PearlwhiteS2k

We probably had the same argument back in the dot come burst, as we are having today about oil. I guess we will have to wait and see.

lOOkatme

But thats an apple to baseball comparison.



demand for oil exceeds supply........housing and dot com bubbles have nothing to do with what we are facing.


Housing can be built rapidly........resulting in a large supply glut.


Oil is different in the sense of

1. Oil is a finite resource
2. The FLOW rate is leveling off and could decline worldwide
3. Right now there is no replacement for oil
4. Once oil is burned its gone
5. Oil producing nations have increasing demand because of high oil prices leading to lower exports.
6. The USA is debasing the currency leading to inflation, raising the price of oil
7. Other countries are raising rates putting even more pressure on the dollar
8. The lead time to produce more oil is long and getting longer
9. Producers are producing from more expensive areas
10. Demand is trying to increase more than supply



SUPPLY is limited.....and efficiency gains are a MUST.

If you cut your consumption by 50%....a new person who never used any oil comes online.....nullifying your 50% reduction.

The problem is a growing population.....if the world is growing...and there is limited substitutes.....how would the price of oil go down...especially when the producers costs are rising.

I know oil prices aren't immune to corrections in a bull market.....but I honestly cannot see how prices can decrease if the cheap oil to produce is becoming more limited.....and the flow rates of the more expensive oil are limited.

In order for oil prices to decrease.....we need cheap oil to produce along with a reduction in demand of the product.....we are seeing neither of these happening on a global scale. If you have evidence...please show me.

Otherwise the bears have no evidence of a possible long term bear market in oil.....we would need to shift all new cars OFF oil.....and we would still have a bull market for quite some time.

sevenrd

lOOkatme, I sometimes feel it's not even worth the effort.

I try, and try, and try again to explain the science, the geology, the absolute "earth is round" numbers behind oil. And 99 times out of 100 I get a blank stare. Or I'll hear one of the following:

"The earth is flat!"
"Damn speculators!"
"Abiotic oil!"
"Technology will save us!"
"The Free market will solve it!" (Actually, I agree with this one. It will solve anything. Lives be damned.)
"It's OPEC!"
"We've got the Bakken formation!"
"We've got tar sands!"
"We've got oil shale!"
"Drill ANWR!"
"Drill the continental shelf!"
"Big oil's screwing us!"
"Have you heard about Brazil's big find?!"

And on, and on, and on. People rarely grasp or are willing to accept the magnitude of the issue. I truly think it may be some sort of defense mechanism. A psychological issue. The concept is so completely foreign and unacceptable to their current way of life that they dismiss it involuntarily.

We are in the minority. And maybe we always will be. I can envision the media and the government obfuscating, intentionally or unintentionally, the reality of oil decline by pointing to geo-political reasons for our troubles. But either way, the consequences will be the same.

I do firmly believe we are on borrowed time. Extremely borrowed time. Jeffery Brown's ELM for Venezuela and Mexico are proving way too accurate for my comfort. I'm very concerned about significant disruptions to the global economy this year.

lOOkatme

[QUOTE=sevenrd,Jun 8 2008, 12:40 AM] lOOkatme, I sometimes feel it's not even worth the effort.

I try, and try, and try again to explain the science, the geology, the absolute "earth is round" numbers behind oil. And 99 times out of 100 I get a blank stare. Or I'll hear one of the following:

"The earth is flat!"
"Damn speculators!"
"Abiotic oil!"
"Technology will save us!"
"The Free market will solve it!" (Actually, I agree with this one. It will solve anything. Lives be damned.)
"It's OPEC!"
"We've got the Bakken formation!"
"We've got tar sands!"
"We've got oil shale!"
"Drill ANWR!"
"Drill the continental shelf!"
"Big oil's screwing us!"
"Have you heard about Brazil's big find?!"

And on, and on, and on. People rarely grasp or are willing to accept the magnitude of the issue. I truly think it may be some sort of defense mechanism. A psychological issue. The concept is so completely foreign and unacceptable to their current way of life that they dismiss it involuntarily.

We are in the minority. And maybe we always will be. I can envision the media and the government obfuscating, intentionally or unintentionally,

sevenrd

I do not have an account to trade futures, nor am I market savvy enough to make the choice to open a futures account. However, I'm playing this with what I do have access to.

I currently have positions in RIG, USO and DXD. I have nice gains in all, especially after Friday. I've been adding to DXD on any positive day in the Dow, letting RIG ride, and have been wanting to add more USO on dips, but those dips are far and few between. I woke up Thursday with the intention of adding to USO after two down days in oil, only to wake up and see oil was already up substantially. So, instead of USO I added more DXD.

I guess what I'm getting at is that I have a bit more comfort and conviction in shorting the dow and the markets in general, best I can with an ETF, than adding to oil through USO. I am fairly certain the markets will drop substantially in the coming months. With oil however, I'm a bit weary of its volatility and its potential for short-term demand destruction to comfortably add more USO on any given day.

Whether oil stays at its current rate of 138, drops to 128, or advances to 148, I think the effect on the markets and economy in general will be the same - devastating. And that's why I'm currently more comfortable with DXD than USO right now.

Any opinions on alternative plays? I was in FSLR for a while, made a nice gain, but have since left the position. Thanks for mentioning Uranium, but I don't think I'm able to access a play in that without a futures account.

Finally, did you catch Rick Santelli on Friday? He's the only guy on CNBC who's got a finger on this, and who understands why it isn't spec driven. You can really feel his frustration in these two clips...

http://www.cnbc.com/id/15840232?video=763784692

http://www.cnbc.com/id/15840232?video=763560927


BTW, great video you linked to. Explains it plain and simple, although I'm still waiting for the day it's referenced simply as Peak Oil, rather than Peak Oil "theory". Really, there's nothing theoretical about it. It's been scientifically proven by every declining individual field, and by every country currently in terminal decline.

lOOkatme

When I say to invest in futures....I should say invest in the commodities themselves....like USO which is just a collection of futures contracts.



Uranium.....invest in URPTF.PK

Thats about as close as you can get to investing in physical Uranium. I would suspect there to be a run on price sometime over the next 5 years......Uranium has some serious production issues.....and is not profitable to mine in the quanitites needed at the current price. Junior miners would become profitable around $120ish/lb.....but in the midst of an oil crisis......miners of Uranium might not get the fuel they need.....who knows....but the cost of production of Uranium will increase...as with any commodity as oil increases.