Best of the Week
Most Popular
1. Will Gold Price Breakout? 3 Things to Watch… - Jordan_Roy_Byrne
2.China Invades Saudi Oil Realm: PetroDollar Kill - Jim_Willie_CB
3.Bitcoin Price Trend Forecast, Paypal FUD Fake Cryptocurrency Warning - Nadeem_Walayat
4.The Stock Market Trend is Your Friend ’til the Very End - Rambus_Chartology
5.This Isn’t Your Grandfather’s (1960s) Inflation Scare - F_F_Wiley
6.GDX Gold Mining Stocks Fundamentals - Zeal_LLC
7.US Housing Real Estate Market and Banking Pressures Are Building - Chris_Vermeulen
8.Return of Stock Market Volatility Amidst Political Chaos and Uncertain Economy - Buildadv
9.Can Bitcoin Price Rally Continue After Paypal Fake FUD Attack? - Nadeem_Walayat
10.Warning Economic Implosion on the Horizon - Chris_Vermeulen
Last 7 days
What to Expect at a Critical Stock Market Point: End of a Wave 2 Rally - 26th Apr 18
A New Lithium War Is About To Begin, Modern Gold Rush! - 26th Apr 18
Silver, silver, and silver! There’s More Than Silver, People! - 26th Apr 18
How to be Financially Prepared When Purchasing Your First Home - 26th Apr 18
Is a Stock Market Crash Imminent or Does this Stock Market Bull Still Have Legs - 25th Apr 18
Gold Price Focusing on May Cycle Bottom - 25th Apr 18
Cash “Vanishes” From Bank Accounts In Ireland - 25th Apr 18
Is the Malaysian Economy a Potemkin Village - 25th Apr 18
Land Rover Discovery Sport Rattling / Knocking Sounds From Car Pillars - 25th Apr 18
China Takes the Long View on Gold-Silver... and So Should You - 25th Apr 18
Russia Buys 300,000 Ounces Of Gold In March – Nears 2,000 Tons In Gold Reserves - 24th Apr 18
Stock Market Study Shows Why You Shouldn’t “Sell in May and Go Away” - 24th Apr 18
CRYPTOCURRENCY MASTERCLASS #CRY90 - 24th Apr 18
UK Gambling Statistics - What the Numbers Say - 24th Apr 18
Chaos Capitalists Short Countries - How Chanos Got China Wrong - 24th Apr
Artificial Intelligence Defines the Political News Narrative - 24th Apr 18
Stock Market "Oops, They Did It Again" - 24th Apr 18
Fox in the Henhouse: Why Interest Rates Are Rising - 23rd Apr 18
Stocks and Bonds, This is Not a Market - 23rd Apr 18
Happy Anniversary Silver Investors! - 23rd Apr 18
The Hottest Commodity Play In 2018 - 23rd Apr 18
Stock Market Correction Turns Consolidation - 23rd Apr 18
Silver Squeeze, Gold Fails & GDX Breadth - 23rd Apr 18
US Economy Is Cooked, the Growth Cycle has Peaked - 23rd Apr 18
Inflation, With a Shelf Life - 23rd Apr 18 - Gary_Tanashian
Stock Market Predictive Modeling Is Calling For A Continued Rally - 22nd Apr 18
SWEATCOIN - Get PAID to WALK! Incentive to Burn Fat and Lose Weight - Review - 22nd Apr 18
Sheffield Local Elections 2018 Forecast Results - 22nd Apr 18
How Long Does it take for a 10%+ Stock Market Correction to Make New Highs - 21st Apr 18
Sheffield Ruling Labour Party Could Lose 10 Council Seats at May Local Elections - 21st Apr 18
Crude Oil Price Trend Forecast - Saudi Arabia $80 ARAMCO Stock IPO Target - 21st Apr 18
Gold Price Nearing Bull Market Breakout, Stocks to Follow - 20th Apr 18
What’s Bitcoin Really Worth? - 20th Apr 18
Stock Market May "Let Go" - 20th Apr 18
Overwhelming Evidence Against Near Stock Market Grand Supercycle Top - 20th Apr 18
Crude Oil Price Trend Forecast - Saudi's Want $100 for ARAMCO Stock IPO - 20th Apr 18
The Incredible Silver Trade – What You Need to Know - 20th Apr 18
Is War "Hell" for the Stock Market? - 19th Apr 18
Palladium Bullion Surges 17% In 9 Days On Russian Supply Concerns - 19th Apr 18
Breadth Study Suggests that Stock Market Bottom is Already In - 19th Apr 18
Allegory Regarding Investment Decisions Made On Basis Of Government’s Income Statement, Balance Sheet - 19th Apr 18
Gold – A Unique Repeat of the 2007 and How to Profit - 19th Apr 18
Abbeydale Park Rise Cherry Tree's in Blossom - Sheffield Street Tree Protests - 19th Apr 18
The Stock Market “Turn of the Month Effect” Exists in 11 of 11 Countries - 18th Apr 18
Winter is Coming - Coming Storms Will Bring Out the Best and Worst in Humanity - 18th Apr 18
What Does it Take to Create Living Wage Jobs? - 18th Apr 18
Gold and Silver Buy Signals - 18th Apr 18
WINTER IS COMING - The Ongoing Fourth Turning Crisis Part2 - 18th Apr 18
A Stock Market Rally on Low Volume is NOT Bearish - 17th Apr 18
Three Gold Charts, One Big Gold Stocks Opportunity - 17th Apr 18
Crude Oil Price As Bullish as it Seems? - 17th Apr 18
A Good Time to Buy Facebook? - 17th Apr 18
THE Financial Crisis Acronym of 2008 is Sounding Another Alarm - 16th Apr 18
Bombs, Missiles and War – What to Expect Next from the Stock Market - 16th Apr 18
Global Debt Bubble Hits New All Time High – One Quadrillion Reasons To Buy Gold - 16th Apr 18
Will Bitcoin Ever Recover? - 16th Apr 18
Stock Market Futures Bounce, But Stopped at Trendline - 16th Apr 18
How To Profit As Oil Prices Explode - 16th Apr 18
Junior Mining Stocks are Close to Breaking Downtrend - 16th Apr 18
Look Inside a Caravan at UK Holiday Park for Summer 2018 - Hoseasons Cayton Bay Sea Side - 16th Apr 18
Stock Market More Weakness? How Much? - 15th Apr 18
Time for the Gold Bulls to Show their Mettle - 15th Apr 18
Trading Markets Amid Sound of Wars - 15th Apr 18
Sugar Commodity Buying Levels Analysis - 14th Apr 18
The Oil Trade May Be Coming Alive - 14th Apr 18

