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Politics : Sioux Nation -- Ignore unavailable to you. Want to Upgrade?

To: Wharf Rat who wrote (211790)	6/29/2011 12:17:30 PM
From: stockman_scott	Read Replies (2) \| Respond to of 361142

Frank Holmes: Three Reasons $100 Oil Is Here to Stay finance.yahoo.com ..By Stacy Curtin \| Daily Ticker – Oil prices are currently trading just around $90 a barrel, down from the recent triple-digit highs of the first quarter. But despite the recent signs of weakness in oil prices, gone are the days of $20, $30 or even $40 a barrel, says Frank Holmes, CEO of U.S. Global Investors. (See: "Straight-jacket Time": Dow, Crude Tumble After Obama Releases Strategic Reserves) Holmes believes $100 oil is here to stay. Here are his three big reasons why, as laid out on U.S. Global's website: #1) Long-Term U.S. Dollar Weakness (Due to Fiscal Crisis in Washington): "Even if Washington decided on a comprehensive plan to fix entitlement overspending, trim defense spending and reduce the U.S. deficit today, it would take years to see any meaningful shift in these figures. Therefore, we feel the recent uptrend in the U.S. dollar is a short-term reprieve from a long-term downtrend." #2) Emerging Market Demand Outpacing Developed Market Demand: "While developed world demand has struggled to retrieve its previous strength, emerging markets have captured a significant share of global demand over the past three years. Emerging market countries have narrowed the oil usage gap between developed and emerging markets from roughly 12 million barrels per day in 2007 to just 4 million barrels per day as of late 2010." #3) Reserves in Geopolitically Unstable Regions: "Over the years, the proximity of oil reserves to unrest has led to a reduction in global spare capacity or the excess amount of oil that can be produced, if desired, to meet demand. When the turmoil broke out in Libya, the general consensus was that Saudi Arabia's spare capacity would be more than enough to meet market demand. That hasn't been the case as Saudi Arabia has moved to calm its own population to prevent unrest. The result is little wiggle room to meet demand should we experience a boom in demand or an event disrupting production. In general, these supply/demand dynamics support historically high prices." In his view, there is only one way oil prices could ever hit what were once considered "normal" levels, he tells Aaron and Henry in the accompanying interview. "I think that is really difficult [for oil prices to fall] unless there is a significant breakthrough in technology [and] in the use of energy [or] repositioning of energy."