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| Crude Oil Rises to a Record $100.10 on OPEC Production Outlook |
| 2008-02-20 |
| Crude oil rose to a record $100.10 a barrel in New York on speculation OPEC will cut production when it meets next month. The Organization of Petroleum Exporting Countries, set to meet on March 5, may cut output as winter heating demand wanes, oil ministers from Algeria and Iran said in the past week. Oil also rose after the U.S. dollar fell against the euro, enhancing the appeal of commodities as an inflation hedge. Platinum, soybeans, gasoline and heating oil also reached records today. ``Prices are primarily up because OPEC will more than likely cut production in two weeks,'' said Richard Chimblo, manager of global business development at Calgary-based Genoil Inc. ``OPEC is concerned about the outlook for a slowing global economy and demand.'' |
| Posted by:Fred |
| #13 Famines May Occur Without Record Crops This Year, Canadian Potash Chief Says |
| Posted by: phil_b 2008-02-20 19:31 |
| #12 From memory, there are 800 million vehicle owners in the world and there are 2 billion people who spend half or more of their income on food. The brutal reality is that the demand reduction will come from those 2 billion people. Hardly anyone realizes how quickly a global food crisis could be upon us. We have already seen one of the first signs, major exporters banning exports - Russia and Argentina. Not everyone is blind to this. India has been steadily building its stockpiles of wheat. |
| Posted by: phil_b 2008-02-20 19:19 |
| #11 AH9418 is right. It's a couple of things. There's lots of dollars floating around to chase the wheat. That's why prices are going up generally, oil, gold, wheat etc. The Fed is flooding the markets with easy money because it is afraid the banks will collapse because they have bought lots of garbage like SIVs and CDOs that no one, including the sharks who invented them, truly understand. The reason the banks had all that easy money was because the Fed flooded the amrket with lots of easy money after 9/11 to make sure the banks didn't collapse. The reason the Fed had to be worried after 9/11 was because they had had to extend easy money after the .com bubble burst amd they were worried the banks would collapse. The reason they were worried the banks would collapse was because they had extended so much easy money after the Asian collapse in 1997 to prevent the banks from collapsing. You get the idea. The NICE (non-inflationary continuous expansion) times are over. The Chinese are going to have a harder and harder time keeping our costs under control by substituting their low cost labor for our higher cost labor. And they're going to realize their sterile dollar holdings are worth less every day. They'll cash in and then the banks will really collapse. Big Time. Asshole Greenspan. |
| Posted by: Nimble Spemble 2008-02-20 17:07 |
| #10 The Canadian Wheat Board probably goes back 110 years, to the rate agreement, which included a subsidy to grain farmers. From that point, the government controlled prices to protect the farmer, vut now the same Board helps to hurt them. Is there a lesson here, B.O.? Yes there is, Bobby. But my fingers are stuffed in my ears, and I can't quite hear you. BHO |
| Posted by: Kirk 2008-02-20 16:50 |
| #8 Have a look at the price controls on Canadian wheat, courtesy of Ezra Levant. |
| Posted by: Seafarious 2008-02-20 08:53 |
| #7 i don't have a breakdown on the proportional cost elements that determine bread pricing, but just off the top of my head they include: - wheat - other ingredients (small cost for basic bread) - fuel to grind wheat to flour, transport flour to bakers, transport baked bread to market - fuel for baking bread - labor costs - cost of packaging baked bread (in 1st world, often plastic bags made from oil) |
| Posted by: lotp 2008-02-20 08:01 |
| #6 Sorry ed, I read that too fast. And you are correct that a doubling in wheat cost won't have a huge effect on the cost of MAKING the bread - but it matters little whether the bread is 1 euro or 2 per loaf if there are no loaves. If the baker can't get his $.20 worth of wheat then (in a free economy) he will raise the price of the bread he has to whatever he can get - which could easily double. And if it is not a free economy, the shortage can be shared more evenly, but the shortage will be more severe because incentives to increase supply will be removed. |
| Posted by: Glenmore 2008-02-20 07:57 |
| #5 Not from oil prices. From wheat shortages. |
| Posted by: Glenmore 2008-02-20 07:46 |
| #4 1 bushel of wheat makes 73 pounds of bread. So at $10/bushel, there is $0.20 worth of wheat in a 1.5 pound loaf of bread. Bread isn't going to double. |
| Posted by: ed 2008-02-20 07:32 |
| #3 Right, phil_b. The world better pray for a good US (and Canadian) wheat harvest this year. Up until now the food shortfalls have been masked by the (relative) decline in price due to the falling value of the dollar - same cause as a big chunk of the rising price of oil. As painful as $3 gasoline is to us, just think what an effect a doubling of the price of bread will have in Europe. Or China. Or a quadrupling in Africa. |
| Posted by: Glenmore 2008-02-20 07:23 |
| #2 Worry more about the price of foodstuffs. We are on the verge of a food crisis and it will be much worse because of the denialists blinded by the global warming dogma. Again today, the sun is blank, no sunspots. |
| Posted by: phil_b 2008-02-20 02:59 |
| #1 This article was mentioned in comments on a related one yesterday. From it: "Oil also rose as a weakening dollar prompted some traders to invest in commodities as a hedge against inflation." I suspect this is the larger cause of the spike. |
| Posted by: Anguper Hupomosing9418 2008-02-20 01:15 |