$500 a Barrel Oil

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  • CEHollier

    *Banned*
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    8   0   0
    Dec 29, 2007
    8,973
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    Prairieville
    :mad:Watching the CNBC Financial show this morning. Dr. Hirsch an economist stated oil could be hit $500 a barrel with in five years. He noted most of our known producing fields are declining as demand is increasing. Presently world wide there is very little excessive capacity in production so any disruption can skyrocket energy prices. Please write your congressman and tell them to DRILL NOW. These wacko's are gonna tank the American middle class. Obama's plan and I quote, "We need to use less oil" WTF kind of plan is that. In conjunction with E and P that may work but not alone. Three words, "Out of Touch"
     

    penguin

    Well-Known Member
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    4   0   0
    Sep 12, 2006
    1,821
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    Slidell, LA / NOLA
    Drilling now won't have an effect for years. Everyone wants instant gratification and a quick fix to a problem where there is no miracle third option. I agree with letting states decide for themselves (and reaping profit that way), but I think too many people believe, without merit, that if drilling is approved our gas will drop below $2 a gallon. It's time for people to realize that high gas prices are going to be the norm. $3 and above gas is here to stay, even with domestic drilling. To think otherwise you would be, in three words, "out of touch".

    BTW, in 2005 Dr. Hirsh warned us of this (if you want to use him as an example). He stated that "unless a mitigation program is started 20 years before oil peaking occurs, the economic consequences will be dire"
    http://www.cleanpeace.org/images/Hirsch.pdf

    He estimated that 2025 might be a peak oil year. Of course, everything can be debated.
     

    TheWho

    My Generation
    Rating - 100%
    6   0   0
    May 26, 2008
    130
    16
    Baton Rouge, LA
    Here's an interesting article that puts things in perspective...

    The Dollar and Oil — The Truth

    About a month or so ago, I wrote a column that was a tongue-in-cheek, fictional story that addressed the oil speculation that was going on at the time. Of course, that speculation is still going on. Well, this column is one where I am going to tell it like I see it, warts and all.


    I have been in this business for over 40 years, as you all know by now, and I have seen a lot. Some of it has been very good and some of it has been very bad. I don’t count myself as having seen it all, but what I have seen helps me get to the bottom of problems in this business.


    I want to address two much talked about topics, the dollar and oil. Both of these are the most misunderstood of all the current investing subjects out there that occupy financial print and talk space. Now, don’t get me wrong here. I don’t claim to be able to see every nook and cranny of these subjects. But, what I do see are the elements that repeat the oldest scams around.


    The Dollar


    The most overused phrase today is the one that says “the dollar is declining fast and is in deep trouble.” The first implication is that the dollar needs to go much higher and fast. The second implication is that the dollar is out of control and about to fall off a cliff to oblivion. The third implication is that the Fed is helpless to do anything to help the dollar. (Do all sorts of special offers to make money from the dollar situation ring a bell?)


    Well, as I see it, these implications are wrong an all counts. First, the dollar is nowhere near deep trouble. It is finally on a near-level economic playing field in the world of commerce, and we are making fast and deep inroads into marketplaces all around the globe.


    After all, one of the very important ingredients of life is about successful commerce. And we are finally becoming a success. We are more and more being seen as the gorilla in the china shop, a truly tough competitor. If you doubt that, ask the Europeans and others who are fast losing business to us these days.


    Yesterday, in fact, due partly to our strength in exports, we had a 2.5 percent jump in durable goods production in April, after taking out the transportation component, and non-defense production was up 4.2 percent ex-transportation. Doesn’t sound like the end of the world to me.


    Second, a higher dollar will kill this fast growing export business that not only generates wealth for our country, but adds good paying jobs, jobs we always need. And as a seasoned trader, believe me, if the dollar was about to drop off the cliff, everyone would know it and be buying other currencies in huge droves. That is just not happening. Why? Because the dollar is still the issued currency of the most powerful economic engine the world has ever seen. Others may not like us because of that power, but our dollar, in spite of all the badmouthing it gets from abroad, and sadly even from some home grown economists, is what they want.


