Told You So

Forget the oil prices we’re seeing now or the Cassandras telling us it will never come down again. It’s all BS. Like the people who claimed, after 9/11 that no one would ever build skyscrapers again. Hysterics need to be ignored. Here’s reality.

Since 2003, worldwide oil prices have quadrupled. According to a new study, the price of oil is rising at a faster-than-exponential rate, and cannot be sustained. In other words, we’re in the midst of an oil bubble, say researchers Didier Sornette and Ryan Woodard of ETH Zurich in Switzerland and Wei-Xing Zhou of the East China University of Science and Technology in Shanghai, China.

It’s all about speculators. Like the housing prices of the last six years when money was cheap and everyone was playing the market. Now they switched to energy. Expect a crash in oil prices. Don’t be surprised if you se $2.75 a gallon gas again in a year or so. Especially when these crazy prices force people to go hybrid or use other means to get to work, oil demand will drop and then they will come begging for customers again.

UPDATE: It’s already dropping

You...you mean the sky...it isn’t...FALLING?

Tulip bulbs in the 1600’s, Dot-coms, real estate, and now oil.  Boom then bust.  Next will be water rights, or greenway permits, or sight easments, or manufacturing capacity caps, or maybe chocolate chips.  Or something.  It’s always something.  When speculation moves a price rather than supply/demand from a user we have a form of betting that seems to be DNA-level-urgent. 

And who steps in to make a pitch to those not ‘in-the-market’?  Either a politician or a snake oil salesman:  Compare and contrast the “Change We Can Believe In” and “Tell ya what I’m gonna do...” Both are dangerous and both are phoney as the bubbles that spawned them.

Dan Patterson
Arrogant Infidel

Posted by  on  07/08  at  11:15 AM

I’m really uneducated in the relationship between the government and Big Oil (but I’m trying to learn) so forgive me if this question seems a little imbecilic: How far out are oil subsidies agreed upon, and is the potential for a bubble burst the reason that the subsidies are still granted in times when the oil companies are reporting record profits?

Posted by  on  07/09  at  07:33 AM

I don’t think the subsidies effect things either way that much in terms of these high barrel prices.

Posted by  on  07/09  at  09:11 AM

Silly sausage. Oil prices are directly affected by subsidies.

More than half the world currently heavily subsidizes their gas consumption. Because then, these countries don’t play the market price for their consumption, their uptake is severely altered, meaning demand is growing even more, regardless of the price the rest of us in the capitalist world pay.

Remove the welfare, and the price of oil comes crashing down as these nations oil demand shrivels and dies. ( with the possibility for much instability as their citizens grapple with their new astounding oil prices at first )

Speculators are only a piece of the puzzle. But this is what you get with a capitalist system that even turns debt into something to make money off. Long gone are the days of common sense, thanks to Nixon and Reagan.

Posted by  on  07/10  at  01:57 AM
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