[Zardoz]

This is crazy:

What is this? The Mad Hatter's Tea Party?

$this->bbcode_second_pass_quote('', 'I')brahim said OPEC dropped its target price in the $20s back in 2004 after it became apparent to the cartel that forces outside its control - geopolitics, speculation and distribution problems, not fundamental supply and demand - were the prime reasons behind oil's spike.

Rising supply

He cited rising stockpile levels in the developed countries as evidence.

"When more oil comes on the market you'd expect the price to come down," he said. "It's just fear that is leading to speculation."

[Cobra_Strike]

I think these people are very confused, and have resorted to the magic eightball approach of predicting the future...aka...they haven't a clue what is happening...expect a rise tommorow...Alaska just shut the heck down.

[Lighthouse]

$this->bbcode_second_pass_quote('Zardoz', '.')..

This is CNNMoney publishing this horseshit, folks. This isn't some fringe organization.

It's gotta be drugs...

[Doly]

$this->bbcode_second_pass_quote('Zardoz', '
')Huh? What? Is that supposed to make some sort of sense?

[seldom_seen]

This is just a stupid cornucopian article where if you were an idiot you'd get the sense that OPEC controls price, which they don't, and supply, which they don't.

They're just a middleman (between the ground and you) who happens to be making a handsome profit.

[Concerned]

$this->bbcode_second_pass_quote('Zardoz', '
')
$this->bbcode_second_pass_quote('', '"')You can't say oil won't go below $60 again," said Andrew Lebow, an energy broker at Broker at Man Financial in New York who agreed with the short-term $60 premise. "It could go to $20 or $30" in a couple of years.

When asked why he saw a price floor that's so far below even the widely accepted medium-term price floor of around $40, he responded "Who in 1998 thought it could go to $75? No one."

[MrBill]

Seriously, I read the article, and there is nothing wrong with it except perhaps the comments by the energy broker at the end which are really just one man's opinion? It is true that when prices were between $15-20 a barrel no one at the time was talking about oil in the range of $75-100. Likely $60 is the new floor price that everyone can live with, but a severe global recession or an outbreak of human to human avian flu or a nuclear accident/war might cause a temporary gut of supply and force prices below $60 or even the stated $40 per barrel. However, I do not think anyone is suggesting that $20-40 is the new equilibrium point between supply & demand in the longer term?

[slick]

$40 oil is predicted widely
http://www.financialsense.com/Experts/2006/Maugeri.html

[Zardoz]

$this->bbcode_second_pass_quote('slick', '$')40 oil is predicted widely

[mekrob]

Zardoz, I think you can actually take the quotes out of believe. They really don't believe in geology.

[evilmonkeyspanker]

Yea, I think they take thier notions from Tom Cruise and refer to it as a psuedo-science. Since we all know "God" wouldn't let america run out of cheap abundant oil.

[MrBill]

$this->bbcode_second_pass_quote('Zardoz', '')$this->bbcode_second_pass_quote('slick', '$')40 oil is predicted widely

[Concerned]

$this->bbcode_second_pass_quote('MrBill', '')$this->bbcode_second_pass_quote('Zardoz', '')$this->bbcode_second_pass_quote('slick', '$')40 oil is predicted widely

[MrBill]

$this->bbcode_second_pass_quote('Concerned', '')$this->bbcode_second_pass_quote('MrBill', '
')If you do not believe in the rules of economics then I guess you're not worried about the economic fallout from high oil prices or scarcity either? It simply should not matter to you?

[MrBill]

More economists sitting around all day with nothing better to do than try to match theory to practice....
$this->bbcode_second_pass_quote('', 'D')OR -- spending is probably a bad choice of words; China is buying $ equal to about 10% of GDP (in exchange for RMB). but it gets an asset in return. the expected loss on its position isn't trivial, but it isn't 10% of GDP either. Maybe 3-4% over time tho.

I still don't quite see why China would be hurt by a fiscal contraction sufficient to throw the US into recession and to generate a real depreciation of the $ via US deflation. A smaller US market. less support for global growth (Europe also needs a real depreciation v. China, and if the US is deflating, Europe either has to deflate or the $ has move v. the euro) and so on. Plus the protectionism.

Yes, supply chains matter. That is why electronics is now in asia and will be hard to move back. but it wasn't always so. if auto parts makers conclude that they and their supply chains need to relocate, well, I fear that it will be far harder to generate a trade response to exchange rate changes (you would first need supply chains that had moved to asia to relocate back to the US). Which is why i think the RMB matters. Electronics assembly isn't coming back to the us. but automobile assembly hasn't (yet) left north america. in the 80s, the japanese shifted the location of much of their assembly (and supply chains) to n. america.

finally, I don't see how it is solely a us problem. Without Chinese financing, the US could never have made the mistakes it has made. Fiscal deficits would have precluded a boom in residential investment. Crowding out. China (and others) kept that happenening. Maybe that wasn't their intent, but it was the effect of $250b a year in annual intervention and associated demand for fixed income assets.

[Zardoz]

$this->bbcode_second_pass_quote('MrBill', '')$this->bbcode_second_pass_quote('Zardoz', '')$this->bbcode_second_pass_quote('slick', '$')40 oil is predicted widely

[MrBill]

$this->bbcode_second_pass_quote('', 'M')akes your head spin, doesn't it? Can you blame us for mocking, scorning and generally dissing economists when they spew out horseshit like this?

They insist the market will solve the problem. They are in total denial of the physics of the coming energy meltdown. They continue to believe the resources are down there somewhere, waiting patiently for us to extract them.

That's all we're talking about. We're simply saying that their market-solution ideas are absurd when the resource they're talking about is getting scarcer by the day.

[BigTex]

Okay, someone PLEASE help me with this one: PO will cause the price of oil to rise because of reduced supply up against relatively inelastic demand, which will cause prices to rise on all products and services because oil is integral to industrialized society. This will trigger a recession because so much money will be spent on energy related price increases and these dollars will not be available to spend on other products. The recession will cause a reduction in the price of oil because the reduced economic growth will reduce demand for oil. Reduced oil prices will set the stage for a recovery in economic growth. That doesn't sound so bad.

MrBill writes:
$this->bbcode_second_pass_quote('', ' ')you have to distinguish between peak oil the geological fact and its economic consequences. Peak oil means no matter how much oil is in the ground, eventually you reach mid-production and after that there is less and less no matter how slowly you pump it out of the ground or how hard you try to conserve what is left.

In the short term the demand for transport fuel is very inelastic as there are few alternatives, and much of our infrastructure is dependent on driving. In the longer term, alternatives for stationary power exist. They may not be as cheap as petroleum is now.

[Doly]

$this->bbcode_second_pass_quote('BigTex', 'R')educed oil prices will set the stage for a recovery in economic growth. That doesn't sound so bad.

[Falconoffury]

$this->bbcode_second_pass_quote('', 'N')obody says there would be a full recovery. More like a partial recovery. What most people here think is that there will be a slump, partial recovery, a bigger slump, partial recovery, etc... but all the time going downhill.