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Old 06-23-2008, 12:15 PM
 
Location: the D
347 posts, read 1,213,324 times
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Quote:
Originally Posted by KevK View Post
Oil is about to crash. Bet on it! The Saudis have made it clear they want a target price of $80 a barrel and they will do whatever is necessary to get it there.
I read about this a few weeks back.
Dont the oil producing nations profit from rising prices of crude oil? I know the cost of finding and refining is also higher than what it used to be, but why would a supplier try to bring their profits down?
Or am I missing something here?
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Old 06-23-2008, 12:21 PM
 
Location: Chino, CA
1,458 posts, read 3,005,166 times
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It's hard to believe our currency is that big of a culprit to oil prices considering that the USDX has actually been increasing since May, but Oil prices continue to soar.





Also I agree with bchris02, that our economy is pretty robust considering what's going on with Housing and the Credit Crisis. With Oil going up regardless of demand... and news of China cutting subsidies, Saudi Arabia adding to production, and the USDX actually getting a bit better not affecting crude's accent.... there's definitely something in the works that doesn't make sense. Maybe it's because of all the Joes next door recommending all these ETFs :P

Yes, it's strange when even the Saudis (Producers) say that prices are too high (its like Buffet saying the rich aren't taxed enough)... there's something fishy going on.

-chuck22b
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Old 06-23-2008, 12:24 PM
 
Location: Raleigh, NC
9,043 posts, read 11,811,237 times
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Quote:
Originally Posted by Mathguy View Post
Good points.

I was more focused on the Gold to Oil ratios than to the stock market. I can more easily see a case for the gold/stock ratios having some constance. I'm just a little hung up on the issue of gold/oil ratios having any historical constance since oil is consumed upon use where gold and silver have more persistance in circulation.

I'm hesitant about gold, I'm already seeing the direct adds in the newspapers imploring YOU John Q. Public not to miss out on the virtually guaranteed continued run-up in gold. (Translation: Buy now at record highs so that you don't continue to miss out on the recent huge gains )

My opinion is that gold is currently the new fad following in the footsteps of real estate (2000's), the new dot-com (1990's), the new silver (1970ish) etc etc etc. too much hype, too much herd running that direction.
I can understand the hesitation with gold and silver bullishness considering the recent ups and downs from 1K gold.

As far as silver, supposedly there is some geological evidence that less silver than gold actually exists within the Earth's crust. Additionally, silver is actually consumed for industrial purposes in greater quantity than gold, taking it out of circulation. Gold's lack of "consumption" is merely a product of the pervasiveness of fiat currency. I believe there will be a "flight to quality" by one or more countries returning to a partial/full gold standard. The yuan? Euro? singapore $? Who knows...but I think it'll happen at some point. It's happened time and time again over the past several thousand years. In fact, we've only begun our "adventure" in pure fiat currency (since 1971 when Nixon officially closed the gold window). Less than 40 years and we're seeing the effects of this huge surge in money supply.

Anyway, I think that some might be reversing cause and effect of inflation. My opinion is that the increase in money supply bids up prices and spurs artificial growth that would be less "spikey" with a more solidly backed basket of currencies.
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Old 06-23-2008, 12:25 PM
 
Location: Raleigh, NC
9,043 posts, read 11,811,237 times
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Quote:
Originally Posted by chuck22b View Post
It's hard to believe our currency is that big of a culprit to oil prices considering that the USDX has actually been increasing since May, but Oil prices continue to soar.





Also I agree with bchris02, that our economy is pretty robust considering what's going on with Housing and the Credit Crisis. With Oil going up regardless of demand... and news of China cutting subsidies, Saudi Arabia adding to production, and the USDX actually getting a bit better not affecting crude's accent.... there's definitely something in the works that doesn't make sense. Maybe it's because of all the Joes next door recommending all these ETFs :P

Yes, it's strange when even the Saudis (Producers) say that prices are too high (its like Buffet saying the rich aren't taxed enough)... there's something fishy going on.

