Tag: demand

Dr. Roubini says rising oil prices will stifle any possible recovery

You have to follow CNBC to get the straight talk from the master seer:

“Oil could be closer to $100 a barrel towards the end of this year, this could be a negative shock to the economy.”

Or you could have gotten the much less publicized version of the relatively same opinion almost two months ago:

No matter – if oil continues its march, consumers won’t be joining the summer of love. And any chance of the recovery the powers that be are trying to convince them is well in hand will be swirling in a tanker parked off the Gulf Coast.

How this all plays out is anyone’s guess, but with interest rates also on the rise it seems unlikely that we are going to see burgeoning demand for goods in the near future. There’s just too much out there, and given the choice between a widescreen TV and filling up the tank, the latter is going to win hands down. Heck, even yard sales are hurting for business.

Peter Schiff: Americans bought too much, with money they didn’t have

I don’t lend much credibility to information garnered from Comedy Central, but this one was good…

The Daily Show With Jon StewartMon – Thurs 11p / 10c
Peter Schiff

I can’t say I agree with Mr. Schiff on hyper-inflation being right around the corner. I believe he is vastly underestimating how far Americans can and will go to reduce their standard of living. You need not concern yourself with how much credit is being poured into the system if there is no actual demand.

He’s certainly hit the bullseye on this though: stimulus, on credit, is having the opposite effect from what was intended. Look no further than the recent spike in oil prices to understand why. That alone could be the recovery’s undoing.

(h/t The Big Picture)

UPDATE: Arthur Laffer says get ready for inflation and higher interest rates. The latter isn’t going to do much for housing – driven by market expectation (i.e. the selling off of Treasuries we’ve seen as of late), it is leaving Bernanke & Co. in one hell of a quandary.

Oil Watch – 1/14/08 (UPDATED)

Yesterday’s close on the near term contract was $38.60, still a smidgen away from the pre-Christmas low of $35.13.

February '09 Crude

This weekend I was hearing rumblings regarding gas prices heading back up, although I haven’t personally seen much difference since I last filled up. There’s a price in which it doesn’t pay to explore – a price that’s already being broken (hence so few words lately about opening up the continental shelf and ANWR). But, there’s also a price in which it won’t make much sense to pump anymore.

What’s that price, and what will the equilibrium point be thereafter?

UPDATE: 1/15 – Doesn’t look like anyone has to worry about $35 being a bottom, since a new low of $34.65 was hit this morning.

Are We in the Peak of an Oil Bubble?

[singlepic id=403 w=240 h=178 float=left]PhysOrg does a good job of convincing, at least for the short to intermediate term.

Since 2003, worldwide oil prices have quadrupled. According to a new study, the price of oil is rising at a faster-than-exponential rate, and cannot be sustained. In other words, we’re in the midst of an oil bubble, say researchers Didier Sornette and Ryan Woodard of ETH Zurich in Switzerland and Wei-Xing Zhou of the East China University of Science and Technology in Shanghai, China.

Certainly goes against the previous note on the subject.

UPDATE: Gas consumption is dropping rapidly – high prices are the cure for high prices. When will the commodities markets come unhinged?