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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: miraje who wrote (250343)	5/17/2008 12:49:38 PM
From: miraje	Read Replies (1) \| Respond to of 793743

Bumpy road ahead?? energytechstocks.com Is $200 Oil Around the Corner? Yes, if ‘Seasonality’ is Dead, Replaced by the ‘Endless Summer’ Posted: May 12, 2008 Is Goldman Sachs right? Is oil going to cost as much as $200 a barrel within six to 24 months? It all depends on whether “seasonality” is dead, replaced by what EnergyTechStocks.com calls “The Endless Summer,” after a movie of the same name about surfers who go around the world following the summer sun. Seasonality is a simple concept but one many new financial players in the oil futures markets may not have thought about. Every year the global price of oil rises in the American spring in anticipation of the peak summer driving season in the U.S., then falls as summer wanes and kids go back to school. Charts show that in 2004-2006, the price of crude fell very roughly about 20% from its summertime highs, the falloff beginning somewhere around August 1. In short, seasonality serves as a natural brake on oil prices. In 2007, however, seasonality failed to materialize. Oil prices just kept going up. Those who believe today’s high prices are a “temporary spike” basically are saying that seasonality can be expected to reassert itself this year. But will it? Or do oil markets now operate on the principle of the endless summer? With oil demand rising in many rapidly-growing countries, there’s always high demand somewhere in the world. (Since sometimes it is winter demand, the endless summer is meant to be a metaphor.) If seasonality based on U.S. consumption patterns fails to materialize again this year, it will likely mean that there no longer is a natural brake on oil prices. The steady upward pressure being applied by demand rates rising faster than available supply will continue unabated. Oil prices as high as $200 a barrel within 24 months become likely – unless people everywhere suddenly find new ways to get around and do their jobs...