Oil nears $84 a barrel

[Lone_Star_Dem]

Last look it was at $83.80.

I suggest buying stock in bankets and coats. There's sure to be a run on them this winter.

The debate behind $80 oil
Industry executives say there's no reason crude prices should be anywhere near current levels. Others say the fundamentals are there, and Big Oil is playing politics.

By Steve Hargreaves, CNNMoney.com staff writer
September 20 2007: 2:42 PM EDT

NEW YORK (CNNMoney.com) -- To listen to Big Oil executives, there's no reason why a barrel of crude costs $80. But others say strong demand and limited supply justifies at least that much, and that the industry is clearly looking out for itself by saying oil is overvalued.

"No one has to wait at the gas pumps of the world. There is no physical problem," Jeroen van der Veer, head of Royal Dutch Shell, recently told reporters in Calgary. " a lot of psychology in the price."

Exxon declined to elaborate on Tillerson's remarks, and a spokesperson for Shell was unavailable for comment.

But for some, the motivations behind the executives claims are clear.

"They have political motivations for trying to talk down the price of oil," said Ken Carol, an oil company analyst at Johnson Rice & Co, a reserach and investment banking firm.

"If you were the favorite whipping boy of policy makers, wouldn't you say the same thing," said Mike Fitzpatrick, an analyst and trader on the energy desk at Man Financial in New York.

More at link: http://money.cnn.com/2007/09/20/news/economy/oil_execs/index.htm?postversion=2007092014

[Warpy]

1. That's not a bid up we're seeing

but the effect of the fall in the dollar caused by the Fed's rate cut.

People are fleeing dollars and they're fleeing US debt.

I fully expect this rate decrease to be very, very temporary. The country needs to keep its debt attractive to foreign central bankers.

If they allow the dollar to keep falling, China will be forced to allow the Yuan to float. That will mean double digit inflation that the gummint won't be able to hide in big screen TV prices.

[Lone_Star_Dem]

4. I agree, but I love to see them validate and speculate

Can they afford for this rate cut to be anything more than very temporary?

Saudi Arabia already announced they may stop buying US bonds and the falling dollar isn't going to persuade them otherwise.

Bernanke had better take that announcement by Saudi Arabia as the warning shot across the bow that it was intended to be.

[w8liftinglady]

10. I have seen almost NO reporting on this..surely those in the financial world

are disturbed by this,too?

[Warpy]

11. You bet they are

Look at the Dow.

[WCGreen]

2. Oil is this high because of speculation...

Speculators had gotten use to double digit returns back in the 90's with imaginary Dot.com stocks and then inflated the cost of buying a home because they wanted to flip that house and now they are running up the price of oil...

Speculation has always been divorced from reality and it still is...

[pwb]

3. Because we invaded iraq?

[hunter]

5. The capacity may not be there to undercut the competition.

There's some good evidence that world oil production is running full throttle -- that there's no reserve capacity. There's a curve of maximum profits to be had as we pass peak production.

But since the dollar is so intimately tied to oil, the calculation of this curve gets very slippery, and the market becomes irrational.

I think this is the root cause of the U.S. dollar's troubles, not the collapse of the home loan bubble. The decisions leading up to the home loan fiasco, and even the war in Iraq, were probably made to cover up something worse: the imminent peak and decline of Saudi and Mexican oil production.

[L. Coyote]

6. That explains the full-court distratctions Press.

Look over here cuz we gotta empty your pocket....

[w8liftinglady]

7. if oil stays over $80 a barrel/what will gas prices be?

[Lone_Star_Dem]

8. And subsequently what will consumer inflation be?

[w8liftinglady]

9. especially when you combine it with the declining dollar value

[L. Coyote]

15. The value of the dollar and oil are linked in an inverse correlation.

If the dollar becomes a weaker investment, oil prices, as stated in dollars, are higher. Oil up = dollar down, and vice-versa.

[w8liftinglady]

16. if a country begins trading oil in euros-like venezuala,that effects our prices how?

does it make gas prices go even higher?

[L. Coyote]

18. If everyone has to buy oil with dollars, they have to buy dollars to buy oil.

That has been the historic situation, and some say it props the dollar. That may be a false argument,
because the dollar is no different than oil, it is a traded commodity. You can buy Euros to buy oil too.

One impact is if there are lots of dollars in the hands of those selling oil, they may buy more American goods, like weapons.

[taught_me_patience]

12. Who cares?

Energy and food are taken out of CPI. Helicopter Ben truely believes that inflation is 2%. He restated that belief today! Very shortly, the american public will realize the emperor has no clothes!

[w8liftinglady]

13. which is why I wish there were more reporting on this

[Lone_Star_Dem]

17. The economist are beginning to care about its effect on retail

They keep mentioning the impact that fuel prices have on consumer inflation and how consumers have less to spend.

Remember, their peak profit season is just around the corner.

[lonestarnot]

14. Doom and gloom and misery on us all, specially those Hummer drivers.

:evilgrin: