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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (20114)	10/17/2004 7:47:56 PM
From: Michael Collings	Read Replies (1) \| Respond to of 110194

mishedlo: If this economy starts slowing down, you can be sure that neither China nor Japan will continue to dump money into our treasuries. Vendor financing only holds up if you are buying goods. You can also be sure that the world will not accept the same number of dollars for oil. Peak production is upon us now with maximum capacity of 31 billion barrels annually in world supplies. Demand is expected to be 84 million barrels per day next year which will equate to the 31 billion with no allowances for disruptions. Even with a slowdown, most countries will continue to build reserves in oil to protect against a future shock. The issue is whether or not oil producing countries would continue to take depreciating dollars for their scarce resource. Most likely they will require a premium. Get your low mileage cars today! I think one of the best investments today are the Canadian oil trusts like Pengrowth paying 13% or Enerplus paying around 10%.

To: mishedlo who wrote (20114)	10/17/2004 10:24:42 PM
From: Wyätt Gwyön	Respond to of 110194

Not sure about the price of oil. Too many factors but it would probably go down to the extent that it is used in plastics, etc. about 7% of oil consumption is for petrochemicals. the vast majority of consumption is for transportation, which is where you see the biggest demand decline in an economic slowdown. however, some of the demand decline is not really a decline. if you look at China, the decline is really in the rate of growth. this contrasts to a place like the US, where you could easily have an outright decline in a recession. but production at existing fields is declining some 4% annually, so without sufficient production adds, even in an economic downturn (short of depression), demand might not decline rapidly enough compared to supply shrinkage to forestall further price increases.