The Economy, stupid

[southsider2k5]

On the idea that they are having a tough time investing, that shows clearly just how against alternative energies this company's culture is.

 

One other thing that stuck out in the article, to me, is that projection of $30-$50/bbl oil price assumption. Given the increasing demand pressures overseas, the continuing flow of big equity money into the commodities markets, the apparent near-term peaking of many main oil reserves, instability in the middle east and other oil producing areas, and on and on and on... I just don't see their assumption as remotely realistic.

 

I forgot to mention that line... For my money, you can always count on a company or two in each industry making the right decesions, and it is supported by history. Think of banking, think of JP Morgan. They have been bailing out the US during three different centuries now. During the internet bubble, some pundits were dumb enough to laugh at Warren Buffett. I wonder what they are doing now? For me, XOM is that company in the energy field. I have a hard time believing this will happen, but it really piques my interest at the sametime.

[NorthSideSox72]

I forgot to mention that line... For my money, you can always count on a company or two in each industry making the right decesions, and it is supported by history. Think of banking, think of JP Morgan. They have been bailing out the US during three different centuries now. During the internet bubble, some pundits were dumb enough to laugh at Warren Buffett. I wonder what they are doing now? For me, XOM is that company in the energy field. I have a hard time believing this will happen, but it really piques my interest at the sametime.

I am sure the price will plummet a few times over the next few years, but let's put this in perspective - it would have to lose 60 to 75% of its value to get to that 30-50 range. That's not a plummet, that's a collapse, and I think you'd have a hard time finding any commodity that has ever lost that much value.

 

Now, if they are projecting that in 50 years, alternative energies have taken a huge bite out of demand, then maybe that's not a horrible assumption. But even then, the supply side would have gotten much tighter as well.

 

[southsider2k5]

I am sure the price will plummet a few times over the next few years, but let's put this in perspective - it would have to lose 60 to 75% of its value to get to that 30-50 range. That's not a plummet, that's a collapse, and I think you'd have a hard time finding any commodity that has ever lost that much value.

 

Now, if they are projecting that in 50 years, alternative energies have taken a huge bite out of demand, then maybe that's not a horrible assumption. But even then, the supply side would have gotten much tighter as well.

 

Its not probable, but its not impossible either. I think we would need economic problems in either China or India to make that happen. China would be the most likely target, seeing as they are the most likely to have a political or social upheaval.

[kapkomet]

Its not probable, but its not impossible either. I think we would need economic problems in either China or India to make that happen. China would be the most likely target, seeing as they are the most likely to have a political or social upheaval.

I think China's demand for energy will plummet after the olympics. Their end game has been Beijing 2008 for 20 years now. EVERYTHING is about making China look good in the eyes of the world for the olympics. When it's over, I think things get a little chaotic there - which is actually more dangerous geo-politically and could raise oil prices even more.

 

[Balta1701]

I think China's demand for energy will plummet after the olympics. Their end game has been Beijing 2008 for 20 years now. EVERYTHING is about making China look good in the eyes of the world for the olympics. When it's over, I think things get a little chaotic there - which is actually more dangerous geo-politically and could raise oil prices even more.

Are you really convinced that so much of China's new energy demand is being fueled by growth in its construction industry directly related to the Olympics rather than growth in the economy as a whole? The only way I can see you being right is if you're saying the government is spending so much money on construction that the construction is what is pumping up their energy demand, and from my impressions, I just don't see this being true. The whole country has been experiencing a boom due to rising employment and rapid construction throughout. The only thing that would push that backwards is a major, major recession in that country.

[kapkomet]

Are you really convinced that so much of China's new energy demand is being fueled by growth in its construction industry directly related to the Olympics rather than growth in the economy as a whole? The only way I can see you being right is if you're saying the government is spending so much money on construction that the construction is what is pumping up their energy demand, and from my impressions, I just don't see this being true. The whole country has been experiencing a boom due to rising employment and rapid construction throughout. The only thing that would push that backwards is a major, major recession in that country.

Well, I think that's a key part - the enormous factory growth is in large part due to us demanding cheap goods, and the olympics. I think that the urgency to make China an economic powerhouse will lose some of its emphasis post August, and I also think that all things being equal, wage growth will start to curtail the "cheapness" of things - which will lead to a severe downturn in their economy.

 

We'll see.

 

[Balta1701]

Well, I think that's a key part - the enormous factory growth is in large part due to us demanding cheap goods, and the olympics. I think that the urgency to make China an economic powerhouse will lose some of its emphasis post August, and I also think that all things being equal, wage growth will start to curtail the "cheapness" of things - which will lead to a severe downturn in their economy.

 

We'll see.

