Thursday, April 17, 2008
First serving of crow for the day
I have been posting and arguing for months that oil prices were going to decline from "current" levels, meaning that I have been repeatedly wrong. With oil above $115/barrel this morning (up around 12% in six weeks), my oft-repeated prediction that oil would trade at $60 before it sees $140 is now looking a bit ragged around the edges. This merely confirms what I have long suspected: that while I have a reasonable track record of buying stuff when it is cheap, I am a terrible seller and always underestimate the heights that prices can scale in a really wild bull market.
6 Comments:
By 
, at
Thu Apr 17, 09:46:00 AM:
i think you are still going to be proven correct on this one. it is widely reported that oil futures are being bid up by speculators; i.e. true demand is well below the apparent levels given the price. people are surprised every time when a bubble pops, even though the math is inescapable. timing the pop is another matter. with china's economy slowing (or even contracting) and the u.s. economy doing likewise, there is only one way for oil prices to go. industry experts i have read are looking at $60/bbl as the demand driven level. wait until it hits $139/bbl before taking that first "bite" :)
By 
Charlottesvillain, at
Thu Apr 17, 10:36:00 AM:
The front page WSJ article this week that Russian oil production has peaked is a contributing factor to this week's price spike. With Mexican production in precipitous decline, this is not good news. Evidence continues to build supporting the agrument that global oil production has peaked, or will imminently. Folks should be prepared for much higher prices, and changes in consumption patterns.
Our only chance of seeing $60 oil again is a massive strengthening of the dollar. I don't think anyone sees that coming anytime soon.
TH, what were we betting on this, anyway?
By Dawnfire82, at
Thu Apr 17, 12:45:00 PM:
Amateur Caveat: I do politics, not economics. But there was just a massive strike off the coast of Brazil, and I've been hearing more and more talk of digging up additional large continental reserves in the Great Plains and Rockies that no one has worried about before. The market always responds...
I suspect that the price will still fall, but not to $60, given the current weakness of the US dollar. Maybe 60 Euros though.
By Charlottesvillain, at
Thu Apr 17, 03:17:00 PM:
Dawnfire, your point is well taken. In general, I agree with that perspective, provided there are no geological constraints. But while there are some who are now arguing that oil is a renewable resource, most would agree that it is finite, and that at some point, we have sucked more than half of it out of the ground. Some believe we are nearing that point. If true, the market better get cracking.
By Charlottesvillain, at
Thu Apr 17, 03:18:00 PM:
Meant to say that at some point we WILL have sucked more than half of it out of the ground.
By , at
Fri Apr 18, 04:14:00 PM:
also, old fields will prove to have more "life" in them as technology improves. we only need oil to last long enough for new technologies to take over. ultimately all of our energy comes from the sun so i wouldn't worry about things for a few million millenia...
