When is the "Oil Bubble" going to burst?? (buying, sell)

[baystater]

Well in the short term I guess this is a bubble and should drop a little by (guessing to $80 to $85) by Nov. Granted I can be wrong on this. But here's the real problem. The idea of oil going up and up to astronomical price again in the future is real. Dollar strength be damned. Even if India or China do start to feel some of our economic crunch they will probably continue to want/need more oil. Not just for fuel but for making plastic, fertilizers, etc. etc. This demand will drive oil price up over the long term. Also we have to consider global politics that help shape oil prices. I mean we all know the problems facing the Middle east and North Africa. And of course the situation in Venezuela. basically their problems (whether created by the west or not) are our problems when it comes to oil costs. Also the key player.... Russia. I believe is playing a game of "let ride this horse til' it dies." They're sitting back watching and not probably producing as much oil as they could because they are getting richer and richer each day the oil prices are sky rocketing. Now whether this plan Russia end up being effectively them cutting their own throat in the long run remains to be seen. But any person that watches Russia can see they are willing to take that chance to make the short term money. As for the U.S. getting more oil from shale, tar sands, or drilling deep in the Gulf. Look guys. Because of the risks involved or just the expense to getting at the oil in these type of processes. Says that the days of cheap oil are over. Yes we have the oil in these places but really is it worth the cost? Or is going to truly bring down the cost of fuel? Honestly I highly doubt it.
Look really in the end we need to move on from oil and look for something else sustainable. We can either start now and feel a little pain or we can wait and basically take a big kick in the ba!!s. The choice is our to make. So what is your choice?

[Philip T]

So why does anyone think this even is a bubble?

Bubbles usually deal in products that are surplus and being traded without regard to demand, correct? In the bubble model, eventually that over-production and surplus product catches up on the market price and the price collapses. Over and over -- housing bubble matched that pretty close.

There is no present true surplus oil, is there? Every drop is sold in advance -- sometimes out for a year or more in advance. And then no one is "sitting" on produced oil, are they? The only real surplus block we have is the Federal Emergency Reserve and that is not being held to be sold at a higher price (as happened with houses, for example).

Only way to a surplus in oil at this point is a drop in demand. While just about anyone can do a demand drop in their own life and net BIG instant gains (or at least stop losses), that is not a market bubble thing, either.

[Joe107]

Originally Posted by Philip T

So why does anyone think this even is a bubble?

Bubbles usually deal in products that are surplus and being traded without regard to demand, correct? In the bubble model, eventually that over-production and surplus product catches up on the market price and the price collapses. Over and over -- housing bubble matched that pretty close.

There is no present true surplus oil, is there? Every drop is sold in advance -- sometimes out for a year or more in advance. And then no one is "sitting" on produced oil, are they? The only real surplus block we have is the Federal Emergency Reserve and that is not being held to be sold at a higher price (as happened with houses, for example).

Only way to a surplus in oil at this point is a drop in demand. While just about anyone can do a demand drop in their own life and net BIG instant gains (or at least stop losses), that is not a market bubble thing, either.

I remember a realtor a few years ago explaining that housing can never go down because there is a fixed amount of land and world population increases every year

[Joe107]

The amazing thing about bubbles is the justificaitons that arise. They always sound pretty darn good too (at the time)........... I think this bubble will take a while to burst. But it's hard to predict something that is irrational and unpredictable.

[Mircea]

Originally Posted by Philip T

So why does anyone think this even is a bubble?

Brilliant question. The answer is that it's the "bubble buzz-word bandwagon."

Originally Posted by Philip T

Bubbles usually deal in products that are surplus and being traded without regard to demand, correct? In the bubble model, eventually that over-production and surplus product catches up on the market price and the price collapses. Over and over -- housing bubble matched that pretty close.

That's spot on. It's more than obvious that home-builders did not conduct marketing research studies. Had they done so, they would have known they were far beyond the saturation point in the market and each new house/condo was surplus.

Originally Posted by Philip T

There is no present true surplus oil, is there? Every drop is sold in advance -- sometimes out for a year or more in advance. And then no one is "sitting" on produced oil, are they? The only real surplus block we have is the Federal Emergency Reserve and that is not being held to be sold at a higher price (as happened with houses, for example).

That's true, except that if there are too many futures contracts, the settlement price will be less (and if you're speculating you lose money).

Originally Posted by Philip T

Only way to a surplus in oil at this point is a drop in demand.

That isn't likely. The majority of countries are developing nations and a drop in demand means a halt in development. In developed countries the demand is fairly constant (especially for a number of the western European countries), and could be reduced slightly without negative consequences, in part because they have well-developed mass transportation systems, plus commercial and passenger rail systems. More importantly, there's a lack of urban sprawl.

[Humanoid]

Do research if you are interested, or not.

I have and I repeat the monetary base has not increased. Also, the US treasury really can't increase the monetary base.

But oversimplifications are always more popular, so you go with that if it makes you happy.

[Wild Style]

^^

So I guess your going with the or not portion of the statement. Gotcha

[Humanoid]

So I guess your going with the or not portion of the statement.

Telling someone that disagrees with your assertion that they should "research" it is a cop-out.

But again whatever makes you happy.

[jimhcom]

So why does anyone think this even is a bubble?

Bubbles usually deal in products that are surplus and being traded without regard to demand, correct? In the bubble model, eventually that over-production and surplus product catches up on the market price and the price collapses. Over and over -- housing bubble matched that pretty close.
The big difference is every drop of oil is being bought 6 months in advance in the futures market so a false market is being produced due to speculation. Can you imagine what would have happened to the real estate market if futures traders could have come in and bought up inventory?

[bchris02]

This is a bubble. Oil has left the law of supply and demand and the price is spiraling out of control on speculation. Oil will never fall as low as the $10 per barrel we saw in the '90s, but I think $60 is possible again. Unfortunately, we are almost sure to see $200 oil and $7 gas before it finally collapses.

Then again, the price might come down this fall so it becomes a non-issue during election season as it did in 2006. The way gas fell from $3 to $1.90 just in time for the 2006 elections then went right back up afterwards is proof to me that Bush is involved in this price gouging in one way or another.