I don't know about $105/barrel, but I have been saying for a long long time that oil is on a sustained, solid uptrend with little evidence of a slowdown. And, that the political issues in Iraq are relatively minor factors.
I have said it before, and I'll say it again: oil price movement has been and continues to be inflationary. This has already caused economic repercussions, although people don't seem to want to admit it, and nobody seems to want to consider the downstream effects of a continued bull market in oil.
The war in Iraq might have exacerbated things, and provided some rather limited opportunities for speculation, but the fundamental driving force is supply and demand imbalances, and that's why it is not going to go away, and that's why oil has been on such a strong uptrend.
Even if everybody decided to kiss and make up all across the middle east and canonize George Bush a saint, nothing would really change.
And anybody who follows these markets knows that OPEC is not the bad guy, and OPEC cannot solve the fundamental problem.
I'll even go one step further: IMHO, there are at least two major threats that jeopardize the long-term uptrends in the stock market: inflation, and the potential significant and protracted deterioration in the real estate markets. These might well eventually cause that uptrend to end, because they have such far-reaching economic consequences. But if so, I don't think this will happen until sometime in 2006 at the earliest.
T |
