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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: el_gaviero who wrote (91400)	10/3/2007 12:17:10 AM
From: Paul Kern	Respond to of 206121

stockcharts.com

To: el_gaviero who wrote (91400)	10/3/2007 3:48:21 AM
From: elmatador	Read Replies (1) \| Respond to of 206121

Price your wealth in a depreciating currency is to depreciate your wealth: Message 23934041

To: el_gaviero who wrote (91400)	10/3/2007 7:20:46 PM
From: Umunhum	Read Replies (2) \| Respond to of 206121

What happens if high oil prices knock us (here in the USA and maybe elsewhere) into recession? Then what? I believe we are in a recession right now. I also believe that a recession will continue to weaken the dollar, which will make oil more expensive in dollar terms for American Citizens and cheaper for the rest of the world stimulating overall demand. We know one outcome is certain, a fall in demand for oil, hence a fall in price of oil. Now we are starting to make assumptions and accept them as fact. First of all demand has to fall because there is going to be less supply available going forward. 2.5 million barrels of export capacity will diminish between now and 2010 according to Jeff Rubin. What is going to fall faster supply or demand and at what price are we talking about? What if recession in the USA gets China into trouble, and the Chinese decide to use their dollars for something else? The idea that China needs the U.S. Consumer is nonsense. The Chinese are providing us with goods that we use and we are giving them paper promises that are losing value everyday. As I’ve stated before, the central banks of the world are stealing their populaces purchasing power to the extent of their trade surpluses. This stolen purchasing power is subsidizing the American Consumer. How far would the dollar have to decline before the U.S. would have a balanced trade account? The net of all this is that a strategy of putting a lot of eggs into the single basket of a rising oil price via the commodity market would make me nervous. Peak oil is going to set off tendencies and counter-tendencies in every direction. Predicting outcomes is going to be hard, in no small part because the process is sure to be chaotic As I’ve said before, energy is true wealth. Paper money is not. Energy represents the ability to get things done. And the more things that you can get done, the higher standard of living you will enjoy. I don’t think it is a stretch to say that oil is going to go a lot higher. I live in Panama and I pay about $3.00 for a gallon of gasoline. In some European countries people pay between $6 - $8 and gasoline is still the dominant form of energy in the marketplace for individual transportation. There are 42 gallons in a barrel, so these European countries are paying the per barrel equivalent of $252 - $336 per barrel (642 – 842 – and I know that a barrel of oil produces approximately 2 parts gasoline to 1 part distillates). If gasoline (or diesel) was going to get displaced in the marketplace, it should happen in Europe first, but that is not happening. Taking the above into consideration, I don’t think it is a stretch to say that oil can easily go to $150 a barrel. I have a vague intuition that peak oil is likely to be paradoxical. It is going to cause the price of oil to be TOO LOW, precisely because spiking prices will torpedo the economy, and then, as the economy recovers, re-torpedo it again and yet again on each upswing. Prices will not convey accurate information, leading to confusion and a vast potential for even more than the usual mischief and stupidity on the part of politicos. I think we are going to have a slow climb to $120 in the next two years. Eventually we are going to have to electrify our transportation. How quickly that can be done will determine what oil does from there. I don’t see the price of oil ever returning to today’s levels. There is too much infrastructure that exists today that requires oil to run. A good portion of this equipment is going to have to be mothballed in the coming years.