needs. My only explanation for this is: speculation, that damned Enron loophole that former Senator Gramm had enacted, and which allows speculation in commodities. (FYI: Gramm is now McCain's "economic advisor" - woe is us.)
The same greedy bastards who brought rolling blackouts to CA in the heyday of Enron's manipulations are now manipulating markets and making tens of billions of dollars profit speculating in oil, corn, wheat and other items. These people are soul-less ghouls who will bleed the world dry and have no limits on their money lust.
Agree. The Saudi's have been saying that $70-100 BBL is where it SHOULD be and that they cannot understand why prices went up and stayed up. They say supply is meeting demand, that there are NO shortages anywhere and that they can pump all the oil the world needs. My only explanation for this is: speculation, that damned Enron loophole that former Senator Gramm had enacted, and which allows speculation in commodities. (FYI: Gramm is now McCain's "economic advisor" - woe is us.)
The same greedy bastards who brought rolling blackouts to CA in the heyday of Enron's manipulations are now manipulating markets and making tens of billions of dollars profit speculating in oil, corn, wheat and other items. These people are soul-less ghouls who will bleed the world dry and have no limits on their money lust.
I don't want to point fingers, the problem is world-wide and my point of origin for criticism is awful Russian company management, but that is a huge subject for debate.
To me, the main point is that the "peak oil" discussion is only valid at a low price point. In looking at the cost of synfuels, especially from sugar or biomass, $70 per barrel appears to be very profitable. Same for the Alberta Oil Sands, $70 provides a huge profit per barrel, even with the high processing cost.
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