More Opinion by The Springboard

The Issue of Terrorism Is Not A Jobs Issue
"Actor Mandy Patinkin suggested that, in regard to the Middle East, if we give them the best roads, the best medical technology, agriculture, and infrastructure they would not feel cheated. The crux of his argument is that if they (the Middle East) have all of these amenities afforded them, they won't be so inclined to go after Western civilization. The argument is reminiscent of many on the left who have made the suggestion that jobs are the key to ending terrorism."

Thursday, May 22, 2008

$129 A BARREL OIL CALLS FOR DESPERATE MEASURES

There's a guy at my place of work who has decided to buck gasoline. No, he's not interested in the latest fashionable hybrid vehicle and he's not rushing to the local smart car dealership. He's literally plugging in as he's certain the oil markets will only continue to go up. And he's not totally off his rocker to think so. Just the other day oil hit yet another record at $129 a barrel, and there are more than a few market watchers who say oil may climb all the way to the $150 a barrel mark, and perhaps yet higher still.

The guy, whose name will remain anonymous, ordered a conversion kit through some website he found that lets him convert his gas powered Chevy S-10 pickup truck into an electric vehicle. Don't ask me how it all works, I swear the man was speaking Greek to me through most of the conversation. But he's got it all put together, after some weeks (he's a pretty handy guy and working on cars is his hobby), and now he's just waiting on the charger so he can plug it in and rejuice, and then he wants to run some tests to determine his range and whittle down what he thinks may be some inflated claims by the manufacturer. More power to him, pardon the pun. The kit cost him $10,000.

Of course, I too believe that oil still has some upside left in it. In fact, I think it has a lot of upside left in it, and I strongly believe we will indeed see oil reach the $150 barrel mark and beyond. Let's not forget that summer isn't officially here yet, and while gasoline sales have been flat for the first time in say, the last thirty years or so, people are still going to have to at least get their behinds to work to pay for all the gas-related-inflation that has affected the most basic of everyday items. We're not out of the woods yet.

In an earlier blog, "Oil's well, but be weary," May 14, I made the prediction that I thought oil would come down. I still believe that. To me oil has all the ominous signs that it is an an inflated, overpriced market. You've literally got people breaking their necks, scrambling, trying to scoop up as many futures contracts on the stuff as they can. Wink an eye or fart in the wind the wrong way and the oil speculators all but lose their minds. It's all this hype that I believe will eventually, inevitably, kill the cash cow oil has been. We're a long way from gas under $3 a gallon, but I don't think it's impossible either. It just depends on how big the crash is when it happens. Again, it will happen.

My bet is that oil will go to under $100 a barrel in as little as 18 months. But, it has got to get ugly crazy before reality has a chance to really hit the fan. I don't think it has yet. I think we're still reeling in shock.

There is no doubt, though, that in the meantime it's going to be one hell of a ride. I hope it all works out for my buddy at work. If I'm wrong, I may need to carpool with him.

3 comments:

rod said...

I agree with you about a collapse, and wonder what exactly will be the catalyst.
I think maybe the perfecting of battery tech for transportation, or deep recession. I hope it is the former.

rod said...

I think you are right about a collapse. I wonder what exactly will be the catalyst? I think maybe perfecting battery tech for transportation, or deep recession.

Jim Bauer said...

When the oil markets start to turn, investors will go into a panic and this will initiate the freefall. There's a ton of hedged bets out there, and there's a ton of contracts bought on margin. When the markets drift downward and those margins get called many investors are going to fall short and propel the freefall yet further. This happened in 1929. It happened just recently in the mortgage industry. I beleive it will most certainly happen with oil as well. After the smoke clears I think we'll be looking at oil around $100 a barrel or just slightly higher.