    Now, lest you misinterpret me, we do have problems in our financial system. We need to bring the political use of economic power under control. Yes, our debt can eventually hurt us, but we are not there yet. For now, we do need to get our spending habits on the federal level in order. And we need to continue to be aggressive as exporters. Any backing off there will clearly hurt. It is a fine balance, but I believe we are up to the task of controlling our excesses and keeping the dollar as a very much wanted currency.


    Look, political and economic conditions will change over time for every country and different currencies, not unlike different stocks, will be favored — witness the 12 year China episode, which now is slowly fading (despite what Jim Rogers would have you believe).



    It is this endless process of currency adjustments that will go on forever that balances one economy against another in commerce. And as long as the value base of a country is not a fixed asset (gold, etc.) but a perceived value, this constant adjustment will continue.


    Lastly, the Fed is hardly impotent when it comes to defending the dollar if the dollar sellers get too aggressive. The Fed chairman said recently that the dollar would be defended, and he quickly added the words “if necessary.”


    The “if necessary” part tells currency speculators that the Fed sees the dollar well placed at the moment. So do I. And if the Fed needs to, believe me, they have the power to knock other currencies down and lift ours up. This gorilla has many years before its power is even approximately matched anywhere in the world. That is an undisputed fact in every financial circle.


    If you need further evidence, I call your attention to the Bear Stearns event. It is acknowledged by astute financial centers around the world that our Fed saved the world’s financial system from possible implosion. That, folks, is power!


    Oil


    Now, I want to turn to oil. I will be brief concerning my feelings about the oil situation. This entire run-up of oil prices is a very carefully planned event by the oil suppliers, the Middle East producers being most prominent. If you believe otherwise, you just do not understand markets.


    Markets always like a “hot” stock. That will never change. But, it always, I repeat always, takes a “promoter” to get a “hot” stock hot. Promoters will spend money advertising, paying writers to “plug” a stock, buy their way onto radio and TV shows, or whatever it takes to get investors’ attention. Promoters will work with brokerage houses and individual brokers to promote their stock to investors and, if necessary, even bankroll the buying to move a stock higher.


    But all this takes time, money, and lots of heavy duty coordination to accomplish. True, now and then a true rush to a stock is caused by a totally unique product like Xerox, Apple's iPod, and a few others I could name. But, that only happens a few times every decade. Most of the “hot” stocks out there make only the promoters and a few of the truly savvy speculators money. The average investors comes out poorer almost every time.


    No, this oil move is a carefully orchestrated event. Huge money pools are financing the buying of the futures contracts to run up the prices. Giant power centers are making sure that no one gets “out of line” in this incredible fleecing of the non-petroleum countries.


    The folks behind this push are the same ones that brought us the 1973-74 gas lines and changed the world’s financial power centers forever. Only this time the reason for the move by these folks is quite different.


    The oil producers can see the handwriting on the wall. Oil will soon become just one of many power sources in the world. The so-called alternative fuel sources will force oil producers to reduce their price per barrel by a huge margin and for good in the next five to seven years. To “make hay while the sun shines” so to speak, the oil powers are using their huge money pools to run up prices that then translate into higher prices per barrel, even when nothing has changed, especially production costs.



    All the talk of running out of oil is nonsense. If we want it bad enough, we could do what the Nazis did in WWII and just make it in chemical plants. Did you know that German scientists did just that over 50 years ago and maintained their entire war machine with synthetic fuel?


    If you question this, just look at the diamond business. We can now make diamonds that are truly difficult to distinguish from the real thing and for very low cost. Yes, the diamond business is very worried.