But here's the counterpoint. Wage growth in China is almost certain to drive more consumption of energy, not less. While fewer factories may be shipped over there from the U.S. as the dollar continues its collapse, if the income of the average Chinese citizen goes up by some percentage, then that allows them to demand more automobiles and more energy and better housing. They're in that enviable position where their economy can sustain itself to some extent as it grows, so as the people earn more money, they're able to buy more things, and who's the country manufacturing everything right now? China.

[kapkomet]

But here's the counterpoint. Wage growth in China is almost certain to drive more consumption of energy, not less. While fewer factories may be shipped over there from the U.S. as the dollar continues its collapse, if the income of the average Chinese citizen goes up by some percentage, then that allows them to demand more automobiles and more energy and better housing. They're in that enviable position where their economy can sustain itself to some extent as it grows, so as the people earn more money, they're able to buy more things, and who's the country manufacturing everything right now? China.

I agree, but only to an extent. I think there's a hard Great Wall of China out there somewhere. It's just a matter of when/how it hits. I think that's more what I'm trying to say.

 

[Balta1701]

I agree, but only to an extent. I think there's a hard Great Wall of China out there somewhere. It's just a matter of when/how it hits. I think that's more what I'm trying to say.

That I can believe. But the point I think I'm trying to focus on is...even if China's economic growth slows, it will take much more dramatic energy price increases for their energy demand to stop going up even in that case.

[southsider2k5]

But here's the counterpoint. Wage growth in China is almost certain to drive more consumption of energy, not less. While fewer factories may be shipped over there from the U.S. as the dollar continues its collapse, if the income of the average Chinese citizen goes up by some percentage, then that allows them to demand more automobiles and more energy and better housing. They're in that enviable position where their economy can sustain itself to some extent as it grows, so as the people earn more money, they're able to buy more things, and who's the country manufacturing everything right now? China.

 

This "recession" is going to hit China harder than anywhere else on the planet. They depend on the rest of the world to buy their cheap crap. Their incomes are based mostly in devaluing US dollars, which they are using to buy record-level priced energy and food products more and more. I really expect China to get hit hard economically, and they are going to be way less resiliant than our economy.

[kapkomet]

That I can believe. But the point I think I'm trying to focus on is...even if China's economic growth slows, it will take much more dramatic energy price increases for their energy demand to stop going up even in that case.

Yea, and I think it's more complex then that, seeing as how they pratically own all of our debt. Funny how that works, seeing has how they make everything in the world now.

 

Those Chinese, they are purdy smart, you know.

[jackie hayes]

But here's the counterpoint. Wage growth in China is almost certain to drive more consumption of energy, not less. While fewer factories may be shipped over there from the U.S. as the dollar continues its collapse, if the income of the average Chinese citizen goes up by some percentage, then that allows them to demand more automobiles and more energy and better housing. They're in that enviable position where their economy can sustain itself to some extent as it grows, so as the people earn more money, they're able to buy more things, and who's the country manufacturing everything right now? China.

And food. Agriculture consumes a not insignificant part of a country's energy expenditure, and when a country shifts to eating more meat (as China's doing), that part gets more inefficient.

[southsider2k5]

Speaking of shortsighted moves that have no economic benefit... Its seems we are going to suspend putting crude into the strategic reserves because prices are too high. Net benefit to you? MAYBE 25 cents a gallon. We got a fuss about a few pennies on suspending the gas tax, but when we are talking about the exact same cost savings in our national energy emergency plan, they all vote for it? Its such pandering bulls***, it is pathetic. The entire Senate, minus the one person who didn't vote for it, should be ashamed.

 

http://www.cnn.com/2008/POLITICS/05/13/con....oil/index.html

 

WASHINGTON (CNN) -- The Senate voted 97-1 Tuesday to stop filling the Strategic Petroleum Reserve for six months in an effort to bring gas prices down, a move President Bush opposes.

art.gas.price.gi.jpg

 

Stopping deposits to the petroleum reserve is estimated to save drivers between a penny and 25 cents a gallon.

 

Many Senate Republicans -- driven by fears that high gas prices are damaging the economy and their re-election chances -- defied President Bush by backing the Democratic amendment.

 

Many Republicans have "an honest disagreement" with the president, said Sen. Kay Bailey Hutchison, R-Texas, a member of the GOP leadership.

 

"We are talking to people out there. We are out there. People are really worried. They are worried about the high cost of food (and) transportation," she said.

 

Bush has said he opposes the bill because limiting supplies to the reserve could have national security consequences in the event of a natural disaster or terrorist attack.

 

He has also argued that the amount of oil put into the reserve on a daily basis pales in comparison to worldwide consumption and therefore would have a negligible impact on the price at the pump. Video Watch how high gas prices are affecting the economy »

 

"Halting the filling of the Strategic Petroleum Reserve has been tried before, and there is no evidence that it will affect the price of oil or gasoline in a meaningful way," Scott Stanzel, deputy White House press secretary, said after the vote.

