Tuesday, September 30, 2008
Mexico fiscal crisis sooner rather than later
Mexico's oil output continues to decline rapidly, but this was offset by the high price of oil. Now that we may have a worldwide economic crisis, the price of oil is plunging. Less oil at a lower price means problems will come sooner.
A nation of high school students
If you need more evidence that we live in Infantile Nation, the top story at Reuters today is...
Monday, September 29, 2008
Newsflash: Osama is dead!
Sources said he was watching C-SPAN and the news from Wall Street, and he laughed himself to death.
Other sources said he died crying when he realized that the attacks were a waste of time because the Empire would have imploded all by itself had he just left it alone.
Other sources said he died crying when he realized that the attacks were a waste of time because the Empire would have imploded all by itself had he just left it alone.
In their nature
"My mommy always said there were no monsters... no real ones... but there are..."
Grub, Aliens
Yes, Grub, there really are monsters. But they don't have acid for blood, lay eggs, and literally parasitize humans.
Grub, Aliens
Yes, Grub, there really are monsters. But they don't have acid for blood, lay eggs, and literally parasitize humans.
Why are they in such a panic?
1. They could be lying to stampede everyone into bailing them and their friends out.
2. They could have no idea what they are doing.
3. They could be afraid of a global run on banks.
Suddenly, 1 and 2 don't seem so bad.
On June 29, Fortis said collapse of US financial markets was imminent. Fortis expected bankruptcy of 6,000 US banks and Citigroup and General Motors. Everyone laughed at Fortis. Fortis itself has now been bailed out. "Dutch-Belgian bank and insurance giant Fortis NV was given a 11.2 billion euro ($16.4 billion) to avert insolvency".
http://ap.google.com/article/ALeqM5gq42vLUmcA9LTFzCEF-EN1vnhV8wD93G2A0G0
2. They could have no idea what they are doing.
3. They could be afraid of a global run on banks.
Suddenly, 1 and 2 don't seem so bad.
On June 29, Fortis said collapse of US financial markets was imminent. Fortis expected bankruptcy of 6,000 US banks and Citigroup and General Motors. Everyone laughed at Fortis. Fortis itself has now been bailed out. "Dutch-Belgian bank and insurance giant Fortis NV was given a 11.2 billion euro ($16.4 billion) to avert insolvency".
http://ap.google.com/article/ALeqM5gq42vLUmcA9LTFzCEF-EN1vnhV8wD93G2A0G0
Cheap pill could cut heart attacks and strokes in half for 10 cents a day
A pill that combines four different medicines and could halve deaths from heart attack and stroke around the globe will enter human trials.
Basically, [big pharmaceutical companies'] whole business model is people paying [hundreds of dollars] a year for the latest blockbuster drug. A pill with established medicines that halved cardiovascular risk and could be available for [$40] a year could be seen as a threat."
http://www.guardian.co.uk/society/2008/sep/29/health.medicalresearch
Basically, [big pharmaceutical companies'] whole business model is people paying [hundreds of dollars] a year for the latest blockbuster drug. A pill with established medicines that halved cardiovascular risk and could be available for [$40] a year could be seen as a threat."
http://www.guardian.co.uk/society/2008/sep/29/health.medicalresearch
Paulson doesn't know what he is doing?
This is hilarious.
"Mr Paulson's appearances on Capitol Hill, marked by the characteristic Bush-era combination of arrogance and incompetence, are turning my once-outlandish view into conventional wisdom: Henry Paulson is to finance what Donald Rumsfeld was to military strategy, Dick Cheney to geopolitics and Michael Chertoff to flood defence."
Republicans: “Stunning and unprecedented in its lack of detail”... “a $700 billion blank cheque to Wall Street”... “neither workable nor comprehensive”... “foolish waste of massive taxpayer funds”... “eerily similar to the rush to war in Iraq”. Best of all was John McCain's comment: “When we're talking about a trillion dollars of taxpayer money, ‘trust me' just isn't good enough.”