    No, this oil move is a careful plan to fleece the world of huge piles of money that will then be used to buy banks, insurance companies, food companies, almost any high grossing consumer goods company, regardless of its location in the world. Thus, when oil does fall from its throne, the income from these purchased businesses they own and control will replace the oil income. Who needs oil?


    This fleecing is going on even as I write this article. Look in your local newspaper at the companies being bought. Where do you think the money is coming from? It is coming from “private investors” (who are their partners), banks (already partly-owned by oil powers) and other innocuously named private groups funded by the oil giants to disguise their oil-backed involvement.


    Look, I don’t write this to condemn anybody. I just want the truth out there on the table. Maybe then somebody in authority will do something to bring a quicker end to this fleecing. Where are the politicians in all this? Where are all the regulators in all this? Surely the Commodity Futures Trading Commission (CFTC) has the power to cool down overheated markets. I used to trade commodities, and believe me, the CFTC can do just about anything they want to a market. Do any of you remember the Hunt Brothers’ attempt to corner a market in the 1980s? The politicians and regulators cut them off at the knees, as they say in my business. But, this time it is not two brothers doing the cornering, it is a multi-trillion-dollar combine that knows they have the power to hold back almost any action that will impede them. Money is power. A huge amount of money is huge power.


    Well, that is all I have to say for today. I just wanted to put it in writing that 95 percent of what you hear about the dollar and oil is gibberish designed either to sell something or to bring influence to bear for political reasons. But, that has been going on for centuries and will never change. In this case, however, it is just that the stakes are far, far bigger.


    Next time you hear the gibberish, just change the channel, turn the page, or change the subject to football or baseball or some friendly conversation topic. You will accomplish a much more productive outcome.
     

    mike308

    HandiChamp
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    May 14, 2008
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    Pearl River
    The US has been blessed with low price gasoline in the past mainly because of the strong us dollar. That ended in the 70's and we ahve had increases is cost ever since.

    In 1973 we had the first Arab embargo. Our great leaders responded by: refusing to allow refineries to be built; no nuclear power plants; restrictions on use of coal; shut down coal liquification process; windfall profits tax; restrictions on drilling for oil in US both land and offshore; and restrictions on the auto industry making fuel efficient vehicles difficult to build.

    About 85% of the oil in the US is off limits. We export coal, import gasoline, import oil and have no general policy to do what is technically available. We stockpile old auto tires where in Europe they burn them in specially designed power plants that produce no polution, recover the metal and use the ash for fertilizer. There are more BTUs in a unit of auto tire then in oil.

    We do not have Statesman in Washington only politicians. A politician is on the low end of the scale of human development. Most should be in prison for what they do, but they write and enforce the laws so drunk driving resulting in death gets you 40 years as a Senator. Congressman can run male prostition rings out of their house wereas the madam gets years in jail.

    On and on, but you know the problems and the culprits. Write your representatives in Washington and LA, and promise to work hard to remove them from office if they don't staighten out the mess they created.

    Sorry for the rant
     

    mike308

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    May 14, 2008
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    Pearl River
    During WWII GIs in England were learning how to deal with the English money sytem. You could get 3 pounds for one US dollar. Today it takes almost 2 US dollars to get one British pound. The British pound is based on an ecomony that was flat broke in 1940-46. Yet the US was robust. The fed prints money where there is no value to back it up. If you and I did this it would be called counterfiting.

    So it is easy to see that the US dollar has declined as most economist of any substance will tell you. Go to Google and ask the question about the value of the US dollar since WWII.

    You tell me why a can of soda can sell for $0.50 and the same volume of bottle water costs $1.29? Easy supply and demand.

    For those that don't know in order to get a gallon of gasoline: First you have to pay, usually the government, for the right to drill for oil; next you need to survey to find the best place to drill; then get a permit to drill; find a rig to drill; drill; complete the well if productive; set well head equipment; find a way to get oil to market; oil goes to a refinery; about 19 gallons of gasoline come out of a 42 gallon barrel of oil; refine oil to gasoline; blend gasoline for region and distributor; transport gasoline to station; and sell gasoline with limits on profit. During all of these process the government takes a piece of the action-taxes state and federal and there are tremendous costs. Rules, regulations and laws govern every step of the process. Everyone has to earn a living who deals with the process so those cost have to factor in.