Market Oracle FREE Newsletter

Trading Lessons

The Oil Crisis and Gold

Commodities / Crude Oil Jul 08, 2008 - 11:16 AM GMT

By: David_Vaughn

Commodities One of the hardest things about life is when we have to close a chapter. Yesterday becomes merely a collection of happy memories and those memories are all that remain. That perhaps is why we have always clung so hard to nostalgia. The world is constantly changing and that unfortunately even includes our own lives. In life personal actions always produce consequences. Unfortunately, this principal even includes things of material value. And the consequence of less oil produces the consequence of higher prices.


“Oil prices climb up to 146 dollars per barrel” “Oil soared to a record above US$145 a barrel Thursday, fueled by concerns over a larger-than-expected drop in U.S. stockpiles and the threat of conflict with Iran.” “Comments by Saudi Arabia 's oil minister suggesting his country had no immediate plans to boost production also helped lift prices.” “Expectations that the European Central Bank will raise interest rates later Thursday could further weaken the U.S. dollar and drive oil prices even higher…” english.pravda.ru

I'm tired of paying high gas prices. How about you? I anticipated this time for many years and knew it would be inevitable for the price of oil to rise some day. What is the reality we are experiencing today? Is this a temporary bubble or an indication that maybe demand is chasing supply? As a nation we really had become complacent about cheap oil. We thought it would stay cheap forever. We believed it would be a problem saved for our grandchildren. It seems a new era is upon us that we as a people have not yet grasped.

Doug Casey - “… the boom was financed largely by debt, which made everybody feel and act much wealthier than they really were. It's as though you borrowed a million dollars and spent it all on wine, song and high living. For a while, you'd have a high standard of living and perhaps have a lot of fun. But eventually, when you either paid the money back with interest or were forced into bankruptcy, your standard of living would take a painful drop. The U.S. , in particular, has been living far above its means, burning up its own capital and trillions more borrowed from abroad.” “It seems to me a near certainty that we're about to enter something I have long called “The Greater Depression.” kitcocasey.com

Of course the real question before us is our desire to know if the world really is running out of oil. The U.S. now imports over 60% of its oil. And the chances do not look too good that oil is ever going to be drilled on American shores. Many analysts personally speculate that oil has been in a decline for 30 years even though this is still a hotly debated opinion. Every day now the oil price continues to rise and no one can attribute that fact to anyone's imagination.

