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Old 04-30-2011, 01:37 AM
 
3,853 posts, read 12,054,592 times
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How many times have you heard this: Oil is going up because of speculators and middle eastern crisis?

Let me tell you this, the media is failing to report one very important aspect of this. Its 75% inflation that is pushing oil prices up. Why do I say this? Let me explain

First off take note that almost every commodity and asset is going up in price. The only stuff that isn't going up are assets that are backed by cash (ie. bonds). Gold & silver hitting all time records. Most stock indexes going up and up. Many stocks hitting 52 week highs. Wheat, corn, soybeans all going up and up and up!

Commodity Prices

Of course when 95% of commodities are going up what does that mean? It means inflation is on the lose in the economy. Its alot higher than the 2% the fed says its at.

Also have a look at this. The mass media would have you believe that there is some sort of oil shortage. What is the world oil production at you say? Its 88.3 million barrels/day. Which is far higher than any amount of oil we have produced per day in previous years. We increase oil production year over year. We haven't hit a peak yet. However, it is important to note that oil is a tight market, demand always remains at about the same amount as production.



Looks like all those bank bailouts, stimulus and money printing is starting to hit anyone who is cash heavy (ie. mainly the middle class). Also anyone who rushed out of stocks during the last stock crash is probably getting screwed big time as well.
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Old 04-30-2011, 04:32 AM
 
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commodities are going up for many reasons most of it greed ,fear and perception.

what we are taught about supply and demand are wrong. we use it like its one word but supply and demand are really 2 words.

we have plenty of supply at the moment. there is no oil shortgage.

what we have is a falling dollar making things priced in dollars more expensive, we have speculators and investors bidding prices up and most key is we have the perception of world demand off in the future increasing more and more. couple that with the perception of being one world event or natural disaster away from supply issues ..

its not just about some price increases in certain areas , as without wage growth by defination we cant have real inflation. we can have prices rise in sectors or areas but thats at the expense of that money being pulled from other areas.

we cant do THIS AND THAT without wage growth, we can only do THIS OR THAT so inflation is really not able to take hold. we fear more from a slow down and deflation as higher oil and food sucks our money away from many areas of the economy.

if the talking heads are blaming que2 for inflation than by the same token when qe2 stops that should be deflationary.

time will tell but for now ill reserve trying to speculate as to the reasons or the out come as no one knows.

Last edited by mathjak107; 04-30-2011 at 05:30 AM..
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Old 04-30-2011, 08:08 AM
 
Location: Victoria TX
42,661 posts, read 78,613,464 times
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In the 1950s, the going rate for a gallon of gas was about 25c. About the same price as five bottles of coke from the gas station cooler, or a pack of cigarettes. Today, five cans of coke from a vending machine or a pack of smokes cost more than a relatively cheap gallon of gas. A paperback novel or a popular magazine also cost a quarter then. They now cost more than a gallon of gas. An ice cream cone was a nickel. Where can you get five ice cream cones for the price of a gallon of gas? Five small cones at Dairy Queen is about 8 or 9 bucks, and it's not even ice cream.
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Old 04-30-2011, 08:16 AM
 
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Considering oil comes from some of the most un-hospital places on the planet and has to be transported after,refined, re-shipped and handled endless times how is a gallon of bottled water more?

How is milk which comes from a local cow more?

Gas really is a bargain even at these prices compared to price increases in everything else.

I always said if oil companies were price fixers they were the worst in the world at it the way gas and oil lagged everything else. i started driving in 1970. gas was around .30cents.

the bus and pizza went up more since then.
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Old 04-30-2011, 10:54 AM
 
5,410 posts, read 10,353,149 times
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Quote:
Originally Posted by killer2021 View Post
How many times have you heard this: Oil is going up because of speculators and middle eastern crisis?

Let me tell you this, the media is failing to report one very important aspect of this. Its 75% inflation that is pushing oil prices up. Why do I say this? Let me explain

First off take note that almost every commodity and asset is going up in price. The only stuff that isn't going up are assets that are backed by cash (ie. bonds). Gold & silver hitting all time records. Most stock indexes going up and up. Many stocks hitting 52 week highs. Wheat, corn, soybeans all going up and up and up!

Commodity Prices

Of course when 95% of commodities are going up what does that mean? It means inflation is on the lose in the economy. Its alot higher than the 2% the fed says its at.
Agreed the money is going bad in relation to most things it will buy. But that is partly a HUGE re-allocation of what is considered valuable. Real Estate and Housing used to be, and now it down and heading downer.

Since the Real Estate backed the banks, The Fed is trying to push enough money out to re-inflate the collapsed Real Estate. Instead the money is now chasing things of new perceived stores of value.