    So when some company fills up a plastic bottle (made from the other parts of oil not gasoline) with water from a local municipality and charges you $1.29 (for 12-16 ounces)for the priviledge of not doing the same from your own faucet, remember all the steps and cost it takes to get your gasoline to the local dealer and compare that to filling a bottle.

    Still a bargin at $4.00 per gallon.
     
    Last edited:

    swagge1

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    34   0   0
    Oct 21, 2007
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    Baton Rouge, LA
    You can drill and pump all the crude you want. The refineries are damn near maxed out. They wouldn't be able to handle the feed stock even if all this new oil was able to make it out of the ground. I read in an e-mail last year that Shell is either building a plant or expanding a plant in Texas that will make it the largest refinery in the world.
     

    mike308

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    May 14, 2008
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    Pearl River
    Marathon is expanding it's refinery in LA.

    Price isn't going to go down by much what we need is security of supplies. So we need to: Build 10-20 nuclear power plants for electrical supply; 10 new refineries for gasoline and lubricants; free up all lands to drilling; liquify/gasify coal as alternate source; hydrogen?- maybe; clean coal power plants; no ethanol from corn but sugar cane and imports from Brazil; make highways safe for more smaller fuel efficient vehicles; use railroads for commuters; conservation. It is a very complex problem and will be solved by industry free from government restraints.
     

    CEHollier

    *Banned*
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    8   0   0
    Dec 29, 2007
    8,973
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    Prairieville
    The Who - That is an interisting perspective on oil and money. I have not researched your post yet. However, some of the examples you posed I do remember and know to be true. Thank you for your narrative. :D
     

    nastynewt

    Well-Known Member
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    0   0   0
    Apr 19, 2007
    305
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    Franklinton/Houma LA
    Ahmadinejad Tells OPEC US Dollar is a "Worthless Piece of Paper"


    Iranian President Mahmoud Ahmadinejad speaking at a ceremony to open the 29th ministerial meeting of the OPEC Fund for International Development has urged the organization to dump the dollar calling it a "worthless piece of paper."

    Ahmadinejad blamed George W. Bush's policies for the decline in value of the US currency and told OPEC "They get our oil and give us a worthless piece of paper" he called on OPEC countries to switch to another form of “credible hard currency".

    Both Iran and Venezuela have suggested that oil should be traded in various currencies to end the domination of the dollar in the oil sector. Hugo Chavez has previously called the Euro a better option saying that, "the empire of the dollar has to end."


    source: http://abcnews.go.com/Business/wireStory?id=3883287
     

    W1nds0rF0x

    Snap, Crackle, Pop.
    Rating - 100%
    14   0   0
    Oct 8, 2007
    3,444
    36
    Baton Rouge
    Drilling now won't have an effect for years. Everyone wants instant gratification and a quick fix to a problem where there is no miracle third option. I agree with letting states decide for themselves (and reaping profit that way), but I think too many people believe, without merit, that if drilling is approved our gas will drop below $2 a gallon. It's time for people to realize that high gas prices are going to be the norm. $3 and above gas is here to stay, even with domestic drilling. To think otherwise you would be, in three words, "out of touch".

    BTW, in 2005 Dr. Hirsh warned us of this (if you want to use him as an example). He stated that "unless a mitigation program is started 20 years before oil peaking occurs, the economic consequences will be dire"
    http://www.cleanpeace.org/images/Hirsch.pdf

    He estimated that 2025 might be a peak oil year. Of course, everything can be debated.

    This is all water under the bridge, we have GOT to start drilling and getting our oil in the Gulf before the stinking Chinese help themselves to it.
     
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