Is there any correlation to what is going on now from what happened in the 70s? $132, this inflation is way out of hand!
tell me about it. where’s my, oil is coming back down post when it was at like 108 or 109! I think ST it is due for a correction, but LT…well, I’m moving to Alberta soon for a reason!
Pricey oil and and a sluggish economy might again make it difficult for the incumbent party in an election year.
I’m not sure if any financial situations ever repeat themselves.
The differences from the 70’s is that the size, and energy intensity of the global economy on a macro basis has likely skyrocketed. Though on a micro basis, I’m sure it has been generally flat… Not to mention we have pumped out 30 years of oil out of the ground since then…
I think there are a lot of differences and similarities now from the '70’s: 1) The 1973 crisis happened with the Yom Kippur war which was one of those moments where we were close to Armageddon. OPEC followed with an embargo. Gasoline and oil were hard to get because of a massive supply shock. Now there seems to be plenty of oil. 2) America was needlessly addicted to powerful cars and driving in 1973. Same now. 3) The dollar was getting pillaged then as now because of the policies of a failed and corrupt Administration. 4) Oil derivatives markets are vastly more developed now than in 1973. Lots of price action in oil is being driven by derivatives markets. 5) China consumes hugely much more oil than in 1973.
china consume 6mbpd from less than 0.5 Excess saudi capacity went from 10mbpd+ (as higha s 14) to 2. And as someone mentioned 30 years have passed. And in the next 30 years don’t expect trends to reverese. As quality of life get’s better in non OECD coutnries they consume more energy. And oil over time decrease in availability.
Solution for America: buy a PV system for your house and a couple of golf carts … your net out of pocket expense will be the same as a guzzling BMW. Your transportation and energy costs will be slashed 90%. Whenever you go on a roadtrip, just rent a car!
^ a PV system at current prices translates to roughly .25 kwh. even with a 30% ITC it would be $.18 making it only competitive in certain parts of the country. Solar stocks are a great way to make some momentum money but are not going to be a solution until at least 2012. And never will i trade in my 6 series for a golf cart.
For my next job, I’m selling my car all together. Walk, bus or bike. With transportation costs ostensibly going higher, are suburbs doomed to be ghost towns or are companies going to wake up and realize work is what we do not a place we go and start telecommuting programs?
Couple of things, Aside from the SUV population, one would think cars today operate more efficiently than in the past right? Due to technological innovation, wouldn’t drilling have become exponentially more efficient? Joey - How was oil ~$13 a barrel during the Clinton Admin and now 10 years later it has grown nearly 10x? It is my understanding the collusion and price fixing is prevalent with the oil cartel and we would need to introduce something to dismantle that oligopoly (i.e. drill domestically). These are a few of my thoughts. My commodity knowledge is limited.
If you believe in the price fixing/market manipulation theory, you must believe that collusion in the oil industry is a new phenomenon. Otherwise, why would they have let the price of oil fall so low in the 90’s?
XSellSide Wrote: ------------------------------------------------------- > If you believe in the price fixing/market > manipulation theory, you must believe that > collusion in the oil industry is a new phenomenon. > Otherwise, why would they have let the price of > oil fall so low in the 90’s? I think it has always been there, in the past I recall we did a case study of game theory and it seemed to fit that someone would always break ranks. Overall I wish I understood oil trade deeper.
Buddha, Let’s examine the numbers… PV system and 2 golf carts vs. 2 BMW guzzlers… This saves you the price of 2 guzzlers ($80k) plus the annual price of gas for the guzzlers ($6k) plus your electricity costs for your house ($1800) = $88k year. The guzzlers have to be replaced every 10 years… thus $9k per year to live the “old way”. The PV system and golf carts cost $45k (5kw system… probably too much). The golf carts need to be replaced every 5 years. The PV system every 20 years… thus it costs you $4500/year to live the smug green alt-energy lifestyle. You can spend some of the savings on stuff like rental cars, hookers, organic weed,p etc. ps. I didn’t add this up right but if I added it up right it would prove my point moreso.
virginCFAhooker Wrote: ------------------------------------------------------- > Buddha, > > Let’s examine the numbers… > > PV system and 2 golf carts vs. 2 BMW guzzlers… > > This saves you the price of 2 guzzlers ($80k) plus > the annual price of gas for the guzzlers ($6k) > plus your electricity costs for your house ($1800) > = $88k year. The guzzlers have to be replaced > every 10 years… thus $9k per year to live the > “old way”. > > The PV system and golf carts cost $45k (5kw > system… probably too much). The golf carts need > to be replaced every 5 years. The PV system every > 20 years… thus it costs you $4500/year to live > the smug green alt-energy lifestyle. You can > spend some of the savings on stuff like rental > cars, hookers, organic weed,p etc. > > ps. I didn’t add this up right but if I added it > up right it would prove my point moreso. ok for a single person like myself let’s assum that i need a 3kw system. installed that would be roughly $20+k. But that needs to be on a loan (for apple to apples comparison since i dont pay the next 25 year electricity all at once). at 6% apr it would be roughly $1750 a year in payments. Assuming 2200 sun light hors per year (probably overly optimistic for NYC) i generate 6600 kwh of electricity. That cost me under 800 from the grid (at .12 / kwh). Assuming eletricity inflation of 4% it would take until year 12 before i break even. Granted a golf cart is cheaper than my $75k coupe. but that is a whole different story.
KJH Wrote: ------------------------------------------------------- > Couple of things, > > Aside from the SUV population, one would think > cars today operate more efficiently than in the > past right? > > Due to technological innovation, wouldn’t drilling > have become exponentially more efficient? > > Joey - How was oil ~$13 a barrel during the > Clinton Admin and now 10 years later it has grown > nearly 10x? > > It is my understanding the collusion and price > fixing is prevalent with the oil cartel and we > would need to introduce something to dismantle > that oligopoly (i.e. drill domestically). > > These are a few of my thoughts. My commodity > knowledge is limited. 1. Us cars are more efficient. It’s not US demand that is driving oil up, it’s chinese cars going from less than 2 per 1000 people to currently 16 per 1000 people with potentialt o get to 100+ per 1000 people. (us is at 880 per 1000 people and has been for the last decade) 2. drilling is more advanced (horizontal, fracking etc) but the advacned technology goes towards drilling more difficult to drill places (deepwater vs onshore) because we have depleted the more shallow stuff. 3. see the above 2 4. collusion has always been a issue. Do you think if we had tons of oil domestically we wouldnt have alreayd started to develop it?
JoeyDVivre Wrote: ------------------------------------------------------- > 4) Oil derivatives markets are vastly more > developed now than in 1973. Lots of price action > in oil is being driven by derivatives markets. That’s definitely a factor!
maratikus Wrote: ------------------------------------------------------- > JoeyDVivre Wrote: > -------------------------------------------------- > ----- > > 4) Oil derivatives markets are vastly more > > developed now than in 1973. Lots of price > action > > in oil is being driven by derivatives markets. > > That’s definitely a factor! It is *THE* factor. Look at the explosion of executed futures in the commodities market from June 2007 until now. Houses were the new .bombs, commodities are the new houses. Consider that in Nov 2001, when we had more or less eliminated the Taliban, oil was at $18 and the USD Index at ~115. In June 2007 Oil was at $55 USD Index had fallen about 20% from 2001 levels. Now, since Jan, oil has gone from $80 to $134. Not one fricking thing has changed significantly in supply or demand and the dollar has only fallen 35% from 2001 till now. Yet oil has gone up more than 620% from 2001 until now. Futures volume is more than 30x what is needed by actual hedgers. This market is a joke. .bombs hurt investors and employees with some bleed. Housing has hurt a much broader audience. Oil is hurting everybody in the world. This is truly a market gone mad.
how do u know that oil market were not inefficient before, and derivatives markets only helped to unlock intrinsic value based on fundamentals. The one thing that I notice people never understand is that they stick by “oil was $40/b so $133/b must be mispriced”. What’s to say $40/b was not mispriced? Are u willing to suggest that equities markets are not overpriced as well compared to 3 decades (or more) ago?
spierce, i totally agree with you.