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In fact, estimates for how much it will save consumers on a gallon of gas range from a few pennies to as high as 25 cents.

 

The U.S. Energy Information Administration predicts oil prices would fall by only about $2 a barrel -- or shave 4 to 5 cents a gallon off the price of gas -- if deliveries to the reserve are suspended.

 

But Sen. Byron Dorgan, D-North Dakota, who wrote the amendment, said suspending the shipments could cut the cost of a barrel of the sought-after light sweet crude up to 10 percent.

 

The amendment would stop new deliveries to the Strategic Petroleum Reserve for six months as long as the price of oil remains above $75 a barrel.

 

"When the American consumer is being burned at the stake by energy prices, the government ought not be carrying the wood. Sticking oil underground is wrong in this point in time and this amendment says stop it, halt it," Dorgan said.

 

Each of the major presidential candidates supports the amendment. Democratic Sens. Hillary Clinton and Barack Obama voted for the measure. Sen. John McCain, the presumptive Republican nominee, was not present for the vote.

 

Dozens of House Republicans are expected to back a similar measure, set to be voted on late Tuesday, setting up what should be a high-profile attempt by Congress to override the president's expected veto. Support of two-thirds of the members in each chamber would be needed to override the veto.

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The Senate vote comes on an unrelated flood insurance bill. The Senate rejected a separate GOP amendment to increase drilling in Alaska and off the U.S. coast.

 

Democrats had planned to offer a broader amendment to go after alleged price gouging and market speculators but narrowed the measure after picking up GOP support for halting deliveries to the strategic petroleum reserve

[Balta1701]

Speaking of shortsighted moves that have no economic benefit... Its seems we are going to suspend putting crude into the strategic reserves because prices are too high. Net benefit to you? MAYBE 25 cents a gallon. We got a fuss about a few pennies on suspending the gas tax, but when we are talking about the exact same cost savings in our national energy emergency plan, they all vote for it? Its such pandering bulls***, it is pathetic. The entire Senate, minus the one person who didn't vote for it, should be ashamed.

 

http://www.cnn.com/2008/POLITICS/05/13/con....oil/index.html

How close is that thing to full anyway?

[Cknolls]

About 25 million bls. should top it off. BTW, according to the WSJ, avg price per barrel in the SPR, a little over $28.

[StrangeSox]

What were McCain, Clinton, and Obama's votes on this?

[southsider2k5]

What were McCain, Clinton, and Obama's votes on this?

 

Not there, Yes, and Yes, respectively.

[Balta1701]

About 25 million bls. should top it off. BTW, according to the WSJ, avg price per barrel in the SPR, a little over $28.

There's a number of factors that go in to that though, including the quality of oil that gets put in (It's often the high sulfur stuff).

[knightni]

If the U.S. Government spent the cash to build a refinery, it might benefit the economy in numerous ways.

 

 

[NorthSideSox72]

Speaking of shortsighted moves that have no economic benefit... Its seems we are going to suspend putting crude into the strategic reserves because prices are too high. Net benefit to you? MAYBE 25 cents a gallon. We got a fuss about a few pennies on suspending the gas tax, but when we are talking about the exact same cost savings in our national energy emergency plan, they all vote for it? Its such pandering bulls***, it is pathetic. The entire Senate, minus the one person who didn't vote for it, should be ashamed.

 

http://www.cnn.com/2008/POLITICS/05/13/con....oil/index.html

Who had the balls to vote no?

 

[southsider2k5]

Who had the balls to vote no?

 

I tried to find it, and couldn't. I am curious myself.

[Mplssoxfan]

Who had the balls to vote no?

In the Senate, Wayne Allard , (R-CO).

 

Here's the House roll call.

Edited May 14, 2008 by Mplssoxfan

[mr_genius]

Speaking of shortsighted moves that have no economic benefit... Its seems we are going to suspend putting crude into the strategic reserves because prices are too high. Net benefit to you? MAYBE 25 cents a gallon. We got a fuss about a few pennies on suspending the gas tax, but when we are talking about the exact same cost savings in our national energy emergency plan, they all vote for it? Its such pandering bulls***, it is pathetic. The entire Senate, minus the one person who didn't vote for it, should be ashamed.

 

totally. it's just a lame pr move, won't do jack to fix the problem.

[southsider2k5]

In the Senate, Wayne Allard , (R-CO).

 

Here's the House roll call.

 

Now THAT is leadership. I don't care what the totals of a vote are, vote your conscience.

[Cknolls]

So once again, CPI says inflation, WHAT INFLATION? Gas prices FALL 2% in today's CPI report. LMAO!!!