Wednesday, June 04, 2008

Oil Prices: Suprise again

The forever rising oil prices have continued to throw up surprises in the face of analysts who talk as if oil tells them every morning where it is headed. The surprises are not only limited to the course of the price movement, but its speed, its impact on economy and its inflationary expectations.

When teh crude started moving from 20$ per barrel people predicted it will go to 50$ and the economy will grind to halt.It will have wide reaching consequences in the industries consuming oil. They even talked about the third world war.

Oil did move to 50 but the much feared impacts didn't happen. People started talking about crude at 80. Some bolder ones said 100. OPil followed suit and economies of the world did largely bore the oil shock well.

Now the analysts changed their predictions. While they continued talking about their next target price (essentially 2X) of 150$. Oil gave them hope by touching 135$. The audacious 200$ oil folks were found smiling.

However, the impact of rising oil prices began to show its impact. It happened very silently. It happened in direct impact on inflation and secondary impacts through rising prices of few food items which started feeding oil guzzling cars rather than hungry mouths.

As we talk about the 200$ oil, I'm getting signals which suggest that oil may surprise people once more. It may correct to as low as 70-80$ per barrel in coming 12 months. However by this time the damage would have been done and the economies of he world would have shaved 2-3% in their GDP growth rates.

In find the fears about oil running out or rising from this levels completely unfounded. They ignore the basic laws of demand and supply. The day oil starts hurting growth, it will lose the steam which was driving it so far. The seemingly unstoppable engine of crude oil prices is about to stall in its upward journey and will hurtle backwards under the effect of its own gravity.

Good times will be back soon.

4 comments:

Anonymous said...

Hopefully good times ARE back soon. Just look at the gasoline prices. Almost $5 dollar per gallon. Thank goodness if the prices go down. But just because they go down, it shouldn't mean that we can go back to driving gas-guzzling SUVs and over-consuming oil. We still need to concentrate on conservation and energy alternatives. For example, oilheat users can use a B5 blend of oil. It's biodegradable, produces NO greenhouse gases, reduces emissions, and it can also help conserve 400 MILLION gallons of oil. Wonderful isn't it? Grab some more info here: http://oilheatamerica.com/index.mv?screen=bioheat

I found that site while working for NORA and searching for heating alternatives. It's been a great help to all existing oilheat users.

goooooood girl said...

i like......

Anonymous said...

you were right, albeit its slightly below what you predicted!

but good times aren't really back - not with the financial crisis going on.

Oleksander Artem said...

I'M NOW FULFILL FINANCIALLY BECAUSE OF THE LOAN I GOT FROM LFDS .I would like to bring this to the notice of the public about how i came in contact with Mr Benjamin after i lost my job and being denied loan by my bank and other financial institution due to my credit score. I could not pay my children's fees. I was behind on bills, about to be thrown out of the house due to my inability to pay my rent, It was during this period my kids were taken from me by foster care. Then i set out to seek for funds online where i lost $3,670 that i borrowed from friends which i was rip off by two online loan companies. Until i read about:loan online (247officedept@gmail.com) somewhere on the internet, Still wasn't convince because of what i have been through until a relative of mine who is a clergy also told me about the ongoing loan scheme  at a very low interest rate of 1.9%% and lovely repayment terms without penalty for default of payment. I have no choice than to also contact them which i did through text +1-989-394-3740 and Mr Benjamin responded back to me That day was the I'M best and greatest day of my life which can never be forgotten when i receive a credit alert of $400,000.00 Usd loan amount i applied for. I utilized the loan effectively to pay up my debts and to start up a business and today i and my kids are so happy and fulfill. You can as well contact them through email: (247officedept@gmail.com)  WhatsApptext  helpline: +1-989-394-3740 Why am i doing this? I am doing this to save as many that are in need of a loan not to be victim of scams on the internet. Thanks and God bless you all, I'm Oleksander Artem from Horizon Park BC , Ukrain.