(crude) oil price discussion thread

Oil will likely double from here within a year. The problem is not oil speculation, it is inflation of the dollar, along with a nasty little situation that the U.S. is egging on over in the Middle East.

Oil is not the bubble; debt is.

 

No way it doubles in a year. the weak dollar is only a small aspect of this. Do you think the dollar has weakened by 36% in the last year? There is speculation on the dollar, too, but things are about to hit the fan with demand, it is going to crumble if gas keeps going up. Once it hits $4 it will be all over the news (even news people who normally watch entertainment tonight get) and a doubling in oil would have gas at $6 or something. Families will cut back everywhere. And poor countries (india, china) that are regularly to blamed will be unable to fund expansion at a big rate. Already gas is highest I think it's _ever_ been in the UK.

 

I'm afraid you're in for a very big surprise........................

 

Well, we can bump in a year and find out. There is simply no speculative reason for oil to hit that high (bubble bursting only three years ago, its memory fresh) and no market fundamentals, either. It hit $147 in 2008 and helped kick the recession off as demand fell back meaningfully. And it wasn't there long at all. This spike absolutely will not continue to trend up all through the summer. We may very well be higher in three months than we are now, but this 1%, 2% kind of gain on a regular basis is not sustainable.

 

Demand already down in US: News Headlines

This is why oil cannot double. Yes, if the dollar gets trashed it could, yes if the middle east is taken out by an asteroid it could, etc. but within reasonable likelihoods oil will soon see a curbing of the forces pumping it higher.

 

4/11/11 @ 10am I just paid $4.07 / gallon at COSTCO in Oxnard, CA.
down the street at Chevron, Shell, others it's $4.15-4.20

so...we're over $4 now in California.
getting ready for $4.50

but remember...at $4/gallon, a 50mpg Prius costs 8 cents/mile to drive

 

Yep, you guys are $4.15/gallon now.

 

Translation..."We can't pump any faster."

 

I think rather: translation... we need the money to bribe our people not to rebel.

Those with economic arguments should note that this is a (planned intentional) decrease in supply despite an increase in price.

 

But there does seem no real supply issue. This appears to be speculation motivated. In a way that hardly matters, it's pretty much apparent to me that oil is going to be volatile indefinitely. There is some elasticity to demand but not a great deal, we're at the whim in great part of markets and unlike, say, coffee, a 50% increase in cost of this stuff is actually measurable. I don't much care if a month supply of coffee goes from $10-20, but if my gas bill goes from $300 to $450 I can measure that. The only way to mitigate this as a consumer is to just use less of it; drive less, get a Prius. Or, if you have a enough money to invest, buy shares of an oil ETF.

 

Gas continuing to creep up, but it really has to be almost caught up with oil by now. Oil is up and down but now up again almost to $110. On..strong demand? what?

Oil up above $109 on signs of strong US demand - Yahoo! Finance

" suggesting higher fuel costs haven't yet curbed demand."

Strange, given the article I mention in post 65

 

Yes, 3 or 4 months ago, I posted here that T Boone Pickens was predicting $125 by end of 2011, assuming no recession. He is looking much closer last couple days.

OTOH, some people think price bubble will burst as Lybia crude comes back in and other factors: pipeline flow reversals, etc

 

It is not going to matter if they keep printing more money. That is one of the reasons the barrel price is so high despite the economy/demand factors. More cash in the system and you need more of it to purchase the same amount of goods.... I actually think oil has the probably of going much higher than $125 as a lot of these countries that have been behind start catching up. Area's of China are starting to go through what the USA did in the 50's with a lot of people getting cars and refirdgerators for the first time in their lives.. India is also another one expected to put a lot more cars on the roads. So even if the price does go down in the short term the long term prospects are still pretty bleak.

 

Got four months left for that oil doubling prediction to play out In fact, my march prediction of it not even hitting a national $4 was accurate, we got a nickel or so short and now nationally it's down to $3.30.

Closure of Straight of Homuz is not substantially raising price of oil. In fact it's down hugely today alone following OPEC news.

Nobody actually believes Iran will try and close the straight regardless of what war games they may play. And if they did try, it would be reopened within 24 hours and their navy would be reduced to 100% scrap materials along with anything that tries to launch missiles into the straight from their mainland. They simply cannot close a shipping lane that carries 40% of the world's cargo, they do not have the ability to do so and their entire navy could be sunk by a single US carrier fleet if they attempted.

 

As the U.S. economy goes, so goes the price of oil. At least for the time being.

 

When these places say things like this it doesn't mean much without a timeline. Does he mean in perpetuity? If so, we should count our lucky stars. Or does he mean this year?

USA average gas prices is now $.25 off its 2008 peak of $4.12/gallon.

I've thought for a while and now double-down on that that these $100/gallon+ prices (Brent is well over $100) are here to stay. They can blip down, even hugely in the short term, but if we're now a few years into a very lethargic recovery and they are already this high we better get used to them. And thank God we have so many alternatives now, even that we didn't have back in 2008. Today there is no reason a family need to get bent over the barrel [of oil] on monthly gas bill.