Article

2008-03-11 Home Front Economy

Archived material is restricted to Rantburg regulars and members. If you need access email fred.pruitt=at=gmail.com with your nick to be added to the members list. There is no charge to join Rantburg as a member.

Posted by Steve White 2008-03-11 00:00|| || Front Page|| [5 views ] Top

#1 Speculative investing, that says it all. A couple of thousand people make untold wealth while the rest of us make less every year. Go ahead and give me the b.s. line again about how a free market with NO price guidelines is better for the consumer. A little interference in the energy industry might be needed if we want to keep our economy out of the shithouse.

Posted by bigjim-ky 2008-03-11 09:01|| 2008-03-11 09:01|| Front Page Top

#2 From last night: http://www.businesswire.com/
The US oil import bill last year came to some $327 billion, and should easily top $400 billion this year. That's an increase of some 300% since 2002, according to PIW.

US Oil Import Bill
($-bill) Total . Crude .Products
2000 - 119.26 089.88 29.38
2001 - 102.74 074.29 28.45
2002 - 102.77 079.25 23.52
2003 - 132.44 101.80 30.64
2004 - 179.27 136.03 43.24
2005 - 206.06 138.94 67.12
2006 - 300.07 225.53 74.54
2007p 327.34 245.53 81.81
2008e 440.00 331.00 109.00
p-preliminary, e-estimated.

That 3 times what the US is spending on Warfare as Welfare for Muslims.

Posted by ed 2008-03-11 09:15|| 2008-03-11 09:15|| Front Page Top

#3 Supply/Demand of oil has not substantially changed, certainly not doubled in the last 18 months. SO how did this happen?

Hedge Funds.

They've damaged the economy enough with their manipulation of prices - and with their prior messes in finance and questionable methods (remember the bailout they got a few years ago?).

They Should be OUTLAWED.

Liquidate the hedge funds now and oil prices would collapse.

Posted by OldSpook 2008-03-11 10:10|| 2008-03-11 10:10|| Front Page Top

#4 Before we outlaw hedge funds, we need to define what they are.

Higher on my list of culpability is the Federal Reserve system and the American people. Note that it's not just oil that's increasing, it's every commodity around. If we'd show some monetary discipline, take our medicine and get through this recession without so much wimpering before it's even started, there would be a lot less opportunity for speculators to make money betting on a government financed inflation.

Posted by Nimble Spemble 2008-03-11 10:22|| 2008-03-11 10:22|| Front Page Top

#5 When the economies of India and China stop accelerating so rapidly, with concomitant increases in oil purchases, then perhaps the price of oil will start to drop.

When Iraqi production increases to where it should be, then perhaps...

When the new government in Venezuela has invested in the delayed maintenance of the past decade, and manages to lure back the international oil companies to run extraction and production, then perhaps...

When the new government in Iran ditto, then ditto.

When Canadian oil sands excavations finally hit peak, ditto.

When the American ecology emos stop fussing and let us drill for oil off the Florida and California coastlines, and increase extraction in Alaska, ditto.

Bottom line, production is far from optimal, while consumption is increasing.. Until production increases to match consumer desires -- and both decisive factors are outside American borders and American control -- I wouldn't expect oil prices to drop significantly... if my slight understanding of matters financial and economic bear more than a passing resemblance to reality.

Posted by trailing wife ">trailing wife 2008-03-11 10:59|| 2008-03-11 10:59|| Front Page Top

#6 1. China is now a major petroleum consumer unlike a decade or two decades ago. Demand is up.

2. NIMBY and eco-radicals have shut off both the exploitation of known existing resources and the substitution of others.

3. The dollar has cheapened as the Fed has dumped cash to fuel the American capital market with without regards to inflation.

4. The agents involved in the speculative markets are not held accountable for their acts, both by getting 'relief' when they caught holding worthless paper [by having the American people pick up the tab] and not being prosecuted for RICO actions as in the corporations and institutions which over rate the company/paper in the market.

5. No real functional accountability for presidents, CEOs, and board members who engage in these activities. With millions of bonds, stocks, and various degrees of paper [with and without power], individuals and even investment firms do not have leverage to oust with cause and no compensation those who in effect loot the corporations for a living in an 'good old boy' network of executives.

