[nobodypanic]

is some version of this what we're seeing?

[cipi604]

nobodypanic, I think that this is what we see right now, Head-Fake. Wait till next christmas , january 2009, and so on.

The show must go on!

[eastbay]

nobody panic,

Nice chart. I see this as a plausible scenario too. Nothing can lower prices enough to trigger another SUV buying frenzy ever again.


I do have one little issue with the chart. I'm no expert, but aren't 'demand' and 'supply' supposed to be in synch, so to speak? Or at least very close as portrayed on the left side of the chart?

[JoeW]

the big news is that oil consumption is DOWN. it takes people a while, but eventually they find ways to conserve in the face of much higher prices. this should not be a surprise to anyone. colin campbell predicted volatile prices for this reason--because the demand-side response is extremely sluggish. add that to high prices and stagnant (not declining) production, you get this volatility.

people made big bets on the price of oil going up. the price rose for four or five years here, and consumption still increased. all of a sudden we see consumption fall. if you're a gambling man, you take a little off the table at that point, recognizing that you just had a hell of a run for four or five years.

now, more than ever, it is unclear what prices will do from week to week or month to month. so if i'm looking at the contract for august crude, i have to wonder where it's going. it's not a sure thing.

inventories are still low for this time of year and we'll see what happens. it's all about volatility now.

[JoeW]

$this->bbcode_second_pass_quote('eastbay', 'I') do have one little issue with the chart. I'm no expert, but aren't 'demand' and 'supply' supposed to be in synch, so to speak? Or at least very close as portrayed on the left side of the chart?

[eastbay]

$this->bbcode_second_pass_quote('JoeW', '')$this->bbcode_second_pass_quote('eastbay', 'I') do have one little issue with the chart. I'm no expert, but aren't 'demand' and 'supply' supposed to be in synch, so to speak? Or at least very close as portrayed on the left side of the chart?

[nobodypanic]

$this->bbcode_second_pass_quote('eastbay', 'n')obody panic,

Nice chart. I see this as a plausible scenario too. Nothing can lower prices enough to trigger another SUV buying frenzy ever again.


I do have one little issue with the chart. I'm no expert, but aren't 'demand' and 'supply' supposed to be in synch, so to speak? Or at least very close as portrayed on the left side of the chart?

[Mominator]

$this->bbcode_second_pass_quote('JoeW', ' ')colin campbell predicted volatile prices for this reason--because the demand-side response is extremely sluggish. add that to high prices and stagnant (not declining) production, you get this volatility.

[smallpoxgirl]

$this->bbcode_second_pass_quote('Mominator', 'T')hat makes sense. How will it change when there's declining production? Is that when prices will go up-up and away with fewer hiccups?

[Homesteader]

Seems so coincidental that "expectations" by the experts are consistently company after company, below results, horrendous as they are, so the billions of losses can be reported as "better than expected".

Tinfoil hat off.

[HEADER_RACK]

$this->bbcode_second_pass_quote('', 'T')hat's the fundamental beauty of free markets is that they adjust the price to prevent shortages.

[Homesteader]

$this->bbcode_second_pass_quote('HEADER_RACK', '')$this->bbcode_second_pass_quote('', 'T')hat's the fundamental beauty of free markets is that they adjust the price to prevent shortages.

[smallpoxgirl]

$this->bbcode_second_pass_quote('HEADER_RACK', ' ')I don't think that statement is quite accurate. Free markets keep shortages from being distributed throughout the system. They keep shortages at the bottom tier of those that can not afford the new higher price, but you still have shortages.

[Blacksmith]

I have two points I would like to add to the chart.

(1) If we are pumping at maximum rates now, how can more crude be added to the mix?

(2) Falling prices will mean decreased exploration and workovers which will decrease supply.

[HEADER_RACK]

$this->bbcode_second_pass_quote('smallpoxgirl', '')$this->bbcode_second_pass_quote('HEADER_RACK', ' ')I don't think that statement is quite accurate. Free markets keep shortages from being distributed throughout the system. They keep shortages at the bottom tier of those that can not afford the new higher price, but you still have shortages.

[smallpoxgirl]

$this->bbcode_second_pass_quote('Blacksmith', '(')1) If we are pumping at maximum rates now, how can more crude be added to the mix?

[HEADER_RACK]

SPG, You're starting to sound like one of those the markets are going to save us types.

[jdmartin]

$this->bbcode_second_pass_quote('JoeW', '')$this->bbcode_second_pass_quote('eastbay', 'I') do have one little issue with the chart. I'm no expert, but aren't 'demand' and 'supply' supposed to be in synch, so to speak? Or at least very close as portrayed on the left side of the chart?

[smallpoxgirl]

$this->bbcode_second_pass_quote('HEADER_RACK', 'S')PG, You're starting to sound like one of those the markets are going to save us types.

[TheDude]

Some of the measures intended to curb speculation stand to increase volatility, too. Perhaps this will show its effect before the elections.

Anti-Energy Speculation Bill Stirs Fear

$this->bbcode_second_pass_quote('', 'I')n an open letter to Congress Thursday, Robert G. Pickel, chief executive of the swaps industry’s trade association, argued that the Reid proposal “could actually make things far worse” for consumers by impairing the effectiveness of the hedging markets.

Of concern to the swaps dealers, Mr. Pickel noted, is a provision in the bill that would allow commodity regulators to order companies to liquidate their swaps transactions if it concludes that a major market disturbance has occurred.

In effect, he said, this would require companies “to break their privately negotiated risk management contracts,” even if the swap complied with trading limits that were in place when it was originally negotiated.

The Futures Industry Association, which represents futures brokers and derivatives exchanges in more than 20 countries, has also expressed its opposition to the bill, saying it “would amount to liquidity-robbing, regulatory overkill.”