Crude oil prices are also hitting record highs almost every day. Bush just got back from Saudi Arabia where he asked the sheiks to boost production of crude oil. Know what they told him?
Demand does not justify increasing production at this time.
And, if you look at the above graphs, it seems the prices of heating oil and natural gas are also going up without the conventional pressures on demand (e.g. cold weather). My prediction: demand for blankets will spike around January 2009 when people begin to find that heating their homes is becoming prohibitively expensive.
Special thanks to my friend for bringing these graphs to my attention.
3 comments:
but this is great for global warming. less oil = less pollution and more polar bears.
im glad oil is expensive. ever been to europe? they pay for a liter what we pay for a gallon.
Also, I think that high oil is the best thing that could happen to our economy long and intermediate term.
Watch our big competitor, China, take it straight in the a** from high oil prices.
Those people dont exactly have a diversified economic base. They've got a few trillion in dollars, but with oil at 130 / barrel, its not going to take their manufacturing base long to eat through that.
China may actually contract if this keeps up for a few years, which would be freakin' beautiful. They'll have to raise prices because its going to cost them more to make everything, combine that with an increasingly greedy domestic Chinese labor pool, and dramatically reduced US consumption of Chinese products and you end up with a perfect storm.
If you build a house on sand, dont be surprised when a strong wind blows it flat.
A pure export economy, over-extended and without a domestic consumer base is doomed in the long term. I've been trying to explain this to people. The buyer always has the seller by the nuts- no one believed it.
If you want to make money, sell every Chinese stock you can find short, go long the dollar, and run like hell from Gold. We're turning a corner boys and girls!
t-whack said:
im glad oil is expensive. ever been to europe? they pay for a liter what we pay for a gallon.
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You're sorta of missing the point. This is not crude oil, so the discussion regarding China and its petroleum issue is not on-topic (btw, China has entered into state-contracts with Venezuela, Sudan, Nigeria, etc. so as to not have to buy petroleum in the open-market).
Anyways, the issue is that with increased gasoline, the consumer does have feasible alternatives (e.g. carpooling, mass transit, etc.). When the commodity involves heating, there are only so many alternatives available. The average consumer simply can not absorb 200+/month increases this winter.
My prediction? When the crisis in heating occurs this winter, government (either state or federal) will pass a relief package. While this will prevent Americans from freezing to death, it will simultaneously prop up already unrealistic prices.
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