Again, I will bless my forum friends with the latest oil rumors floating about town. Fill your tanks in all your cars. The forces that have held gas prices in check while crude has risen have been knocked asunder by a refinery fire elsewhere in the US. Over the next couple of weeks, the wholesale price of gasoline may rise .40 a gallon, meaning about a .60 a gallon higher pump price, more in states that tax more.

Watch the situation in Venzeula. We may have screwed up by meddling in their affairs, and most of the people there who support the leftist president Chavez, think the CIA is the cause of the recall election that is causing political instability there. It could be a lose-lose situation. If Chavez is recalled, sever civil unrest, if not civil war could break out, if he wins, he may be looking to exact revenge on Bush. Any disruption or preceived risk in Venzeuala could send the price of oil thru the roof.

Watch the situation in Iraq. Right now, we worry about the Sunnis blowing up the pipelines, but the risk of this has been factored into the current price of oil. If the increasing rebellious Shiites begin to do the same thing in the south, again, prices will go wacko.

Chavez claimed victory on this morning news.

Higher gas price + declined consumer confidence + unstable economy + war overseas + return of the bear + lies and scandals = Bush out

__________________
95 R129
04 Infiniti G35.5 BS
10 X204

Rather than a political thread, why not turn this post into a guess as to where the spot prices will be in the future. Then, perhaps, make some suggestions how we can all profit from the circumstances by guiding us on which securities to invest in.

I am fine with that, although oil requires a realistic view of what is going on and sometimes that clashes with ones political views.

Here's the current rub in oil: Conventional wisdom says one should invest in drilling stocks. Example (by the way, I've heard good things about McDermet):

http://cbs.marketwatch.com/tools/industry/focus.asp?bcind_ind=oie&bcind_sid=980704

but what if there is no more oil to be found?

In oil circles, Iraq is the key. There has been so much unrest there for so long, nobody really knows how much oil is there. But it is for sure a hell of a lot. But the question an investor has to ask is will our intervention improve or make that situation worse? Current bets are, short term worse, long term better.

The next question is China. It is obvious they represent a huge new demand for oil, and they represent a huge new pool of dollars to buy it, that will be ever increasing. The oil industry is betting the Russians will supply it, and become the Arabia of the Chinese economy. But again, political unrest has clouded it, and you get the same picture - short term bad, long term maybe ok.

The last question is the American economy. Bush has built a house of cards, and the main card holding it all up is deficit spending on an unheard of scale. Our "recovery" may be a pipedream, like I said, it is the recovery of the guy in hock up to his ass who gets a new credit card in the mail. Take the politics out for a minute and look at the charts I posted. That is what they are saying - we are starting to become a credit risk for the guys on this planet who control vast sums of money. The result is a decling value of the dollar. This becomes another variable in the equation. If the economy goes in the tank, will oil prices fall or will unrest keep restricting supplies, causing them to rise as we go into recession, meaning a deeper and longer recession?
Can our economy go up any further - even if there is not a recession? Big questions lots of variables. I am betting oil goes to 55 before year end, and the economy will go in the tank, but after that, who knows.

What percentage of the world oil consumption is used by China? Didn't the largest Oil co. in Russia file bankruptcy recently?

OK. AP has called it for this guy. He is Teflon now. He has won two elections and now this recall, with Jimmy Carter supervising the election no less. He is going to be a hero to the left all over the world. The general feeling in his country is we tried to oust this guy - there is evidence we financed the recall effort, and we made a major diplomatic blunder (what else is new) when we came out in support of the failed coup that tried to oust him that only lasted a few days, making our claim to support the spread of democracy look hypocritcal to the rest of the world, something we never even here about on the US press.

So the question is, what is he going to do? Keep your eye on this guy, he has just become a very powerful man, geo-politically speaking. He has every reason in the world to want out of sight oil prices - he wants to be in office forever, and there are no term limits on the Venz presidency.



Observers endorse Venezuela vote results
Monitors: No evidence of fraud found
Monday, August 16, 2004 Posted: 2:22 PM EDT (1822 GMT)



Hugo Chavez waves to supporters from the balcony of the Presidential Palace in Caracas on Monday.


CARACAS, Venezuela (AP) -- Former U.S. President Jimmy Carter and the head of the Organization of American States on Monday endorsed the results of Venezuela's recall referendum that President Hugo Chavez won.

"Our findings coincided with the partial returns announced today by the National Elections Council," Carter, one of the top election observers, told a joint news conference with OAS Secretary-General Cesar Gaviria.

The announcement appeared to deflate opposition claims of widespread fraud in the voting that began Sunday and ended early Monday.

The National Elections Council earlier announced its tally with 94 percent of the vote counted, showing Chavez surviving by a wide margin the opposition's effort to unseat him.

Francisco Carrasquero, president of the National Elections Council, earlier said 58 percent of voters voted "no" to the question of whether Chavez should immediately end his term in office, and 42 percent voted "yes."

"We have not found any element of fraud in the process," Gaviria said. "Until elements of fraud emerge we are not going put the results in doubt.

"If the opposition has a serious concern, we are willing to work with them, but not to put the results in doubt," said Gaviria.

Directing his remarks at opposition figures who have hit the airwaves to complain of fraud, Carter called on all Venezuelans to accept the results.

"Now it's the responsibility of all Venezuelans to accept the results and work together for the future," said Carter.

I beleive China is consuming 5%. That is up from almost nothing ten years ago. Right now, both Taiwan and Japan are investing huge sums in building industrial capacity in China, and this figure is expected to double. It is the exact opposite of what is happening in the US. Both countries are islands that have a ton of money, but little room for heavy industry, and the fact that Chinese labor is the cheapest on earth certainly makes it appealing. I'll try to get a graph on that.

The situation in Russia is based on the fact that Russians still have a sneaking suspicion that profit is evil. The government simply walked in one day, arrested the tycoon who built a successful company for tax evasion, declared a huge tax bill was owed, and declared the company bankrupt. Obviously, it is going to put a huge damper on foriegn investment. The situation there changes daily, and it is at the heart of all these matters. If China cannot get cheap oil from Russia, then oil prices will inccrease - they can bid high prices for Arabian oil, simply because they can offset it by lower labor rates, something we cannot do. General Motors is going to be in a hell of a bind for example.

http://www.msnbc.msn.com/id/5743701/

Odd day on oil. The Iraqi and Venz news should have sent the price down, instead it went up. el presidente, China stats are shown in that link.

Anyone want a hot stock tip? ALTI, doubled last two days, nanotech stock, looks like it might keep doing it. Warning: nanotechs are like shooting dice.

$1.48 rise in one day is a new record, as is the price.


Crude Price Surges Past $48, Close In on $49
Thursday, August 19, 2004


NEW YORK — Crude oil prices surged to a new record Tursday, passing the $48-a-barrel level, spurred by renewed violence in Iraq and fresh evidence that strong demand growth in China and India has not yet been slowed.

The spike raised fears that the psychologically important $50 mark could be breached soon.

U.S. light crude on the New York Mercantile Exchange (search) rose a whopping $1.48 to $48.75 a barrel, a new record, and London Brent gained 67 cents to $43.70 a barrel. U.S. prices have set record peaks in all but one of the past 15 trading sessions and are up nearly $11 a barrel, 29 percent, since the end of June.

Rising world oil demand has left little slack in the system to cope with outages in Iraq where Shiite militia have said they will target oil infrastructure if U.S. forces do not leave the holy city of Najaf.

In real terms, adjusted for inflation, oil prices are still well below 1980's peak of $80 a barrel, following the Iranian revolution. But average U.S. prices this year are approaching those of 1974, the first oil shock, when crude averaged an inflation-adjusted $43 during the Arab oil embargo.

Fierce fighting raged in Najaf on Thursday after rebel Shi'ite cleric Moqtada al-Sadr (search) defied an Iraqi government threat to attack his stronghold in a holy shrine and rejected demands that he end his uprising.


Iraq's main southern pipeline from the Basra oilfields has been shut since a sabotage attack on Aug. 9, curbing export flows to about a million barrels daily, half normal rates, through a secondary line.

Iraq's oil minister said that exports would not be restored until the security situation improved. "Once things return to normal (exports) will be back to normal," Thamir al-Ghadhban told Reuters.

Demand growth in emerging economies China and India has shaken up the oil market this year, intensifying competition for supply with established consuming giants such as the United States.

China's refineries have processed 17.2 percent more crude so far this year than in 2003, the country's State Statistical Bureau said on Thursday. Crude imports to end-July have soared nearly 40 percent from last year.

India's biggest refiner, state-run Indian Oil Corp. Ltd. (IOC), said it expected India's crude oil imports to rise by 11 percent in 2004/05 as demand rises by nearly four percent. "Refineries are running flat out," said IOC chairman M.S. Ramachandran.

In the United States, which guzzles around a quarter of the world's oil, demand so far this year is up 3.4 percent, stopping inventories building much as rising consumption absorbs extra imports from OPEC producers such Saudi Arabia.

U.S. government data for the week on Wednesday showed commercial crude oil supplies had fallen 1.3 million barrels to 293 million barrels last week, the third straight week of declines.