“The Democrat-controlled House of Representatives is expected to pass a popular, if largely symbolic, measure this week that would declare that Opec efforts to control oil prices are illegal and give the US attorney general the authority to sue the cartel.” “HA! This is the most hysterically funny thing I've seen in a very long time. Can you see it now? Opec being sued and losing the beach house and custody of the kids? This is good, good stuff.” lis.newsvine.com

Many speculators believe this to be a cyclical phase and keep waiting for oil to begin dropping again in price and back to those old days of 10 dollars a barrel. Do you really believe we will see those days again? And does anyone anywhere really know how much oil there is left in the world? What should be the appropriate price for a barrel of oil? The analysts at Goldman are forecasting a spike up to 200 dollars per barrel. A lot of the data on oil is contradicting and confusing to understand.

Mike Swanson  -  “As I wrote last week though I do not believe we'll see the Fed raise rates this year, because I'm expecting the bear market in stocks and further banking problems to force them to stay on hold. Once this becomes clear to the market - which I think will happen in the Fall - I'm expecting we'll see some real fireworks - with steep losses in stocks and the dollar - which will lead to an explosion in the price of gold.” kitco.com

No one really knows for sure the exact level of current and future reserves. Oil really exists in a category all by its lonesome self. Most oil producing countries simply do not provide reliable and proven information concerning their precise reserves. The International Energy Agency is expected to produce a report soon illustrating a significant reduction in the world's true oil reserves. And what about China ?

“Soaring oil prices have not slowed China's consumption of oil as statistics show that China's apparent consumption of crude oil and refined oil products both hit record highs in the first quarter of the year.” news.xinhuanet.com, 2008

We cannot talk about oil consumption without always bringing up China and the rest of the Asian world. China is continuing to produce ever higher volumes of automobiles for its citizens and that number continues to grow considerably. Over the next decade and beyond it is estimated that China will produce hundreds of millions of cars for its expanding middle class. This fact all by itself is going to drive the price of oil higher long term. And in not too many years from now China will be burning the same amount of fuel as America . Just consider that fact alone.

“What a difference four or even two years make in the life of Chinese auto manufacturers. Their growth is well documented: China has gone from virtually no auto industry a decade ago to annual sales of more than 10 million vehicles.” autoobserver.com, 2008

Increased demand for oil is only going to tighten competition for future remaining oil sources. I can envision wars being eventually fought just over oil in the near future. China 's oil imports rose around 13% just in the first half of 2008. And you believe gas prices are going to go down significantly again? China has no desire to conserve their use of oil as they need this source of energy for their continued expansion. And how about bringing Russia into the mix?

“Last year, BP and its partners were under intense pressure to sell a large Siberian natural gas field to the Russian state-controlled gas monopoly, Gazprom. The government had cited violations of a drilling license. A year earlier, Royal Dutch Shell had been pressured to sell a controlling stake in the world's largest oil and natural gas development, Sakhalin-2, to Gazprom. In that case, the government cited environmental damage in a pipeline project.” Herald Tribune, 2008

Russia is squeezing out Western oil companies thus raising the stakes of even higher oil that will drive oil speculators into turmoil. The next crazy spike in oil may even now be preparing for late 2008. Russia would like to see its own state controlled oil industry raise its stakes and cancel western contracts. So, what does the future hold for oil?

“Sadly, the United States of America , the world's most advanced economy, has no fuel gauge of any sort to indicate when our useable spare supply of crude oil and (refined) products is nearing empty. And the stock data of the USA is the best published oil data of any country…” “None of this would be alarming if ‘peak oil' was decades away. But, this is a fool's dream.” Petroleumnews.com

We are living in the last days of cheap resources and cheap commodities. Gold Letter, Inc. reviews undervalued gold stocks poised to rise in this time of increasing demand.

Click here to order Gold Letter

Don't forget to email.

By David Vaughn
Gold Letter, Inc.
David4054@charter.net

© Copyright 2008, Gold Letter Inc.

“The Worldwatch Institute, an organization that focuses on environmental, social and economic trends, says the current rate of global demand for resources is unsustainable.”  

The publisher and its affiliates, officers, directors and owner may actively trade in investments discussed in this newsletter. They may have positions in the securities recommended and may increase or decrease such positions without notice. The publisher is not a registered investment advisor. Subscribers should not view this publication as offering personalized legal, tax, accounting or investment-related advice. The news and editorial viewpoints, and other information on the investments discussed herein are obtained from sources deemed reliable, but their accuracy is not guaranteed. © Copyright 2008, Gold Letter Inc.

David Vaughn Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules