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2005-04-05 Home Front: Economy

Oil Contrarian Sees Bubble Ready to Burst

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Posted by Mark Espinola 2005-04-05 1:57:45 AM|| || Front Page|| [11137 views since 2007-05-07] Top

#1 ... oil prices could plummet to $28 a barrel ....

Regardless of the accuracy of the prediction this is a key statement. He seems to be talking about $28/bbl oil as a floor whereas a few years ago my folks were receiving approximately half that amount as the market price for their production. Given demand growth I can easily imagine another doubling of the floor by the end of the decade or just after, it's only a matter of time.

Posted by AzCat 2005-04-05 8:43:13 AM|| 2005-04-05 8:43:13 AM|| Front Page Top

#2 Burst baby burst!

Posted by sea cruise 2005-04-05 9:02:26 AM|| 2005-04-05 9:02:26 AM|| Front Page Top

#3 ANWR now

Posted by Frank G 2005-04-05 9:16:23 AM|| 2005-04-05 9:16:23 AM|| Front Page Top

#4 Oil will go to $28 pb. Its what happens between then and now thats of interest.

Posted by phil_b 2005-04-05 9:45:52 AM|| 2005-04-05 9:45:52 AM|| Front Page Top

#5 - The U.S. Strategic Petroleum Reserve, which the Bush administration has been filling at an average rate of nearly 250,000 barrels a day, is nearly full.
Thank God--I was so damn sick of Clinton using this for his short-term political gain! Of course, everything was expendable or for sale during his administration if it could give him an assist--strategic oil reserve, nuclear missile technology, Lincoln's bedroom...

Posted by Dar 2005-04-05 10:26:58 AM|| 2005-04-05 10:26:58 AM|| Front Page Top

#6 Now if only the housing bubble here would burst....

Posted by Bomb-a-rama 2005-04-05 11:03:01 AM|| 2005-04-05 11:03:01 AM|| Front Page Top

#7 BAR - you must live in Collee-fornia. ;-p

Posted by Barbara Skolaut 2005-04-05 1:16:18 PM|| 2005-04-05 1:16:18 PM|| Front Page Top

#8 Yep, the land of six hundred thousand dollar bungalows and four hundred thousand dollar condominiums.

Posted by Bomb-a-rama 2005-04-05 2:40:42 PM|| 2005-04-05 2:40:42 PM|| Front Page Top

#9 bleh. this is stupid. Bush and Cheney are oil men, wtf are they doing buying high? sell the dang reserve and lower prices. They could do it easily. They start dumping oil and puttiing that money towards the deficit, and oil prices will fall. When they fall enough, buy more.

After a while the idiot speculators will have been buned for billions, and cashed out.

We do not need a huge reserve anymore. Fill it when oil is cheap, sell it when the arabs get uppity. This will cause the Arabs no end of pain.

Why do you need a big reserve? If you never use it to hit back economically then what good is it? Dont give some cold war scenario crapola.

In a war situation you all know dang well we could seize venezuela and Mexicos oil supplies overnight, heck Saudi oil fields would be easier.

Posted by Jimbo19 2005-04-05 2:51:59 PM|| 2005-04-05 2:51:59 PM|| Front Page Top

#10 gotta disagree, Jimbo.

If you sell the oil, you aren't guaranteed to get what you paid for it - you will, as you note, depress the price.

Buy again and the price goes up while you do so.

The reserves aren't there to hit back economically. Do you have any idea how long it would take to invade Venezuela and Mexico even if we wanted to and could justify that? And how much sabotage could shut down their production? And how long it will be before ANWR and other fields are brought online?

The bloody reserve is there to be used if necessary - and I don't mean for your summer vacation or my own.

Posted by snarfles smooch2349 2005-04-05 2:59:37 PM|| 2005-04-05 2:59:37 PM|| Front Page Top

#11 Baloney. If you start selling a little bit a day you will get money for it. and it will be more then you paid for it on average.

they are not there to hit back economically? why? because we have never used them like that before?

And no it would not take long to invade and seize another countries oil supplies if you truely wanted to. you would just have to be brutal about it. But again Saudi oil fields are isolated, meaning no way to sabotage them unless you plan on walking across the desert witout being seen.

