Monday, Oct 15, 2007
Ooooh, look $86 for a barrel of oil! - sustained inflationary pressure; this could get messy!
Bloomberg: Oil Rises Above $86 to a Record on Turkey-Iraq Border Tension
Crude oil rose above $86 a barrel for the first time in New York on concern Turkish forces may pursue Kurdish militants in Iraq, curbing shipments as refiners prepare for the peak-demand heating season.
Posted by tyrellcorporation @ 10:37 PM (613 views) Add Comment
9 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. planning4acrash said...
"Prices are 47 percent higher than a year ago"
"Today's intraday high passed the previous all-time inflation-adjusted record reached in 1981 when Iran cut oil exports. The cost of oil used by U.S. refiners averaged $37.48 a barrel in March 1981, according to the Energy Department, or $84.73 in today's dollars"
- one word, INFLATION. This is supposed to be a cheap period inbetween the US driving season and the northern hemisphere winter. Oil is going to be at $100 very soon and this is way more than just about a falling dollar. Inflation will spike again in 2008, as it did at the beginning of 2007. I'm sorry, but there is no way that interest rates are falling unless oil goes back down. They'll damn well rise up and up. I still reckon 7% by the end of 2008.
And looking into the future? I agree with this statement, and its SCARY. Peakoil or fear of it is upon us.
``It's going to soon hit $90 and go north of $100 next year,'' said Peter Schiff, chief executive officer of Darien, Connecticut-based brokerage Euro Pacific Capital, with $700 million in customer accounts. ``We should see $150 to $200 oil in the next two to three years because of the drop in the dollar. Once Asian countries allow their currencies to appreciate, demand will explode there.''
2. whiteknight said...
Without looking the at the data i assume that the previous oil high was part of a much more rapid spike?
Whereas here we have a solid and persistently high value that will steadily increase.
3. planning4acrash said...
You are spot on whiteknight. Add to the equasion that the 1981 spike was caused by a specific geo-political event. This one is about generally declining inventories, fear for general supply, etc. What we haven't had is this general issue combined with a serious geo-political event such as a dangerous gulf of mexico hurricane that threatens US installations, or an actual middle east war. The fact is that either of those whould, right here, right now, send oil above $100/barrel.
4. George Sore Ass said...
Most investments are looking dodgy today:
- house prices are highly overvalued and the credit crunch has pulled the rug out
- stocks and shares look jittery, probably overvalued too and highly susceptible to rapid falls on more credit problems in the markets
- cash value is likely to be eroded as 10%+ money supply growth will erode its value (with central bankers doing their best to inflate their way out of problems)
There are also a lot of global risks around that will affect the oil price and hence the markets: israel/syria, turkey/iraq, iran (and possible retaliation against gulf arab states). Add in the fact that we've only seen subprime chickens come home to roost in the US so far. The UK lenders claim no skeletons in the closet, but I'd bet 90% of self cert mortgages are sub prime - people doubling their claimed salary to get a loan. When the UK market really starts to blow, it'll be blood on the streets.
Gold looks pretty good bet to weather the storm and make some good profits. Every time the central banks hint and rate cuts (and hence inflation) or the oil price gets ratcheted up, the price of gold flies. And it hardly seems to drop much afterwards.
5. Lierbag said...
Those 'golden age' years of the 1980s were funded off the back of North Sea oil revenues, and Thatcher's car-boot sale of UK infrastructure. It was a one-off bonanza from the nation's treasure chest - similar to splurging your redundancy money on a 48 hour 'free drinks for all' party. Now the hangover is setting in. North Sea fields are in rapid decline now (by about 12% or so per year) and we'll have to bid against/compete with every other nation on earth for remaining resources. It won't be cheap. And as Russia is holding a lot of the aces - and can quite adequately defend itself - it's not going to be a case of taking what we need by force. Oil is the underlying thread underpinning every discussion on this forum - whether correspondents are fully aware of it or not. Within a year, expect it to be the most prominent topic for discussion. Now go find a 'Transition Town' that will have you, and move there.
6. uncle tom said...
In certain ways, oil is becoming a reserve currency as well as a commodity. What we are seeing is a steady collapse, not only of the dollar, but also the other currencies of the developed world.
How long before the developing countries cut their dollar pegs? - they are losing badly by sticking with the greenback.. However a country that chooses to break free would not want to do so while holding large dollar reserves, so swapping their treasuries for oil futures makes considerable sense.
I doubt it will be one of the big nations that blinks first - probably a smaller country with little oil of it's own - Thailand perhaps.
Once one country moves in that direction, the consequences could be spectacular - $200+/barrel is quite possible..
7. tyrellcorporation said...
UT Do you think oil shares are worth looking at?
8. mrmickey said...
As oil goes higher the oil producing countries which are pretty hostile to the west will get wealthier and use their petro Dollars to build up their military to use against us at a later date. This is good news for UK & US arms manufacturers pity the weapons they produce will be used against us in the end.
9. uncle tom said...
"UT Do you think oil shares are worth looking at?"
In general, yes - but spread the load. Oil and mining will weather an economic winter better than almost anything else.