Posted by Procopius2k 2008-03-11 11:03|| 2008-03-11 11:03|| Front Page Top

#7 P2K, 4 and 5 are really consequences of 3. The problem here is the Fed. Prices of commodities are up across the board, it's not China, it's Washington.

Posted by Nimble Spemble 2008-03-11 11:23|| 2008-03-11 11:23|| Front Page Top

#8 At these prices US demand has to be falling.
Even with these exchange rates, worldwide prices have to be rising.
At least the Chinese economy (and likely others) are affected by rising internal prices and reduced US product demand.
Thus, I don't see that the demand side of the equation explains the magnitude and speed of the price runup.
Speculation? Maybe. I don't really understand how that works.
Some significant impending supply shortfall that is not yet generally known? Maybe. But I have not heard of anything really sudden and unexpected going on.
To me, it doesn't add up. And as I always say, 'if something doesn't make sense then you don't know the whole story.'
I wonder if the Fallon story is connected to the price rise? Are there some insiders leaking thoughts, discussion, etc. about a pending assault on Iran? Even if not true, might THAT be enough to motivate the speculators?

Posted by Glenmore">Glenmore 2008-03-11 18:38|| 2008-03-11 18:38|| Front Page Top

#9

People that drive to work can't cut their consumption much. Our local newspaper ran an article last week about truck drivers going out of business because of high fuel prices. People may alter their consumption patterns some. They might think twice about driving to the local convenience store for a lottery ticket but rather combine trips. They might eliminate some of the discretionary trips but I don't know how much they might do this.

Supply and concerns over the environment seem like the biggest problem.

Posted by JohnQC 2008-03-11 19:19|| 2008-03-11 19:19|| Front Page Top

#10 Maybe when it gets to $200 / barrel Congress will consider drilling off the coasts and in ANWAR.

Posted by DMFD 2008-03-11 19:24|| 2008-03-11 19:24|| Front Page Top

#11 Speculation? Maybe. I don't really understand how that works.

OK Glenmore, here's a pocket explanation.

1, You're a greedy bastard, the multi-millions you already have are simply "Not Enough".
(Cant do this unless you're already a billionaire or better.)

2, you find something that there's plenty of (Housing, Coal, Generating plants etc) you buy as much as you can, Report "Shortages" (You also own the news outlets) creating an artificial shortage.

3 You convince your other "Robber Baron" Friends that you've got something (This part is easy, they're greedy too) and they also buy this now "Scarce" thing.

4 price of the "Thing goes up because of this "Shortage". (Mind you now it's not at all scarce, just bullshit and owning the news outlets, you can make it seem so.) Example don't buy gas stations, buy refineries, you can control the price then, not so with stations.

5 When the price is high enough Sell all, quickly an quietly, no announcement, no "News" bulletins, if selling is discovered deny it strongly, threaten the "Slanderous" reporters with jail or whatever you think scares them most.

6 After half to 2/3 of your holdings are sold, sell "Short" to drive the price even lower.

7 (Optional) buy at or near the very lowest prices, then Announce Your "Brilliant investment strategy" (NO Details whatever) and you wind up with a huge percentage of the (Whatever) and record profits. in other words, you've still got your money (Or more) and the "Thing" is also now yours.

8 find another "Thing".

Posted by Redneck Jim">Redneck Jim 2008-03-11 20:08|| 2008-03-11 20:08|| Front Page Top

#12 Mods, please remove one of those duplicates, thanks Jim

Posted by Redneck Jim">Redneck Jim 2008-03-11 20:36|| 2008-03-11 20:36|| Front Page Top

23:55 anymouse
23:53 anymouse
23:49 trailing wife
23:13 3dc
23:04 3dc
22:55 JosephMendiola
22:51 OldSpook
22:49 OldSpook
22:41 ed
22:39 Galactic Coordinator Spereting7009
22:34 ed
22:34 Abdominal Snowman
22:29 Frank G
22:25 ed
22:19 crazyhorse
22:11 lotp
22:09 crosspatch
22:09 DMFD
22:01 JosephMendiola
21:44 Phort Barnsmell7838 aka Broadhead6
21:41 Fred
21:40 Phort Barnsmell7838 aka Broadhead6
21:35 Pappy
21:32 legolas