[mrobert]

@mefistofeles: I know that proping up the dollar is not an easy task.

The US makes a lot of nice things. Too bad they killed the economy for a short lived gain of cheap chinese crap.

Take my Zippo lighter for example. Manufactured in the US.
I paid about $40 for it. Expensive for a lighter, but it's durable. I know it will last me a few good years. I can always start buying chinese plastic lighters for $1 a piece. I would pay the price of the Zippo in about 2 years.

What do I have left after 2 years?
A) A good piece of american lighter that still works and will continue to work. It can be recycled if needed. It's made out of metal and cotton (I assume is used) for the wick. Did it's manufacture involve chemical processes that damage the environment? Not that much really.

B) About 40 pieces of useless plastic chinese lighters. Can they be recycled? Not really. Did the manufacture process involve chemical processes that damage the environment? Yes.

These are the things US should focus on, and start doing again.
Quality and durable things.

[DantesPeak]

$this->bbcode_second_pass_quote('mefistofeles', 'I') would argue that it doesn't matter if the oil price run up is caused by speculators.

[kokoda]

$this->bbcode_second_pass_quote('mefistofeles', '[')code]I love this video in which Robert Hirsch really puts Joanne Lipman, the Editor of portfolio magazine, in her place. She is talking about surveying economic "experts". The mere fact that these people are so bad at predicting oil prices casts doubt on any claim they have of being "expert" in my opinion. [/code]

Is it just me or is Becky Quick incredibly hot?

[smallpoxgirl]

I'm pretty strongly of the belief that speculators are not driving the price of oil up. The simple reason is this. When people want to speculate in oil, they do it in the futures markets. The way futures work is that, producers sell contracts for future delivery. People bid them up and down, and then eventually the contract expires. When the contract expires, the person holding the contract is entitled to delivery of 1,000 barrels of crude oil. Speculators buy the contracts and hold them, but they sell out before delivery. As all those contracts expire, someone has to be willing to buy them and take delivery. If the people interested in actually buying physical oil had enough, the contracts would drop precipitously at expiration. They're not doing that, so that's pretty clear evidence that there is not a surplus of physical oil and that the price is a fair price. Speculators can easily drive up the price of stocks or precious metals because speculators take physical possession of those things and horde them. The only real hoarding of oil that going on is the SPR. Now maybe you want to say that Dubya is the evil speculator driving up oil prices by filling the SPR. That argument, I think, could be made. The point of the SPR though is that things are only going to get worse from here, so a little hording today is worth it to offset even worse shortages in the future.

[mrobert]

/sarcasm on

@smallpoxgirl: You are wrong! Gas is expensive because of the speculators. Haven't you seen it on TV?

/sarcasm off

Now ... I wonder when all stupid reasons for high oil price expire ... will they just admit the truth?

[TheDude]

I simply borrowed the title of the TOD article for this thread, should've known it would have taken wing on its own. No harm though!

$this->bbcode_second_pass_quote('mefistofeles', 'O')f course if you could buy something with those dollars that would be one thing. But look what happens when large foreign investors try to buy US assets:

Dubai Ports

CNOOC Unocal Bid

[AlexdeLarge]

"Since 2003, worldwide oil prices have quadrupled. According to a new study, the price of oil is rising at a faster-than-exponential rate, and cannot be sustained. In other words, we’re in the midst of an oil bubble, say researchers Didier Sornette and Ryan Woodard of ETH Zurich in Switzerland and Wei-Xing Zhou of the East China University of Science and Technology in Shanghai, China."

"A comparison of supply and demand showed that, most recently, supply has been exceeding demand by more than a half million barrels per day. Meanwhile, the price continues to increase. Since it appears that the supply-demand balance has only a small effect on the price of oil, the researchers suggest that a major effect lies elsewhere. They point out several reasons why speculation, fed on rumors of rising oil scarcity, may be the positive feedback causing high oil prices."


http://www.physorg.com/news134646313.html

[Plantagenet]

$this->bbcode_second_pass_quote('AlexdeLarge', '[')img]http://www.physorg.com/newman/gfx/news/1-oil_supply_demand_price.jpg[/img] ...it appears that the supply-demand balance has only a small effect on the price of oil...

[joewp]

$this->bbcode_second_pass_quote('AlexdeLarge', '[')img]http://www.physorg.com/newman/gfx/news/1-oil_supply_demand_price.jpg[/img]

A comparison of supply and demand showed that, most recently, supply has been exceeding demand by more than a half million barrels per day.

[Cashmere]

$this->bbcode_second_pass_quote('', 'A')ccording to a new study, the price of oil is rising at a faster-than-exponential rate

[yesplease]

$this->bbcode_second_pass_quote('Cashmere', '')$this->bbcode_second_pass_quote('', 'A')ccording to a new study, the price of oil is rising at a faster-than-exponential rate

[Cashmere]

$this->bbcode_second_pass_quote('yesplease', '')$this->bbcode_second_pass_quote('Cashmere', '')$this->bbcode_second_pass_quote('', 'A')ccording to a new study, the price of oil is rising at a faster-than-exponential rate

[Ferretlover]

Bubble, shmubble.
There's only so much oil. Everybody is scrambling to get control of the last little bits, or make profits on it.
Nothing is going to stop the increasing consumption of it.

[yesplease]

$this->bbcode_second_pass_quote('Cashmere', 'W')ell, not to pick nits, but the concept of "growing exponentially" does have meaning unto itself. It means, IMO, growing faster than linearly.

[Sys1]

Thread's title is misleading in the sense that a bubble must pop like every bubbles, which leads to recession, later to business as usual.
Oil is not a commodity like apples, it's the blood of industrial civilization. So yes, the oil bubble will pop just like any bubble, but it will pop with capitalism!
There won't be any "business as usual" scenario if oil gets down to 40$ something. Oil getting down to double digits will be associated with a world depression or economic collapse of Chindia, which IMHO will happen very soon (meaning 2010).

Well, all that to say that I want this bubble to last as long as possible, which means enjoying today life. The good old days!

[Graeme]

The great oil bubble has burst

$this->bbcode_second_pass_quote('', 'I')f the trend continues into September at anything like the same rate of descent, most of the inflationary spike of the past 12 months will miraculously have been sliced away. This is a dramatic reversal, and it is worth trying to work out why it is happening and what it means.

Just possibly, it means that what investors refer to in shorthand as the great "oil up" story has finally revealed itself not as the fundamental reflection of scarce supply that its adherents liked to claim, but as a simple, speculative bubble that was always going to burst.

[Arsenal]

Ha!! Problem solved. Time to go and buy a new SUV.

Arsenal

[Concerned]

$this->bbcode_second_pass_quote('Graeme', '[')b]The great oil bubble has burst

$this->bbcode_second_pass_quote('', 'I')f the trend continues into September at anything like the same rate of descent, most of the inflationary spike of the past 12 months will miraculously have been sliced away. This is a dramatic reversal, and it is worth trying to work out why it is happening and what it means.

Just possibly, it means that what investors refer to in shorthand as the great "oil up" story has finally revealed itself not as the fundamental reflection of scarce supply that its adherents liked to claim, but as a simple, speculative bubble that was always going to burst.

[Graeme]

Notice that near the end of the article, the author also says this:

$this->bbcode_second_pass_quote('', 'T')hat's not to say it won't go up again when the signals change and all those long-term factors loom large once more.

[CrudeAwakening]

$this->bbcode_second_pass_quote('', 'I')f the trend continues into September at anything like the same rate of descent, most of the inflationary spike of the past 12 months will miraculously have been sliced away. This is a dramatic reversal, and it is worth trying to work out why it is happening and what it means.