Wednesday, August 1, 2007

There really is very little to pursuade me that another rate hike isn’t needed asap…

Oil price rises to all-time high

Oil prices have climbed to a record high of $78.71 a barrel amid worries about whether oil supplies can meet global demand. The price of a barrel of US light, sweet crude passed the previous high of $78.40 a barrel, reached in July 2006.

Posted by tyrellcorporation @ 07:34 PM (461 views)
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18 thoughts on “There really is very little to pursuade me that another rate hike isn’t needed asap…

  • planning4acrash says:

    We still have a little way to go to meet the 2006 high in real terms, but one thing is for sure, this is a sustained rally that will eliminate much of the fall in CPI from 3.1% to its present level. Expect another whole % in IR’s in a shortish period if CPI does go back up to 3%. The last inflation report now looks rather comical.

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  • planning4acrash says:

    We still have a little way to go to meet the 2006 high in real terms, but one thing is for sure, this is a sustained rally that will eliminate much of the fall in CPI from 3.1% to its present level. Expect another whole % in IR’s in a shortish period if CPI does go back up to 3%. The last inflation report now looks rather comical.

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  • david20040_0 says:

    Oil may be rising but gasoline prices at the pumps haven’t gone up too much yet.

    Also it is the peak of the driving season in the US.

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  • Planning…..

    6.75% this year is too much remember the gulper needs to go to the country this year…

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  • David dude, it’s one thing playing devils advocate, it’s quite another when you obviously are doing it and you have no clue what you are on about… If you really want to spark debate you will have to do better than continuously post mildly abrasive and ignorant statements. Personally I love to see both sides of an argument/discussion, but you are offering nothing of any value…

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  • tyrellcorporation says:

    David, oil is used everywhere and in evrything. Petrol prices at the pumps is not as significant as you might imagine. For inflation as a whole, expensive oil is a big deal. I know you’re a ‘glass-half-full’ type of guy but you can’t try and spin me the idea that peak oil prices are nothing to worry about!

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  • planning4acrash says:

    David, petrol is up over 10% this yr, how on earth can you say that petrol hasn’t risen? £1 a litre dude, have you ever driven a car?!

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  • david20040_0 says:

    It always happens like this, especially in the US and Canada.

    Gasoline prices go up during just before Memorial Day weekend in the US, drop again, then the last period of the driving season kicks in and prices rise before falling after Labour day.

    By Christmas with demand for gasoline dropping oil will go back down again.

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  • david20040_0 says:

    Petrol isn’t £1 a litre, my local Sainsbury’s and Shell both have regular unleaded and diesel on sale for 93.9p which is less than last year when it was 97.9p

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  • david20040_0 says:

    Also, I am not ignorant, this is just a pattern which repeats itself every year, oil always goes through a new high most years but adjusted for inflation it is nothing, it is only $1 higher than peak time last year.

    As soon as the driving season is over in the US it will drop again and it will be back to the high 80s, low 90s again.

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  • David is correct….but the underlying trend is ahead of inflation

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  • david20040_0 says:

    * High 80s low 90s pence for fuel

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  • planning4acrash says:

    David, are you talking from a time machine or from a subsidised communist state? I can’t find anywhere for less than 97p/ltr!

    And, about cyclical behaviour, this is the first ever time probably since the 1970’s shock that oil has risen for the sole reason that supply may not keep up with demand. It is as high as during war in Lebanon after hurricanes in the Gulf of Mexico. Now, cast yourself back, imagine if oil was at around $80 before those things happened during the last spike? Yes, we would have £90-100/barrel. That my friend is a distinct possibility with Iran and the bulk of the hurricane season ahead.

    And David, you sound ignorant by saying that a 10% rise in the cost of one of the most important consumer goods, petrol, is not significant, when CPI targets are just 2%. Its fine to question whether this pattern will be sustained and whether it is cyclical, etc. and to make predictions, but, to debase significant market data and its potential impact is plainly rediculous. How much to make you notice? $100? $200 a barrel? How far does your optimism stretch?! You are aware that a predicted peak of 5.75% interest rates by the bank of england was predicated on oil falling to $40/barrel in the medium to long term? And I’m sorry, but there is no way of talking away the impact of the world’s most widely traded commodity being 1/3 more expensive that was expected. The question is, will the price stick, if not how much will it rise or fall? Because if it sticks expect to see 7 to 8% interest rates within less than a year. If it rises then we are in for serious trouble.

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  • Finally!! Like blind flies, you have all flown into his very poorly built web. He has heard something about ‘driving season’ in the States and thinks this is what it is all about…. He doesn’t mention ‘hurricane season’ or even ‘refining capacity’ or ‘factory orders’ or any of the factors which are really driving inflation and oil prices… Driving season,, is that it??? that’s all you got??? Gasoline in the States is about 3x what it was 6-7 years ago, hence imports have just overtaken US brand vehicles in sales. Funnily enough, most import brands are built in states such as Alabama and Tenessee, whereas ‘US’ branded vehicles are built mostly in Mexico and Central America…

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  • High oil prices have been offset in this country by a weak dollar. All oil is traded in dollars. The other point to note is that as oil is consumed by everything the “cost push inflation” can be offset by a weakening of “demand pull inflation”. If you pay more for your fuel you have less to spend on discretionary spending…

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  • I’m sure that the central banks would like nothing more than to let people believe that oil prices affect inflation rates, and that they are powerless to prevent it. The fact is that it is changes in past money supply that cause price inflation, and not changes in oil prices. With money supply currently growing at around 14% p.a. , high inflation is going to be with us for several more years.

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  • Actually, I think the price depends on where you live. I live in between Salisbury and Shaftesbury. If I fill up in the village or one of the other independent garages nearby it’s around £1 a litre. If I go to Tesco’s in Shaftesbury its 97.9p. If I go to Waitrose or Shell in Salisbury it’s 93.9p.

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