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To: ms.smartest.person who wrote (1117)	5/25/2006 9:48:18 PM
From: ms.smartest.person	Respond to of 3198

The Oil Bubble Is Next to Burst The free market is the ticket for this commodity round trip. By Thomas E. Nugent Tune in to any of those financial news networks and you’ll be sure to find a commodity guru still predicting $1,000 an ounce for gold and $100 a barrel for oil. Should the little guy jump on this bandwagon? Or is it too late? Well, the recent plunge in some commodity prices is giving speculators second thoughts about the durability of the commodity bull market. The price volatility of another well-known commodity, natural gas, can be instructive here. As the world frets about energy shortages, natural gas is suffering from rising inventories and sluggish demand. Last year, the gurus were looking for $20 per million BTUs of natural gas. Recently, that price dropped below $6 per million BTUs. Natural-gas price fluctuations, as represented in the following chart (prepared by the Federal Reserve Bank of St. Louis), indicate the forming of a price bubble, with natural gas prices rising from a low of approximately $6.50 in March 2005 to a peak of $14.50 in December 2005. But once the peak heating season reflected a warmer-than-normal winter, the price of natural gas plummeted back below the low levels of 2005. (Incidentally, many tech stocks charted much the same course between 1998 and 2002.) article.nationalreview.com