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Thread summary:

Oil future: energy supply, market, loan, credit card, debt.

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Old 02-03-2008, 05:37 PM
 
85,974 posts, read 83,522,039 times
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Quote:
Originally Posted by businezguy View Post
This is really an experience many in this nation are facing right now. Believe me, folks can only keep up with these increasing prices for so long before they have to reduce their consumption. These prices can't increase like this forever when our consumers are the demand for many of these products in the first place.

It isn't like this is Zimbabwe where a 10,000 increase in prices is to be expected, and won't effect the rest of the world. Regardless of what folks think, we matter to the rest of the world, and our behavior will effect the bottom line of other nations.


you would think if prices on something got to crazy people would stop buying it and prices would drop or you would think if prices got high enough new supply would come to market to take advantage of the price and in return the extra supply would drop the prices downward.

not always working out that way, experts thought for sure 100.00 oil would bring new supplys to market flooding us with oil , supply didnt increase at all. look at cigerettes and how expensive they got. the purchases kept right on coming. even coffee soared but people continue to buy it and they just stop buying other items in exchange .

dont forget people may stop doing something or buying something thats a far cheaper item and keep buying the over priced item with the money they didnt spend on the cheaper item.

in a very simplified view
right now i see us as being at the stage of this or that. we have to choose one thing over the other as we can no longer afford to do both. we can't eat out and buy the new sneakers.

the economy would have to dive so much that we are in the neither stage. we can't afford to do anything. even paying basic bills is a struggle.

eventually prices come down and thats deflation. when they get to a point where we can afford to do this and that , thats inflationary.
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Old 02-03-2008, 09:42 PM
 
276 posts, read 627,531 times
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Quote:
Originally Posted by mathjak107 View Post
you would think if prices on something got to crazy people would stop buying it and prices would drop or you would think if prices got high enough new supply would come to market to take advantage of the price and in return the extra supply would drop the prices downward.

not always working out that way, experts thought for sure 100.00 oil would bring new supplys to market flooding us with oil , supply didnt increase at all. look at cigerettes and how expensive they got. the purchases kept right on coming. even coffee soared but people continue to buy it and they just stop buying other items in exchange .

dont forget people may stop doing something or buying something thats a far cheaper item and keep buying the over priced item with the money they didnt spend on the cheaper item.

in a very simplified view
right now i see us as being at the stage of this or that. we have to choose one thing over the other as we can no longer afford to do both. we can't eat out and buy the new sneakers.

the economy would have to dive so much that we are in the neither stage. we can't afford to do anything. even paying basic bills is a struggle.

eventually prices come down and thats deflation. when they get to a point where we can afford to do this and that , thats inflationary.
By purchasing cigarettes, you don't increase the cost of almost everything else. By purchasing coffee, you don't increase the purchase of almost everything else. Cigarettes and coffee don't heat homes, etc. Oil is intertwined in products purchased, cars, etc. In other words, if folks drive as much, but buy less, they use less oil. If folks drive the same amount, but they turn their thermostat down, they use less oil.

Besides, the supply of oil exceeds demand currently. It's just taking awhile for folks to catch on.
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Old 02-04-2008, 10:21 AM
 
Location: WA
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Quote:
Originally Posted by businezguy View Post
....
All of this is going to bring about a decline in the price of oil. It's going to be a painful process, and the economy will certainly struggle through this. But oil will peak, and go down in both demand and price, as in the long term lifestyles change.

I'd love to hear some counterarguments.
The price of oil is driven by supply and demand. There is declining supply and increasing demand. The price will go up.

Thus far there is no cost effective alternative to oil for many applications, especially as a transportation fuel.

There simply are no odds that the situation will change in the foreseeable future.
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Old 02-04-2008, 05:39 PM
 
Location: Boise, ID
1,356 posts, read 5,709,787 times
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Here is an article from several years about the technology that turn anything carbon-based into oil. Nothing like the market to spur innovation!