Point is the reserve is useless if you never use it. If the price goes up too high, it makes no sense to buy, sell for a while. Make some dough. then buy again when the price is more to your liking. In the short term there is nothing anyone can do to offset you. Opec cant cut production everytime you sell oil.

Basically the Pres could set the upper price of oil if he wanted to.

No need to invade anyone, just sell into the price hikes. This alone make people less twitchy about speculating oil prices way up. Because you can bet money someone is making a ton of cash controlling it all. Throw in some chaos buy making it impossible to know when the US will start selling.

Posted by Jimbo19 2005-04-05 3:49:38 PM|| 2005-04-05 3:49:38 PM|| Front Page Top

#12 Basically the Pres could set the upper price of oil if he wanted to.

Complete and total BS. Clinton's stunt with the strategic reserve had essentially no impact on oil prices or the price of gasoline, it was clearly a pure political play. There's little reason to believe that another round of the same would fare any better, even a massive drawdown is unlikely to have more than a minimal transient effect (analysts say a moderate drawdown would reduce gasoline prices by no more than a few cents per gallon).

I think you're grossly overestimating the size of the US strategic reserve. Any drawdown large enough to have a noticeable impact on crude prices can last no more than a few weeks. After that you've got to start refilling the reserve and you'll drive the price right back up.

If you really want to see prices impacted try declaring high oil prices a national security matter and using that hammer to open every square inch of the nation to exploration while simultaneously exempting oil producers from environmental regulation and associated litigation.

Posted by AzCat 2005-04-05 5:36:57 PM|| 2005-04-05 5:36:57 PM|| Front Page Top

#13 LOL the Martian equatorial fields will soon drive down the price of oil to 11teen cents a quart. Jesus! Let the President set the price at negative numbers! LOL! NitWits.

Posted by Shipman 2005-04-05 5:41:37 PM|| 2005-04-05 5:41:37 PM|| Front Page Top

#14 Oh and buy Gold, keep a good food supply handy and whine.

Posted by The Militia Needs You 2005-04-05 5:44:01 PM|| 2005-04-05 5:44:01 PM|| Front Page Top

#15 Anyone who thinks the government can buy low and sell high in an open market is a fool. Any increase in uncertainty merely increases the risk premium i.e. the price.

What the government can do is reduce the risk of high cost producers who can produce at less than the current market price by commiting to buy from those high cost sources at a fixed price on long term contracts.

Posted by phil_b 2005-04-05 6:04:54 PM|| 2005-04-05 6:04:54 PM|| Front Page Top

#16 This guy may have a valid point if one checks the great oil price dip of 1999.

data

Posted by Mark Espinola 2005-04-05 7:38:59 PM|| 2005-04-05 7:38:59 PM|| Front Page Top

#17 "Anyone who thinks the government can buy low and sell high in an open market is a fool."

I dunno. After all, California was very successful in its takeover of the electricity market in 2001, boosting the presidential aspirations of Governor Dav...

Oh, right.

Posted by jackal 2005-04-05 8:47:06 PM|| [http://home.earthlink.net/~sleepyjackal/index.html] 2005-04-05 8:47:06 PM|| Front Page Top

#18 Don't confuse the cost of oil and the cost of gasoline. Until somebody starts building a heap o' refineries, the supply of oil is not directly related to the supply of gasoline. Especially if you're counting on that nasty stuff the Saudis call oil these days.

Posted by Chuck Simmins 2005-04-05 9:02:43 PM|| [http://blog.simmins.org] 2005-04-05 9:02:43 PM|| Front Page Top

#19 Jimbo--Dammit, man! The strategic reserve is for a national emergency! If Iran and Israel decide to go nuclear, or China invades Taiwan and starts sinking tankers in the Indian and Pacific Oceans, or the "super-volcano" under Yellowstone blows, or a large meteorite hits the Earth, etc., we're gonna need something to live on for a while!

Thank you, Slick Willie, for dipping into it and sticking the next prez with the trouble of re-filling it. Of course, you got your second term and your blow jobs, so what do you care?

Posted by Dar 2005-04-05 9:21:11 PM|| 2005-04-05 9:21:11 PM|| Front Page Top

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