"His inability to think seriously about solutions to the present financial crisis probably has deep ideological roots. Just as Mr Rumsfeld could simply not believe that US foreign policy might be misguided, Mr Paulson simply cannot believe that markets can be fundamentally wrong."
P.J.O'Rourke, the conservative writer, once remarked: “The Republicans are a party that says government doesn't work - and then get elected and prove it.”
http://www.timesonline.co.uk/tol/comment/columnists/anatole_kaletsky/article4820549.ece
"Mr Paulson's appearances on Capitol Hill, marked by the characteristic Bush-era combination of arrogance and incompetence, are turning my once-outlandish view into conventional wisdom: Henry Paulson is to finance what Donald Rumsfeld was to military strategy, Dick Cheney to geopolitics and Michael Chertoff to flood defence."
Republicans: “Stunning and unprecedented in its lack of detail”... “a $700 billion blank cheque to Wall Street”... “neither workable nor comprehensive”... “foolish waste of massive taxpayer funds”... “eerily similar to the rush to war in Iraq”. Best of all was John McCain's comment: “When we're talking about a trillion dollars of taxpayer money, ‘trust me' just isn't good enough.”
"His inability to think seriously about solutions to the present financial crisis probably has deep ideological roots. Just as Mr Rumsfeld could simply not believe that US foreign policy might be misguided, Mr Paulson simply cannot believe that markets can be fundamentally wrong."
P.J.O'Rourke, the conservative writer, once remarked: “The Republicans are a party that says government doesn't work - and then get elected and prove it.”
http://www.timesonline.co.uk/tol/comment/columnists/anatole_kaletsky/article4820549.ece
Saturday, September 27, 2008
Washington Mutual bites the dust
Washington Mutual, WaMu, had a run on its deposits and has been taken over by JP Morgan Chase. JP Morgan seems to be very interested in the customer deposits. Why would you want to leave your money in an institution like that?
Tuesday, September 23, 2008
The two best ways to be consistently wrong
1. I don't like it, therefore it is wrong; I like it, therefore it is true.
2. Be so stupid you don't know how stupid you are.
As we are now seeing, stupidity has real-world effects. Unfortunately, this behavior is strongly controlled by genes and will not go away soon. Also strongly controlled by genes: panic behavior. Good luck.
2. Be so stupid you don't know how stupid you are.
As we are now seeing, stupidity has real-world effects. Unfortunately, this behavior is strongly controlled by genes and will not go away soon. Also strongly controlled by genes: panic behavior. Good luck.
Sunday, September 21, 2008
The Bene Gesserit chant
Fear is the mind-killer.
Fear is the little-death that brings total obliteration.
I will face my fear.
I will permit it to pass over me...
Over the last decade, most people have reacted in terror to peak oil and to the looming financial crisis, thereby allowing foreseeable events to jerk them around.
I am very interested in things that are potentially really good, and in things that are potentially really bad. I am interested in the timing of The Singularity and the fact that sometimes the light at the end of the tunnel is an oncoming train.
Inappropriate levels of fear lead to inappropriate behavior.
http://www.newscientist.com/article/dn14761-voting-republican-may-be-a-survival-response.html
Fear is the little-death that brings total obliteration.
I will face my fear.
I will permit it to pass over me...
Over the last decade, most people have reacted in terror to peak oil and to the looming financial crisis, thereby allowing foreseeable events to jerk them around.
I am very interested in things that are potentially really good, and in things that are potentially really bad. I am interested in the timing of The Singularity and the fact that sometimes the light at the end of the tunnel is an oncoming train.
Inappropriate levels of fear lead to inappropriate behavior.
http://www.newscientist.com/article/dn14761-voting-republican-may-be-a-survival-response.html
How to consistently come to the wrong conclusion
Three blind economists are feeling an elephant in an observatory. One takes the trunk and pronounces it to be like a snake, one takes a leg and pronounces it to be like a tree, and one takes the tail and pronounces it to be like a rope.
