<OSX to lag the products was that very issue of DEMAND.>
OSX has lagged because of "errors of pessimism" (lack of/ slow response to higher prices: hearing footsteps) in the industry. Even if demand falls off in a meaningful way (it will have too actually: 3,4 bcfs a day and about 50 m barrels (increasing) of oil in sparse inventory), it's still hard to argue that offshore drillers barely trading above NAV are putting in a market top, especially with a crisis of this magnitude, and especially the way it's snuck up on many observers, including you BTW.
My mind is made up on the supply issue, but open on demand. But you need to be more specific about where demand falls and at what point price elasticity takes hold. Does someone permanently shut down an industrial operation at $6 NG, $7? Do they lay people off, and then suddenly recall them if gas goes below $5. Are there any more industrial operations even left in the US? I thought it was mostly just mortgage brokers, and bloated medical and government nowadays. Those folks will NEVER turn down the heat or cooling. A lot of low hanging fruit like aluminum was already taken off line in the 00-01 energy crisis. When this summer do people turn off the air conditioner? 90 degrees. 85, 80? What gas price level will they require to swelt? Have you found any decent or supportive work out there that you could post (in the manner of the bulls here, who have demonstrated outstanding diligence in supporting their views). I'll try hard not to be a smart ass here, but require collaborating opinion other than your personal hunch and your extrapolation (I'm reminded of the old Rocky Horror picture show song "Time Warp Dance" when I hear this) about how these cycles "always play out"? Otherwise what's the point of these discussions. Time to put up or shut up, cause honestly I'm all ears and receptive right now. |
