Word to the wise…

Your hypothesis is seriously out of whack with economic reality:

1) Prices are set by purchasers. I can’t arbitrarily jack up prices for my services without idling my business. Oil companies charge what the market will bear, yes, but it’s their customers making the buy/not buy decisions.

2) Producers cannot easily set prices of commodities by withholding and then flooding the market with supplies. Economists and historians studying cartels have long noticed that cartels rapidly come apart when some members “cheat”. The fact is when a cartel holds back product from the market, the first member of the cartel who “cheats” and releases its supplies benefits from the high quantities and prices. OPEC, for example struggles with this – its members notoriously violate the production limits that were agreed upon during OPEC meetings. Saddam Hussein, incidentally, used to act as an enforcer, threatening to invade neighbors who violated these agreements.

3) The theory behind peak oil – that there is only a finite supply, and that the published figures of “proven reserves” are not reliable – is correct: a) most reserves are held by governments who have an incentive to lie, b) we are most likely using oil at a higher rate than it is being produced by biological/geological processes.

To me, the wheels come off the peak oil bus when they announce that some sort of government intervention is required to remedy this situation. The price system will take care of it; as oil becomes scarcer, and production slows, prices will rise, leading people to reduce consumption and cast about for substitutes for oil. Europe is pretty deforested right now, yet we have no problems due to peak wood for just this reason.

One thing to bear in mind is that the amount of proven reserves keep going up. The product of improvements in the technologies of producing and prospecting for oil, it appears that oil companies are discovering oil at a faster rate than they are pumping it out of the ground. While I believe that the figures are likely being fiddled with, I think the increase in the total reserves is likely a real phenomenon.

4) The masons (the guys who put the pyramid on the dollar bill) are not running any secret worldwide conspiracy. Judging from the fact that they are now advertising for members on my local television station, and in my town have moved out of their palatial digs into a tinier and less swanky meeting hall, I am pretty confident that they are pretty hard up for cash and members.

The U.S. had over 50+ warships and 4 carrier groups in the Persian Gulf ready to do this. What they didn’t count on was that Russia spanked Georgia’s ass in 5 days time, sent warships to the Georgian ports, and divided the country in half overnight. This gave the U.S. no time to attack Iran because Russia was ready for such a dumb move. Bush is an IDIOT (along with the rest of the Neo-cons) who is incapable of planning anything. Vladimir Putin is a man capable of planning for such things and he did just that. Russians are busy teaching their children to play CHESS while American parents give their kid a video game as a baby sitter. Reality & Strategy vs fiction and no planning.

The ONLY way to get back at Russia now is thru the oil market. Russia has to sell their oil at a minimum $50 a barrel in order to make any type of profit. Bring down the price of oil below $50 and wait them out.

Here comes the Infomercial: “But wait there is MORE!!!” So now we have the world being flooded with cheap fuel prices and cheap oil again……..WUT!?!? Am I the only person asking “What the fuck happened to the Peak Oil theory? I thought we were running out!?” Do we have a lot of oil or not?? Apparently we do, but I am sure after Russia is brought under control again, the Peak Oil clowns will be all over TV telling us how thanks to the low oil prices, people consumed 10X as much and NOW we are running out!! Last time they were just bullshittin’ but THIS TIME they are serious!! Just in time for Exxon to make another record profit quarter.

If you don’t believe in the Grand Chess Game, that is cool with me. NOBODY with half a brain that actually reads my blog can deny that worldwide oil, food and metals markets are not being toyed with by a very few people on top of the pyramid for their own gain (Yeah, THAT pyramid on your $1 bill). They tell us we are running out of oil and jack the prices to $147.50 a barrel and gas to $4 a gallon (for the cheap stuff). Then when it suits them, they drop it to $56.00 a barrel and gas to $1.75 a gallon.

I dont EVER want to hear someone talking about “Peak Oil” again. Peak Oil is like a Sasquach or the Chupacabra. It don’t exist!! There is no such thing!

Wake up people! The banking industry has ruined this country. The signs are all around you: The average American spends 2% MORE than they make! NOBODY is going to keep financing this operation indefinitely. IT HAS TO STOP.

I wouldn’t say that all the price growth was speculative. Conventional oil production probably has peaked. There had been a complete peak in 2005, but the world returned to that level in Feb 2008. With this reduction in supply, it’s unclear whether we’ll ever be able to produce at that rate.

All during that time, demand is increasing and continuing to increase on a global scale. Between India and China, there are about 2.5 billion people, and if there average oil demand goes up even slightly it will dwarf any oil reduction we undertake in the West.

Simply put, I do agree that a good portion of the price increase was due to large-scale speculation caused by a global financial credit boom, and that the added money drove up prices. I don’t agree, however, that the fundamentals support oil in the $50-60 range, and the current low prices will only exacerbate the fundamental supply-demand imbalance.

The preaching of energy independence should cause a speculator to bail out of the oil market (or short it). The prices should be below 2006 levels (approx $60/barrel).

Further, the US has stated an interest in drilling for more oil in areas protected since the 1970′s. This should reduce the prices as well, since transport and competition for resources would both be reduced.

With the increasing wealth of China and India, one would assume increased oil prices. However, China depends primarily on coal for now, and an oil binge is yet to be seen.

Lastly, speculators may be driving down the prices artificially to reap huge profits in the future. This supports your statement.

We’ve seen lots of market manipulation this past month. The false rally before Thanksgiving in hopes of easing people’s fears, to get people to spend more on black Friday. The real crash today of 7.7, 8.93, and 8.95% in the DOW, S&P, and NASDAQ respectively.

Tomorrow, more manipulation. Just watch the last hour of trade. Take a look at the volume. There is definite manipulation, but step back and look at the trend. The crash flattening out, with lots of volatility.