Meanwhile, the astronomer is looking through the telescope at the asteroid that is about to strike the Earth...
While the bean counters were busy refining their equations, winning Nobels along the way, making their equations more perfect so that they better modeled their transactions, they forgot what everyone who has studied ecology knows: Equations work well for systems near equilibrium; the real world is almost always in disequilibrium... and there are asteroids out there...
Some call these sudden events that upset their equations "black swans". What they are really saying is that they wander around the world looking through a microscope, so they sometimes get hit by cars while crossing the street.
Meanwhile, the astronomer is looking through the telescope at the asteroid that is about to strike the Earth...
While the bean counters were busy refining their equations, winning Nobels along the way, making their equations more perfect so that they better modeled their transactions, they forgot what everyone who has studied ecology knows: Equations work well for systems near equilibrium; the real world is almost always in disequilibrium... and there are asteroids out there...
Some call these sudden events that upset their equations "black swans". What they are really saying is that they wander around the world looking through a microscope, so they sometimes get hit by cars while crossing the street.
From finance to the real economy
Saturday, September 20, 2008
Gone with the Wind?
I used to think it was gonna be gone with the oil...
But now I think it is first going to be gone with the bank...
Then, of course, there is Went with the Wind...
But now I think it is first going to be gone with the bank...
Then, of course, there is Went with the Wind...
What is it?
Elections were lost because of it.
Forest Gump's evil twin from the mirror universe is in charge because of it.
Attacks were mishandled and wars were started because of it.
Instead of slowly fading in the west, the American Empire, flower of The Enlightenment, came to a crashing end because of it.
Answer: The most expensive blow job in the history of the world. Bill should have gotten Larry. At least Larry wouldn't have told his mother, who therefore wouldn't have told the girls at the salon that her offspring was giving head in the office.
I sure hope it was one hell of a good job.
Forest Gump's evil twin from the mirror universe is in charge because of it.
Attacks were mishandled and wars were started because of it.
Instead of slowly fading in the west, the American Empire, flower of The Enlightenment, came to a crashing end because of it.
Answer: The most expensive blow job in the history of the world. Bill should have gotten Larry. At least Larry wouldn't have told his mother, who therefore wouldn't have told the girls at the salon that her offspring was giving head in the office.
I sure hope it was one hell of a good job.
Recent quotes“That sound you hear is the FDIC upping its troubled institutions list,” said one senior banking executive
“That sound you hear is the FDIC upping its troubled institutions list,” said one senior banking executive.
Citing “deep concerns” about the Treasury’s program to guarantee money market mutual funds, American Bankers Association president Edward Yingling said that the bailout of money markets “will undermine the role of banks during this current crisis and has the potential to have an extremely negative impact in the future.”
Don't take your eye off the UK... they are in as big, or bigger, trouble as the US:
Lloyds TSB has agreed a £12bn emergency takeover of Halifax Bank of Scotland in a deal that could lead to 40,000 job cuts.
So how to mark the end of an epoch? In 1976, Jim Callaghan was the undertaker for the post-war social democratic order when he said: "We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that option no longer exists." On Tuesday, the prime minister should stand up and say: "We used to think you could borrow your way out of a recession and increase employment by increasing debt and setting the City free. I tell you in all candour that option no longer exists".
Former Senator Phil Gramm, who now advises Senator John McCain and is the person who says that folks who fret about current economic conditions are “whiners”; Clinton Treasury Secretary Robert Rubin, one of whose protégés advises Senator Barack Obama; and Alan Greenspan, former chief of the Federal Reserve.
Gramm, Rubin, and Greenspan made this debacle possible.
Against this backdrop, if the government had rescued Lehman, it would have repudiated the claim that the Bear rescue was extraordinary; it would have also conceded that in the six months since Bear failed, neither the new facility that it set up nor the other steps to make markets more robust were reliable. Essentially, the Fed and the Treasury would have been admitting that they had lied or were incompetent in stabilizing the financial system — or both.
The last 10 days have been the most remarkable period of government intervention into the financial system since the Great Depression.
Excellent summary of what just happened.
http://freakonomics.blogs.nytimes.com/2008/09/18/diamond-and-kashyap-on-the-recent-financial-upheavals/?em
The blue ribbon for "Unexpected Superb Analysis Of The Month" goes to Mirko Mikelic, senior portfolio manager at Fifth Third Asset Management in Grand Rapids who correctly surmises: "It sounds like there's going to be a giant dumpster for illiquid assets."
Citing “deep concerns” about the Treasury’s program to guarantee money market mutual funds, American Bankers Association president Edward Yingling said that the bailout of money markets “will undermine the role of banks during this current crisis and has the potential to have an extremely negative impact in the future.”
Don't take your eye off the UK... they are in as big, or bigger, trouble as the US:
Lloyds TSB has agreed a £12bn emergency takeover of Halifax Bank of Scotland in a deal that could lead to 40,000 job cuts.
So how to mark the end of an epoch? In 1976, Jim Callaghan was the undertaker for the post-war social democratic order when he said: "We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that option no longer exists." On Tuesday, the prime minister should stand up and say: "We used to think you could borrow your way out of a recession and increase employment by increasing debt and setting the City free. I tell you in all candour that option no longer exists".
Former Senator Phil Gramm, who now advises Senator John McCain and is the person who says that folks who fret about current economic conditions are “whiners”; Clinton Treasury Secretary Robert Rubin, one of whose protégés advises Senator Barack Obama; and Alan Greenspan, former chief of the Federal Reserve.
Gramm, Rubin, and Greenspan made this debacle possible.
Against this backdrop, if the government had rescued Lehman, it would have repudiated the claim that the Bear rescue was extraordinary; it would have also conceded that in the six months since Bear failed, neither the new facility that it set up nor the other steps to make markets more robust were reliable. Essentially, the Fed and the Treasury would have been admitting that they had lied or were incompetent in stabilizing the financial system — or both.
The last 10 days have been the most remarkable period of government intervention into the financial system since the Great Depression.
Excellent summary of what just happened.
http://freakonomics.blogs.nytimes.com/2008/09/18/diamond-and-kashyap-on-the-recent-financial-upheavals/?em
The blue ribbon for "Unexpected Superb Analysis Of The Month" goes to Mirko Mikelic, senior portfolio manager at Fifth Third Asset Management in Grand Rapids who correctly surmises: "It sounds like there's going to be a giant dumpster for illiquid assets."
Beware when buying gold
There is a lot of fake gold around. It is plated, so be careful if buying something like that. I just wouldn't.
Pure gold coins like the Canadian Maple Leaf are VERY soft and can be scratched if touched, and usually this will reduce its value. However, in current circumstances, if it is pure gold, people may not care.
Instead of confiscating gold the way the US government did in the '30s, they simply are blocking the sale of gold and silver. You will note that you can order anything you want... it will be placed on back order, and you will get it when they feel like giving it to you... They are desperately trying to block the collapse of the dollar, which is coming sooner or later, after decades of the petrodollar-printing-to-buy-oil ponzi scheme, and decades of "we don't need regulation", the whole house of cards is imploding, and they are in the biggest panic of their lives trying to slow it down until at least after the election.
The booms and busts have increased in amplitude over the last few decades, and now they have reached or exceeded boundary conditions.
Pure gold coins like the Canadian Maple Leaf are VERY soft and can be scratched if touched, and usually this will reduce its value. However, in current circumstances, if it is pure gold, people may not care.
Instead of confiscating gold the way the US government did in the '30s, they simply are blocking the sale of gold and silver. You will note that you can order anything you want... it will be placed on back order, and you will get it when they feel like giving it to you... They are desperately trying to block the collapse of the dollar, which is coming sooner or later, after decades of the petrodollar-printing-to-buy-oil ponzi scheme, and decades of "we don't need regulation", the whole house of cards is imploding, and they are in the biggest panic of their lives trying to slow it down until at least after the election.
The booms and busts have increased in amplitude over the last few decades, and now they have reached or exceeded boundary conditions.
The most despicable of all human behaviors
Now that we have run into The Brick Wall, all those primarily responsible are running around screaming "It's your fault too!!!" "It's not all my fault!!!"
Yes, that's true, but it is 95% their fault. Selfish as pigs, and without any of Scarlett's charms.
Anyone who does that should be shunned until he/she/it dies.
So stupid, they don't know how stupid they are.
Yes, that's true, but it is 95% their fault. Selfish as pigs, and without any of Scarlett's charms.
Anyone who does that should be shunned until he/she/it dies.
So stupid, they don't know how stupid they are.
Wednesday, September 17, 2008
Coming Soon: Deflation then Inflation
Since the financial crisis seems to have overtaken the peak oil crisis for the time being, we can expect deflation first. Gas and food will moderate, but houses will continue to go down for quite some time, perhaps years. Of course, the whole thing is getting out of the control of the geniuses running the show, so the collapse could be sudden, severe, and really astonishing.
Then, they will start printing money like mad and we will have horrendous inflation.
So, you have a couple of years to fix your house, add insulation, get a solar water heater, apply an elastomeric roof (see below), do the painting, etc., before the inflation comes. There is no sense sitting on cash when that happens. Spend cash first and foremost on getting future expenses down.
Then, they will start printing money like mad and we will have horrendous inflation.
So, you have a couple of years to fix your house, add insulation, get a solar water heater, apply an elastomeric roof (see below), do the painting, etc., before the inflation comes. There is no sense sitting on cash when that happens. Spend cash first and foremost on getting future expenses down.
The Sun is a variable star
When it has few sunspots, its output drops about half a percent.
The Sun has had almost no sunspots for years now, which is unusual, and could mean we get a respite from global warming... but of course the warming will resume when the sunspots do...
http://www.spaceweather.com
The Sun has had almost no sunspots for years now, which is unusual, and could mean we get a respite from global warming... but of course the warming will resume when the sunspots do...
http://www.spaceweather.com
Global warming
A heat-reflective elastomeric titanium oxide ceramic roof...
Costs less than half what a new roof would (we saved $12,000)
Reflects so much heat that the house is cool, saving a fortune on air conditioning
Prevents shingles from flying off
And now... REDUCES GLOBAL WARMING!
I tried to do a ballpark calculation, but now researchers have also done that. Our house reflects so much heat back out into space that it cancels the greenhouse gases we are responsible for.
http://www.latimes.com/news/science/environment/la-me-roofs10-2008sep10,0,1149905.story
And although some people call them "white roofs", they do not have to be white. They can be tinted without compromising the heat reflectivity very much.
http://www.hawaiiansunguard.com/colors.html
Costs less than half what a new roof would (we saved $12,000)
Reflects so much heat that the house is cool, saving a fortune on air conditioning
Prevents shingles from flying off
And now... REDUCES GLOBAL WARMING!
I tried to do a ballpark calculation, but now researchers have also done that. Our house reflects so much heat back out into space that it cancels the greenhouse gases we are responsible for.
http://www.latimes.com/news/science/environment/la-me-roofs10-2008sep10,0,1149905.story
And although some people call them "white roofs", they do not have to be white. They can be tinted without compromising the heat reflectivity very much.
http://www.hawaiiansunguard.com/colors.html
Saturday, September 6, 2008
Two of the most amusing sites around
These sites have provided hours and hours of amusement over the last few months. Or I suppose they are terrifying...
We are not in a normal downturn. The amplitudes of the crashes and the booms have been increasing, and either in this cycle or the next, the amplitude will be so large that it will be empire-ending...
http://bankimplode.com
Look at the list of writedowns/losses... The investment banks who said, "We dont need any regulation or supervision, thank you", now say "Save us! Take tax money! Print money! Save us!" Hahahaha... they have lost all the profits they have ever made because they were smarter than everyone else and went to the finest business schools... Have you ever met some of these people? Some are sharp, but most are myopic bean counters. Basically, they are good at math, and that is about it. They want to tell US how to manage OUR money? That is really too rich... And of course, they will get nasty now because they are humiliated.
http://ml-implode.com
We are not in a normal downturn. The amplitudes of the crashes and the booms have been increasing, and either in this cycle or the next, the amplitude will be so large that it will be empire-ending...
http://bankimplode.com
Look at the list of writedowns/losses... The investment banks who said, "We dont need any regulation or supervision, thank you", now say "Save us! Take tax money! Print money! Save us!" Hahahaha... they have lost all the profits they have ever made because they were smarter than everyone else and went to the finest business schools... Have you ever met some of these people? Some are sharp, but most are myopic bean counters. Basically, they are good at math, and that is about it. They want to tell US how to manage OUR money? That is really too rich... And of course, they will get nasty now because they are humiliated.
http://ml-implode.com
Many people seem to think the oil problem is over simply because the price of oil is going down
I do not think the oil problems are over at all. In fact, I think we ain't seen nuttin' yet.
Total world oil output has been flat since 2005, even though the price skyrocketed. Output did not go up because producers are basically pumping as fast as they dare, lest they ruin the wells.
If you look at mega projects coming on line, there basically isn't much after 2012.
http://seekingalpha.com/article/93602-megaprojects-predict-decline-of-oil-production
The supergiant Canterell field in Mexico is falling off a cliff at minus 36% per year now. That is extraordinary. Mexico is basically not going to have much oil to export in just two years. The thing that has saved them so far is that the price of oil has been much higher than they anticipated, but now, if the price falls, since oil exports provide half of the money of the Mexican government, well, their fiscal crisis will come sooner rather than later. Mexico supplies the US with 10% of our imported oil, so this is a huge problem for the US and any country that imports oil.
Ghawar, the biggest field ever discovered, has been yielding black gold for more than 50 years now... the sign that it is failing? From satellite photos, suddenly, Aramco is drilling thousands of new wells. Why? Because the old wells are drying up. That is what happens when a field goes into final decline. They have been pumping millions of gallons of seawater into the edges of the field for decades, trying to maintain pressure. If you do that, the field does not stop yielding oil gradually; suddenly, almost all of what is coming out is water. Cantarell was pumped with huge amounts of nitrogen to maintain field pressure, and look what is happening: -36% per year.
Forget the price of oil.
Look at the output for the last 4 years: flat.
Look at the mega projects coming on line: barely able to keep up with the declines of the big fields, and after 2012, almost nothing... while the major fields continue to decline.
The price is currently being driven down by massive currency intervention to prop up the dollar.
If there is a military strike on Iran, the price will go through the roof.
All of this depends on timing.
Other things affecting the price of oil in the medium term, say 10 years:
The Sun is a variable star. Its output has been unusually low recently. If its activity stays low, we could be in for a period of global cooling, which would make heating take up even more oil and gas. (And no, just because the Sun goes through a quiet period and the global temperature goes down does not mean it is a good idea to pump more carbon dioxide into the atmosphere.)
Volcanic eruptions could inject a lot of dust and sulfur into the atmosphere, blocking sunlight and causing temperatures to drop.
War.
Natural disaster or attack affecting major oil facilities.
Financial crisis leading huge drop in economic activity.
Buying and selling of futures.
Dollar going up or down.
This is why it is impossible to forecast the price of oil very well. As in comedy, it is all in the timing...
While I have been watching oil for the last decade, I was not paying much attention to the economy, and so the housing bubble was a little surprising to me (But in October 2006, I did say to a realtor, "When is the housing bubble going to pop?" He replied, "It's not". Another realtor in the UK told one of my friends that house prices never go down. I told him, "That's because she was lying". I was sure enough by 2005 to tell five people to sell and to sell then and there.) So this is having a huge effect on the oil price... And THEN the whole nonsense securitized debt... and the scale of it... 20 times world GDP of worthless paper. Merrill Lynch just sold 30 billion dollars of these fine instruments for 5 cents on the dollar... and even that is a risk for the buyer.
Why is all of this happening simultaneously? Because they are all related.
Total world oil output has been flat since 2005, even though the price skyrocketed. Output did not go up because producers are basically pumping as fast as they dare, lest they ruin the wells.
If you look at mega projects coming on line, there basically isn't much after 2012.
http://seekingalpha.com/article/93602-megaprojects-predict-decline-of-oil-production
The supergiant Canterell field in Mexico is falling off a cliff at minus 36% per year now. That is extraordinary. Mexico is basically not going to have much oil to export in just two years. The thing that has saved them so far is that the price of oil has been much higher than they anticipated, but now, if the price falls, since oil exports provide half of the money of the Mexican government, well, their fiscal crisis will come sooner rather than later. Mexico supplies the US with 10% of our imported oil, so this is a huge problem for the US and any country that imports oil.
Ghawar, the biggest field ever discovered, has been yielding black gold for more than 50 years now... the sign that it is failing? From satellite photos, suddenly, Aramco is drilling thousands of new wells. Why? Because the old wells are drying up. That is what happens when a field goes into final decline. They have been pumping millions of gallons of seawater into the edges of the field for decades, trying to maintain pressure. If you do that, the field does not stop yielding oil gradually; suddenly, almost all of what is coming out is water. Cantarell was pumped with huge amounts of nitrogen to maintain field pressure, and look what is happening: -36% per year.
Forget the price of oil.
Look at the output for the last 4 years: flat.
Look at the mega projects coming on line: barely able to keep up with the declines of the big fields, and after 2012, almost nothing... while the major fields continue to decline.
The price is currently being driven down by massive currency intervention to prop up the dollar.
If there is a military strike on Iran, the price will go through the roof.
All of this depends on timing.
Other things affecting the price of oil in the medium term, say 10 years:
The Sun is a variable star. Its output has been unusually low recently. If its activity stays low, we could be in for a period of global cooling, which would make heating take up even more oil and gas. (And no, just because the Sun goes through a quiet period and the global temperature goes down does not mean it is a good idea to pump more carbon dioxide into the atmosphere.)
Volcanic eruptions could inject a lot of dust and sulfur into the atmosphere, blocking sunlight and causing temperatures to drop.
War.
Natural disaster or attack affecting major oil facilities.
Financial crisis leading huge drop in economic activity.
Buying and selling of futures.
Dollar going up or down.
This is why it is impossible to forecast the price of oil very well. As in comedy, it is all in the timing...
While I have been watching oil for the last decade, I was not paying much attention to the economy, and so the housing bubble was a little surprising to me (But in October 2006, I did say to a realtor, "When is the housing bubble going to pop?" He replied, "It's not". Another realtor in the UK told one of my friends that house prices never go down. I told him, "That's because she was lying". I was sure enough by 2005 to tell five people to sell and to sell then and there.) So this is having a huge effect on the oil price... And THEN the whole nonsense securitized debt... and the scale of it... 20 times world GDP of worthless paper. Merrill Lynch just sold 30 billion dollars of these fine instruments for 5 cents on the dollar... and even that is a risk for the buyer.
Why is all of this happening simultaneously? Because they are all related.
Sorry to have been away
I have been spending all my time the last few months trying to figure out what on Earth is happening and why it is happening... it has been so entertaining, I haven't even had all that much time to read about science... and that has never happened in decades...
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