Ed
Some serious effort to talk down oil in this week's Barron's. Besides the Andrew Bary column, this from Abelson's column is really simplistic crap. Quotes from the anonymous Bernie....only Bernie KNOWS how much oil is on the high seas...only Bernie KNOWS how long it takes to deliver the oil....only Bernie KNOWS it is going to drive prices down. You would think a guy that sure of himself would allow his name to be used. If this is all the shorts have to offer, we gonna rock on.
There's this, too: That ominous rekindling of oil prices -- they scooted across $32 a barrel last week before slipping back a hair -- may prove nothing more than a flare-up. That's the word from our old pal, Bernie, who in terms of savvy and experience in oil is light years ahead even of those two top guys on the Republican ticket. Simply put, Bernie knows everything about oil worth knowing.
Bernie's point is that in all the handwringing about depleted inventories that sparked the latest run-up after crude prices had nicely subsided into the $27-$28-a-barrel range courtesy of the Saudis, what is being overlooked is the enormous quantity of the slick stuff bobbing on the high seas. In other words, there's a heap of supply, he reckons, on the water, making its way from the Mideast to the oil-hungry Far East and the good ol' USA.
He points out that the really big tankers number maybe 470, each of which carries around two million barrels. Scale down a bit and you get another 275 tankers that haul one million or so barrels apiece. Finally, there are the smaller, yeoman-like vessels, each with roughly 750,000 barrels of capacity. Of the total, a reasonable estimate, Bernie says, is 900 million barrels are being transported from those fabled fields of Arabia to the big guzzling countries. Typically, the voyage takes about 60 days. What that means to Bernie is that the step-up in Saudi production has still to make its full impact felt. But come next month, the world will be surprised to find that there's more crude available than the Nervous Nellies (a/k/a commodity traders) believe, and, as fear fades, so will prices.
Whatever the political implications, if Bernie's right, no way it's not a big, fat plus for the economy. All the more so, since hefty gasoline prices and shocking electricity charges have manifestly taken more than a little zest out of the consumer's spending spirit. |