Quote:
Also have a look at this. The mass media would have you believe that there is some sort of oil shortage. What is the world oil production at you say? Its 88.3 million barrels/day. Which is far higher than any amount of oil we have produced per day in previous years. We increase oil production year over year. We haven't hit a peak yet. However, it is important to note that oil is a tight market, demand always remains at about the same amount as production.
Sorry, but we may be past Peak. Peak was about real, normal, attainable "cheap" Oil. That may have passed a couple of years ago.

But since resource peaks tend to be sort of broad -- spanning typically at least a few years, it is hard to tell if we have truly peaked, or just plateaued. Take a look at your graph "colored-up" a bit so that you can see what is involved in that "curve."





See the blue portion? That is the real on-land attainable production. That is and has been the lion's share of real oil production. Both in the US and around the world. Notice it has been falling for a few years? That is what Peak Oil is about.

That fall-off is in spite of US, Saudi and others going to extreme measures to keep it going. It amazes me the efforts and techniques we are going to in Texas, as we have been falling for a few decades. Flooding, Pressure, Chemicals, Cyclic Pumping, Heat, on and on.

Our next stage are Low-Energy "sippers" to manage to keep wells that produce just a couple of barrels a day going. Doing the math, to bring out two barrels, we obviously have to be well below $200 a day on operating costs.

We have been slapping Solar on wells (another amazing thing -- the most expense electricity to produce the most expense fuel), and getting ready to put air systems on fields, tracking the tides, and all sorts things that would have been thought crazy just a few years ago.

But in spite of all that -- Real Deal is we are falling, and by all measures likely to continue -- same as in any productive sites around the world.

Now take a look at the Green Section -- Offshore Conventional. That is roughly holding its own -- but not able to make up for Falling Onshore Production. If it follows the trendlines found everywhere else -- it will Peak and begin to decline, as well.

So what IS holding us up?

The Yellow -- Onshore Unconventional -- Tar Sands, etc. -- which is SO nasty (and expensive) that I will not be part of it -- is not likely to cover the Falling Conventional in the long run,

AND

The Red -- Offshore Deep Water -- has some Real Risk and Expense to it -- Think of BP in the Gulf of Mexico -- and is not likely to cover the Falling Conventional, either.

Quote:
Looks like all those bank bailouts, stimulus and money printing is starting to hit anyone who is cash heavy (ie. mainly the middle class). Also anyone who rushed out of stocks during the last stock crash is probably getting screwed big time as well.
Collapse studies are pretty interesting in their own right. As are forensic studies (after the collapse, where you can muse "what if"). Putting the two together, it really makes me wonder "What If" instead of going to War for Oil, we had instead Taken US Off Oil, how different things would be now -- for US and the world.
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Old 04-30-2011, 11:48 AM
 
Location: Planet Eaarth
8,955 posts, read 18,772,831 times
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All of the discussions thus far are all good with much merit. However, public perception is more important long term. Yes, what the public thinks is more important than the facts discussed herein.

What you all have said is there is no oil crisis but what the public reads is there is no reason for me not to change my habits and behaviors as a consumer.

In other words, facts to the public only empowers them to behave in the same wasteful manner as always. So I say, leave the public a little frightened so that they will each conserve a little so we can postpone the inevitable.
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Old 04-30-2011, 01:37 PM
 
5,610 posts, read 9,902,970 times
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Oil is going up because of dollar devaluation. I mean how obvious can it get? Sure a little hype about Libya never hurts but Nigeria has been in a never ending supply threat for a decade and it never really registered.

Speculators are focused on dollar weakness and targeting a future dollar level that they are getting in front of by buying oil and gold. But the short dollar trade is getting crowded. Even worse its starting to hit the mass media, which tells me a correction with a strong dollar move isn't too far off.
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Old 04-30-2011, 01:49 PM
 
1,822 posts, read 4,185,298 times
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Speculators pushing paper contracts and not a single physical barrel moves. Wall street at the expense of real street. That's the bulk of the spike. Demand and supply my rear, it's paper trading. You put an end to that paper shuffle and bam, prices stabilize. Make em take hold of the physical barrel and physically shove it around, incur that overhead. Put an end to the silly casino games in a second. We're rewarding our smart people to go into that casino, we need to put an end to that too, but that's for another thread.
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Old 04-30-2011, 02:57 PM
 
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its alot more complex than pushing paper. those contracts are insurance for millions of businesses.

im in the electrical supply business and we have a huge copper wire inventory.

we use futures contracts to hedge our inventory . since we have to drop our prices with the markets we need to insure against loss with these contracts . we dont want delivery ,only hedging.
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Old 04-30-2011, 03:09 PM
 
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James Kunstler addresses this pretty well in his blog of April 25th. You can read the whole entry here.

The Banana Peel of Destiny - Cluster**** Nation

Last edited by vter; 04-30-2011 at 06:56 PM.. Reason: do not cut and paste - just post link please
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