Anything Into Oil | Alternative Energy | DISCOVER Magazine

How about drilling some of our own reserves too?
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Old 02-04-2008, 06:23 PM
 
Location: Jonquil City (aka Smyrna) Georgia- by Atlanta
16,248 posts, read 22,463,984 times
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Quote:
Originally Posted by businezguy View Post
Since a new thread was requested, here it is.

There's been an argument that the supply of oil will not keep up with demand. This will ensure that oil prices, and other types of energy prices will remain very high, and will never go down, or will not go down much.

This arguement is based on the assumption that there is a dependence on oil, and the demand for oil will grow indefinitely regardless of price.

I believe that those who give this argument underestimate the force of the market, a force that should be compared to that of the weather.

Let's start with a driver of prices, jobs:

Job growth has slowed, and recently begun to deminish. It should be understood that the growth of wages has deminished when compared to inflation. Considering inflation is now beginning to increase while wages and job growth are not, and the economy is also slowing, it doesn't bode well for oil prices. Also consider that energy and house prices are not included in inflation.

Housing:

Never, in the history of this nation, has housing grown in price as much as it has over the past 8 years. When you consider that wages have not grown in real value, the almost doubling in housing prices was not sustainable. This is going to bring about the most spectulalor crash in housing values since The Great Depression. Housing values could go down anywhere from 15 percent to 40 percent over the next two to three years, bringing negative equity to many homes.

Credit cards:

In order to cope with the increasing cost of housing, energy, and food prices, house holds have resorted to using credit cards to grow their ability to spend. This has caused a very false sense of wealth for households, and really brought about the current demand in products/energy/etc. When many of these cards are cut, or go into default, the ability for households to spend as much will go down severely, as it ought to.

Fed rates:

If jobs diminish, and banks cut lending, and inflation continues to go up, the feds will be forced to increase the fed rates by the end of the year. This will further constrict spending/borrowing, and make it more expensive, and make the benefit of saving much more attractive.

Overseas:

China, India, and the Middle East are profiting from this run up in credit. Yet the two areas that are creating this profit are Europe and the United States, and it will be discovered that once these customers stop spending nearly as much, there will not be enough customers to sell their goods and services to. They will suffer similar effects to their economy as Europe and the United States will suffer.

Innovation:

It should not be forgotten that market forces will force companies to bring forth innovation. Nothing forces companies to change the way the serve products to customers then sheer pain. As companies like Ford and GM compete with the global car market, they will be forced to spend R&D on developing new ways of developing cars.

The government or private sector will also find that roadways are no longer sufficient to be solely depended on for transportation, so there will be new developments in transit systems that allow for commuters to get to their jobs conveniently, reliably, and affordably.

These infrustructural changes will take a long time, and their effects will certainly take 5 years to really begin to see, and 20 to 30 years to see the full effects, but if well planned, will make oil a horrible long term investment.

Nuclear plants:

These are becoming in vogue, and will make dependenance on electricity more possible, and keep it relatively affordable.

The overall effect:

All of this is going to bring about a decline in the price of oil. It's going to be a painful process, and the economy will certainly struggle through this. But oil will peak, and go down in both demand and price, as in the long term lifestyles change.

I'd love to hear some counterarguments.
Argument one is this: Oil prices rise and fall all the time. Nobody will invest a dime into alternatives in this country unless oil prices stabilize at high rates. Investors have been burned many times when oil prices were high and they invested in things like hydrogen, bio diesel and electric only to see oil fall to new lows and their investments out the window. This is why, if there is going to be any progress towards alternatives, we should tax gasoline/oil with a floating tax that will insure a price floor that will make investing in new developments worthwhile. The Arabs know this game and they- and OPEC play it well. They know when to jack up the prices sky high and when to let them crash back down. We really ought to stop playing this game with them. Put a floor price of $3 a gallon for gas and GM, Ford and the rest of them will figure out how to make vehicles that get decent MPG.
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Old 02-04-2008, 07:50 PM
 
