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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: romannose who wrote (83747)	8/24/2008 10:39:25 PM
From: Keith Feral	Read Replies (2) \| Respond to of 116555

Rose, think about the last few big drops in commodity prices. Coal prices plunged in Europe back in July by $30 a ton, or something to that effect. In August, Gold prices plunged in Europe to almost $770. I guess the big question is why Europe is having such a big impact on commodity prices for energy and gold. The biggest thing in Europe is the development of solar and wind farms for electricity. Hell, France recycles most of their nuclear waste to regenerate power for their nuclear reactors. Maybe Europe is seeing more demand destruction for conventional energy than we can imagine. BMW, Audi, and Mercedes are all coming out with more fuel efficient cars in the next year. My favorite is the Mini Cooper plug in! Right now in the US, we have seen an unprecedented increase in supply for nat gas from shale. Boone Pickens thinks he can generate 20% of our electric from a $11 billion investment in wind farms from TX to ND. That would free up most of the excess demand for coal and nat gas for utility companies. Hybrids, diesel suvs, plug ins, and other fuel efficient cars and trucks can double our fuel efficiency from 17 mpg to 35 mpg. We are using half of the imported 20 million/barrels per day for retail consumption. That means we could eliminate 5 mbp if we increased fuel efficiency to 35 mpg. I have no hope for the airlines or transportation companies, but the airlines will cut 10% of their capacity in September. The key to US trade deficits will be eliminating our demand for foreign oil. That's the biggest price tag out there, except for gold at $800 an ounce. I wouldn't pretend to think that either one of these price levels are safe just because they are high. This world is beginning to get a lesson in self sufficiency in terms of energy - gold prices will follow.