As prices spike, analysts continue to be wary of Organization of Petroleum Exporting Countries (search) claims it could raise its production capacity immediately to meet demand and cool prices.

"It's a Catch-22. There isn't much more capacity and even if OPEC increases it, it won't cause any significant dent because there is still instability around," said Shum.

"Then what happens? There is even less spare capacity and it will make the situation worse psychologically."

1. Iraq
2. China
3. India

Well, at least you can blame 1/3 of it on Bush, LOL....

Another smokescreen (or shall we use oilslick in this thread) perpetuated by the demos.....

The main thing I blame on Bush is the lack of a conservation policy - he supports unbridled consumption and drilling our way out of everything. Anyone in the oil business five years ago could have told it would lead to this. Its all cut and dried numbers. The philosophy ot total-government hands-off-the-market is dumb here, as this is a strategic national security problem and not just a market problem. We need a massive program to get off the stuff, and we need to implement the same policies the Europeans have on our own auto fleet. This is going to lead to an economic meltdown and is going to be a permenant brake on economic expansion. 911 was a big wake-up call, and stealing oil from Iraq was not the answer.

Dude.......chill a bit.....

I don't think the sky is falling. There are several choices now available in the U.S. for hybrid and alternative transportation. Heck, even Mercedes-Benz is bring back the diesel.....

We've started moving in the right direction.

DUDE, did you see the Mercedes hydrogen fuel cell prototype on PBS this week? A remarkable car. It does not actually burn the hydrogen, it sprays a hydroxide on a chemically coated plate, the reaction causes the plate to emit an electric current, and the hydroxide is coverted to water in the reaction, and water goes out the tailpipe as the only emission. The "engine" is actually in the floor pan of the car, and is about 11" thick. Given the environmental costs and the rising fuel costs, we should have a national effort to pursue this kind of technology here in America.

Leave it to the entrepreneurs...

My feeling on the whole thing is that we should have started mo better/serious conservation efforts around 1979-1980 and we should have done it by means other than turning the thermostat down. My suggestion (and there are some who are not going to like this suggestion) is to tax the crap out of gasoline - put like $4.00 gallon tax on it and then watch how quickly folks start conserving. Unfortunately, like most taxes, it would not get reduced (to keep the price about the same) as the ACTUAL gasoline cost went up.

Now the question is how the heck are you going to get those moms out of those Surburbans/Tahoos and big SUV's now? I was talking to this attractive blond the other day while she was pumping $45 of gasoline into her big SUV. She said that gasoline prices did not effect her because she just put it on her credit card which she said hubby pays. I have the feeling that there are alot of moms out there that think like that. I think the only thing that is going to turn it around now is $5+/gallon gasoline.

Another slant that is screwed up, in my opinion, is that the large motor companies (trying to increase their stock price) are doing all they can to build/sell in China to get those poor folks off of them bicycles (this is going to put that much more demand on petroleum). Long term, in my way of thinking, is that it is very unfortunate for the Chinese. The bicycle is one of the most efficient transportation devices known to man. I am biased towards bicycles and find nothing more stress relieving than getting out for a 3 to 4 hour ride. Fortunately, I live in an area where this is possible and realize that everyone is not this fortunate so realistically a bicycle is probably not the answer for everyone. Did ya'll know that at the turn of the last century the car and oil companies assisted communities with ripping up trolley lines? An interesting read in this regard is "The Seven Sister". Ripping up trolly lines, in my opinion, was one of the worst moves the communities could have made. I lived in New Orleans for a period of time and took the trolley every time I had the opportunity and thoroughly enjoyed utilizing that means of transportation.

Another unfortunate thing is the surburban sprawl of cities like Atlanta and Houston. The developers could not pave that farm land fast enough and have pretty much made it where you have to have a car to get around.
Communities should be well thought out and planned where you can walk or bike to groceries, schools, etc.. but all that happens is the same old, same old.

The other weird thing is that we are constantly bombarded with tv ads for large SUV's - take the Hummer for example. They have a BS ad on there about driving accross some screwed up place in the world and another where some kid is in a race and builds a wooden vehicle to race against others and he drives accross/through the landscape to beat the other cars. What a CROCK!!!

One thing about it is that this s*^t ain't over and I don't think things are going to get any better for awhile. I think we are in for some tough times ahead whether we see it coming or not (again, just my personal opinion). Kinda like I read where Oprah told the press (regarding her serving on a jury in Chicago for a murder trial) that "there is a whole nother world out there". Well, duh if she would get out of that limo every now and she would see it.

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Jim