The FREE MARKET solves all problems.

Email Print posted by KenTX 07/17/2008 02:54:10 AM EST

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You’ve probably heard that the price of a barrel of oil dropped $10.50 in the last two days.

Was it jawboning from Bush on drilling? Partially. When the market understands that the U.S. and other oil producing countries are determined to ramp up production, they will factor enhanced supply into forecasts.

As predicted, the Supply Curve will increase.

But what about the Demand Curve?

“In the United States, consumers have cut their gasoline consumption in the face of record prices. Gasoline demand in the United States, for example, fell 5.2 percent last week, according to a nationwide survey by MasterCard, its 12th consecutive weekly drop. Since the beginning of the year, gasoline demand has dropped by about 1 percent.

As a result of higher gas prices and reduced demand, refiners are using less oil. Instead of falling as refiners draw on their inventories, oil stocks built up. Oil stocks rose 2.95 million barrels to 296.9 million barrels last week, a report by the Department of Energy showed on Wednesday. Analysts had expected inventories to drop by about 2.2 million barrels.&rdquo ;
So how long will it take for oil to drop to $20 per barrel? It could take 3-4 years. People have to cut their energy consumption by 50% by trading their Lincoln Navigators in for hybrids. New wells have to be brought in, and new petroleum infrastructure laid.

Mark these words: We might see oil hit $200 per barrel. We might see oil hit $300 per barrel. But the free market will make sure that oil will see $20 per barrel again. The bubble will pop.
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The FREE MARKET solves all problems. | 11 comments (11 topical, 0 hidden)
No, it won't. (none / 1)
We'll see which of us is right in a few years.

You are failing to account for the demands of China and India, among other things.

by jarett on 07/17/2008 03:32:30 AM EST

unintended consequences (none / 0)

In the meantime, don't you oil men say

"Let the bastards starve in the dark"


by beelzibub on 07/17/2008 09:56:10 AM EST

[ Parent ]
Not Really... (none / 0)

We heard, and as expected you jumped the shark on claiming Bushes symbolic gesture on offshore drilling is responsible.

Was it jawboning from Bush on drilling? Partially

Probably not. The dour economic forecasts , consumer cutbacks, Benekes recent remarks, bank weakness and, oddly enough the new US willingness to talk with Iran are mostly responsible, not the village idiot. Markets see the growth globally as stagnant or shrinking, putting less pressure on oil in the process..temporarily.

Once the market sees some better economic news, or a big hurricane, revolution in Nigeria oil will advance.

There is no totally free market, the Republican instigated disasters of Reagan and Bush should be instructive.

They are only free in the sense that the big players don't share the risk... they get tax credits ,they make the big profits and they get Government bailouts and they get lots and lots of lobbyist money.

The average citizen gets his house foreclosed on, loses his insurance and job to predatory outsourcing while the CEO of ExxonMobile gets a 600 million retirement package while singing the blues about ExxonMobile not having enough money for exploration and new technology and begging for more tax credits.

If players in a free market are making decisions that impact the US or world economy then there needs to be some supervision.

So before we here a rant from the right, free markets are desirable, markets with some discipline, namely regulatory over site, without being oppressive, are better. Proactive intervention and moving the market in the desired direction is even better.

 

by MRFred on 07/17/2008 07:37:24 AM EST

Oh yeah (none / 0)

privatize profits, socialize losses

What a beautiful world it is for a banker when the rethugs have control. 

 

by bfaul on 07/17/2008 05:21:28 PM EST

[ Parent ]
Arrrgh! (none / 0)
hear...hear

by MRFred on 07/17/2008 07:38:10 AM EST

As always... (none / 0)
...MRFred is 100% right, 0% wrong.

And KenTX?  Well, KenTX can

    &nb sp;        SUCK MY DICK!

ha ha

by BENS MISSING GOATEE on 07/17/2008 08:39:32 AM EST

[ Parent ]
Good acid, huh? (none / 0)

I KNOW you're tripping if you think there will ever be $20 per barrel again. You're more likely to see a $2000 Cadillac.

There is no such thing as a "free" market. Someone's fingers are always in the pie making sure that their piece will be the biggest, no matter who does the cutting.

Get the speculators OUT if you want reason to prevail.

by MedfordTim on 07/17/2008 11:39:56 AM EST

The Future of "Energy" (none / 0)
Follow the Link:


http://www.timesonline.co.u k/tol/news/environment/arti cle4133668.ece


This article really excited me, if it works as promised it is our only hope of ever seeing $40-$60 per barrel oil again. My argument for that is that big oil now knows for a fact that the bottom will not begin to fall out of the market until the price of gasoline at the pump goes above $4 a gallon. They will do what it takes to maximize their profit margin, you can always be sure a corporation the size of Exxon/Mobil, as an example, will. $20 a barrel is more than we should be daydreaming about, I figure it's the same as sitting around deciding what you're going to do when you hit the $200 million dollar lotto.

by gxttotten on 07/17/2008 01:47:13 PM EST

Interesting (none / 0)
I've seen this before, basically its just a slightly modified fermentation pathway...same as corn or switchgrass ethanol just with a different output.  The possible elimination of distillation from the process is potentially useful, however you still need to come up with feedstock.  Also, if you're gonig to use cellulosic material you are still going to need to find a way to break it down into simple sugars that can be metabolized by the bugs.  Currently they use expensive enzimes for this process. 

In the end we've been drinking bug shit for millenia (its called beer, whine, mead, vodka, etc.), this is just a slightly different flavor of shit.  Only time will tell if this technology really helps anything, but it is FAR from a silver bullet.    

by alphasigmookie on 07/17/2008 07:24:04 PM EST

[ Parent ]
Oh well then... (none / 0)
Let the "free market" save Fannie Mae and Freddie Mac.  It would be fascinating to see how the "free market" solves that problem.

by bfaul on 07/17/2008 05:18:29 PM EST

Speculators = Volitility (none / 0)
Although I have repeatedly stated that speculators are not significantly affecting the long term price/trend in oil I have said that they do greatly increase short term volitility in the market by constantly swinging from long to short.  Ken has proposed a single such event as evidence that free markets are working.  Was this 3 day $16 drop really fundamentally different than the 2 day $9 increase (to all time highs) last thursday and friday or the 2 day $16 increase on June 5th and 6th?  I doubt it.  The fundamental price of oil remains in the $120-140 range and will likely stay there until real significant additions to supply hit the market.  Until then the rest is just normal volitility. 

http://futures.tradingchart s.com/javachart/CO/88

by alphasigmookie on 07/17/2008 07:45:52 PM EST

The FREE MARKET solves all problems. | 11 comments (11 topical, 0 hidden)
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