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Quote:
Originally Posted by KevK View Post
Argument one is this: Oil prices rise and fall all the time. Nobody will invest a dime into alternatives in this country unless oil prices stabilize at high rates. Investors have been burned many times when oil prices were high and they invested in things like hydrogen, bio diesel and electric only to see oil fall to new lows and their investments out the window. This is why, if there is going to be any progress towards alternatives, we should tax gasoline/oil with a floating tax that will insure a price floor that will make investing in new developments worthwhile. The Arabs know this game and they- and OPEC play it well. They know when to jack up the prices sky high and when to let them crash back down. We really ought to stop playing this game with them. Put a floor price of $3 a gallon for gas and GM, Ford and the rest of them will figure out how to make vehicles that get decent MPG.
Another reason, aside from high prices, to bring about changes in alternative fuels and innovation is for political stability. Even if prices were to go down, folks are tired of the political issues that are generated by oil.

With that said, I do see your point, and agree with it. I just think things are a bit different nowadays. Perhaps that is wishful thinking.
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Old 02-05-2008, 12:47 AM
 
Location: Heartland Florida
9,324 posts, read 24,736,328 times
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It is even possible to do thermal depolymerization at home. Another technolgy I have experimented with is gassification. By recycling exhaust engine heat you can make more gas from wood and tires and other waste and run your generator or even your car. Without Government interference inventors could find many good ways to cut oil imports to zero.
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Old 02-05-2008, 09:29 PM
 
Location: Los Angeles, Ca
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I dont know exactly where oil is going to go or any commodity, but I follow Jim Rogers line of thinking about the entire group (he wrote a book, Hot Commodities, and started a commodities fund in '98 that's up hundreds of percent since then).

Very simple supply and demand economics. Oil went down for 20 years, since the early 80's. New supply, exploration went down as prices went down. Supply down. No new refinery's built in X number of years. No new big oil discoveries.

Demand keeps going up, China, Asia growth. It's going to take a long time for supply to catch up again. The price has to stay high for a long time to bring everyone out of the woodwork looking for oil and alternative energy.

Then it peaks and the cycle reverses. Everyone is looking for oil, alternative energy is more attractive, there's a glut of oil, and the cycle goes down again for 10-20 years.

Even if the economy goes down, oil can still go through the roof (i.e. in the 70's). Demand could shrink, but if it shrinks less than supply, it'll still go up.
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Old 02-06-2008, 05:24 AM
 
276 posts, read 627,531 times
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Quote:
Originally Posted by John23 View Post
I dont know exactly where oil is going to go or any commodity, but I follow Jim Rogers line of thinking about the entire group (he wrote a book, Hot Commodities, and started a commodities fund in '98 that's up hundreds of percent since then).

Very simple supply and demand economics. Oil went down for 20 years, since the early 80's. New supply, exploration went down as prices went down. Supply down. No new refinery's built in X number of years. No new big oil discoveries.

Demand keeps going up, China, Asia growth. It's going to take a long time for supply to catch up again. The price has to stay high for a long time to bring everyone out of the woodwork looking for oil and alternative energy.

Then it peaks and the cycle reverses. Everyone is looking for oil, alternative energy is more attractive, there's a glut of oil, and the cycle goes down again for 10-20 years.

Even if the economy goes down, oil can still go through the roof (i.e. in the 70's). Demand could shrink, but if it shrinks less than supply, it'll still go up.
I believe that demand for oil is not a constant increase given certain situations. When folks have a lot of expenses, and can only afford so much for oil, they begin to curb purchases (which use oil), and drive less (use still less oil). The demand for oil in the US has come down over the past 2 years, and that's never happened before.

That is what is going to happen in developing nations when they are in a recession. When we go into a recession, and Europe goes into a recession, so will India and China.

World demand for oil will be reduced over the short term. In addition, the assumptions of many "experts" that oil demand always rises (remember, FUTURE demand for oil is what people are trading on) will prove wrong, and that will expose a flaw in much of the thinking today about oil.
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