-chuck22b
We're also exporting our inflation, so the relative strength of the dollar may show stability while commodities continue to escalate in price. I don't think it's a coincidence that all commodities are increasing in price.
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Old 06-23-2008, 12:32 PM
 
Location: Chino, CA
1,458 posts, read 3,005,166 times
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Quote:
Originally Posted by ViewFromThePeak View Post
We're also exporting our inflation, so the relative strength of the dollar may show stability while commodities continue to escalate in price. I don't think it's a coincidence that all commodities are increasing in price.
Not All commodities... Wheat had a major run up til March where it fell over 50% from peak. Also remember Gold was at 1k.... now it's under 900... 10% drop.

Also, supposively... we're getting tough on inflation! Of course, that also had Zero effect on Oil markets.
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Old 06-23-2008, 12:32 PM
 
5,090 posts, read 10,038,990 times
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Quote:
Originally Posted by DDevil View Post
I read about this a few weeks back.
Dont the oil producing nations profit from rising prices of crude oil? I know the cost of finding and refining is also higher than what it used to be, but why would a supplier try to bring their profits down?
Or am I missing something here?
Saudi's existence is tied to being the biggest fish in the ocean. Russia has now passed them in production. Saudi's production, in truth has very limited run-time ahead before they start into serious decline.

If the US and West get half a brain and choose to go off oil, then Saudi losses all its power and influence in the world. Think of this like a drug turf war. Money is less the issue than control. Saudi makes profit at $10 and they make even more profit at the current prices. If they can keep the game going, they will continue to do very well.

If the US were to sober up and quit oil -- the dealer has a very dim future. Oil would go into surplus and whole market would crash, but make no difference to US either way as we would have already walked away from the game.
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Old 06-23-2008, 12:36 PM
 
717 posts, read 629,487 times
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Quote:
Originally Posted by Mathguy View Post
I agree with you about speculators but I think they are the 3rd biggest problem.

1) If the US dollar was worth 1.40 canadian (like it used to be)....oil would be <$100 a barrel.
2) Increased global demand vs. supply

The was a vast extension of BAD CREDIT leading back to the 1990's where it started with credit cards and then moved on into HELOC's etc. We have killed the value of the dollar and the average American has no understanding that this is a huge contributor as to why oil/gas *costs more*.

The American people have done the bulk of the damage to themselves via overspending and overconsumption. It's a free country, we need to take some personal responsibility.
That last sentence gets an A+ in my book.
When things are going well Americans do not live within their means. Then they have to pay off all the debt they accumulated.
Maybe this time with the tremendous amount of pressure on the crdit companies, the next upturn in the economy consumers will not be able to spend more then they have.
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Old 06-23-2008, 12:36 PM
 
5,090 posts, read 10,038,990 times
Reputation: 3961
Quote:
Originally Posted by chuck22b View Post

Yes, it's strange when even the Saudis (Producers) say that prices are too high (its like Buffet saying the rich aren't taxed enough)... there's something fishy going on.

-chuck22b
If you like the charts and pictures version, it is covered over on The Oil Drum >>>

The Oil Drum | The devil is in the production details of Saudi Arabia

AND

The Oil Drum: Europe | Saudis announce oil production increases...again...and again...and again...
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Old 06-23-2008, 12:41 PM
 
55,027 posts, read 43,874,554 times
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Chuck22b, cherry picking a narrow range of data ("since may") is not generally accepted as being a wise analytical process.

In simple terms...if you buy a barrel of oil from some guy in Canada he wants $137 Canadian which is about $137 US. If the exchange rates were back where they used to be...you would only need to hand him maybe $98 US.

I fully accept that speculation and supply/demand and even other issues have contributed to getting oil up to near $100 and the bulk of the rest to me is currency related.
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Old 06-23-2008, 12:42 PM
 
Location: Chino, CA
1,458 posts, read 3,005,166 times
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Quote:
Originally Posted by Philip T View Post


Can't go to the those sites... but I totally agree with you Philip T... the Saudi's best interest is to keep US hooked on Oil. Excessively high prices encourages us to move off the stuff. So, it's to their best interests to keep prices relatively stable so we'll be hooked on the stuff indefinitely.

-chuck22b
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