Oil Market Bubble Starting to Bust

One of the things any investor does not want to hear is that their investment dollars are hurting people. That would be similar to Microsoft causing cancer by using their product on your personal PC. The stock would tank and Bill Gates would be stepping into a homeless shelter. Where Microsoft pretty much has a piece of every single personal computer in the world the same is true for oil. Bad news in any investment always trickles down and dollars move out of the investment not for the sake of greed but the sake of what is right. Investing in oil right now is like free basing heroine and thinking that all is well in the world while your investment high soars. The damage done is the reality of the investment in oil speculation. All around you the world crumbles and you think to yourself that you are good to go?

Over at the New York Times they have tons of opinions in this article and many of them actually make sense. The oil market bubble is about to bust..

Oil Prices Plunge for Second Day

By CLIFFORD KRAUSS
Published: July 9, 2008

HOUSTON — Oil prices headed in an unusual direction — down — for the second consecutive day on Tuesday, leaving energy experts to wonder whether the drop is the beginning of a lasting trend or just a brief pause before another surge.

Snippet

The rise in gasoline prices has not matched the rise in crude oil prices in recent months, largely because Americans are driving less, buying fewer gas-guzzling vehicles and riding more mass transit where it is available.

MasterCard reported on Tuesday that American drivers decreased their consumption of gasoline in the days leading up to and including the Fourth of July weekend by nearly 4 percent from the year before. It was the 21st consecutive week of lower gasoline consumption in comparison with last year.

Snippet Part 2

But some energy experts say the price could drop further. They say it is possible that the kind of “demand destruction” for oil that is taking place in the United States and Europe could spread to China, India and other countries that subsidize gasoline and other energy supplies.

Governments in China, India, Taiwan, Thailand, Indonesia and Malaysia have cut subsidies at least modestly in recent months because of strains on their budgets, and further subsidy cuts are considered likely, especially if oil prices continue to go up. Once their consumers see higher prices, they would be expected to cut their consumption. - New York Times

What is happening right now on the world commodity markets is bad news when it comes to anyone that is dealing in the oil market. Even the Saudi’s are crying foul on the inflation crisis going on in their nation. Food prices are through the roof, but gas is still forty five cents a gallon in the kingdom. I’m not sympathetic with the Saudi people but I am a realist. Oil rich nations are not controlling the price of oil, dollars are, and those dollars are coming from economies like the United States that are expanding even in the face of oil prices rising to never ending highs.

This is where investments meet the road of reality. Joe Six Pack has a 401K where the biggest gain in his retirement fund was in the oil commodity markets. That increase in investment is offset by the cost to feed his oil burning furnace and the fact that his Joe Six Pack pickup truck now cost a couple of hundred dollars a week to feed so he can get to his construction site job. Then he has to pay double or triple what he did last year to heat his home, double to feed his family, double for just about everything he paid for just a few years back. Where is the investment gain?

If the world financial markets are responsible for the rape of your checking account every single month then you need to rethink your long term investments. It can’t be put any more simple than that. It’s your checking account and retirement plan, only you can decide how to invest your money. Just don’t bitch when gas is $12 per gallon. All of our retirement dollars are moving this feeding frenzy in the oil markets and if those dollars are removed then the appetite is no longer there. Or am I wrong?

Papamoka

Technorati Tags:
Oil, Oil Markets, Oil Specualtion, Retirement Investments in Oil, Oil for Dollars, Dollar Value, OPEC, Oil based Economies, Simple Economics, Investment Dollars, New York Times, Clifford Krauss, Saudi Arabia, World Economy, Oil Bust, Oil Bubble Burst

People vs. OPEC

I’m sure that all across corporate America in the executive offices of the CEO’s of all the big oil companies could be heard one phrase today.

“Ut Ohhhhh!”

Congress today passed legislation allowing the creation of banks of lawyers to sue the pants off of OPEC members and investigate price gouging by any company. Of course the Commander in Chief is against this kind of legislation. Who’d of thought that? Over at the New York Times they have this on the subject…

WASHINGTON (Reuters) - The House of Representatives overwhelmingly approved legislation on Tuesday allowing the Justice Department to sue OPEC members for limiting oil supplies and working together to set crude prices, but the White House threatened to veto the measure.

The bill would subject OPEC oil producers, including Saudi Arabia, Iran and Venezuela, to the same antitrust laws that U.S. companies must follow.

The measure passed in a 324-84 vote, a big enough margin to override a presidential veto.
The legislation also creates a Justice Department task force to aggressively investigate gasoline price gouging and energy market manipulation.

"This bill guarantees that oil prices will reflect supply and demand economic rules -- instead of wildly speculative and perhaps illegal activities," said Democratic Rep. Steve Kagen of Wisconsin, who sponsored the legislation. - New York Times

When it comes to the scales of justice here in the States it is basically a foregone conclusion that big oil interest have heavily tipped the scales against consumers. It looks to me like we finally will get a break and the powers that be on the exchange markets that set the market price for oil should start investing in shredders.

I’d be willing to pick up a few document threshers if they would be willing to drop the price of oil down to around fifty or sixty bucks a barrel. If they loan me a hundred bucks to fill my tank then I’ll even deliver the shredders.

Papamoka

Syndicated:

Bring It ON!

To the Center

*****Reuters has picked up this post!!

American Ingenuity on Oil’s Replacement

I’ve said it before on many posts on this site. The end of the strangle hold on America’s energy needs is nearing the end of the beginning. All of those back yard inventors of a better mouse trap when it comes to our fuel needs are coming out of the woodwork and the ones serious enough to believe in it will be successful.

One of the things I find interesting is that many of these backyard chemist, biologist, and guys that know how to work a mean wrench have on thing in common, not one of them thinks they will replace the Exxon’s of this world but they sure as hell will put a dent in their billion dollar profits year by year. And as these combined technologies all grow over time then the likes of Exxon will be the mega giant corporations that dared to think it was irreplaceable. Read more on this great article from Popular Science and Amanda Schaffer in the latest issue…

I’m watching this image on a computer screen at Amyris Biotechnologies in Emeryville, California, where one of the founders, biologist Jack Newman, is giving me a tour. The genetically manipulated E. coli before me are highly crafted units of industrial production, which Amyris is using to turn sugar into novel versions of gasoline, jet fuel and diesel—in other words, the fuels on which the world already runs. Amyris is one of a handful of young biofuel companies putting a brilliant and weird twist on the future of green. It’s betting that, with the help of bacteria, the long-term answer to our gasoline woes will actually be . . . gasoline.

Because as it stands, the main alternative to petroleum, ethanol (a type of alcohol), is fraught with problems. It can’t be pumped through current infrastructure because it tends to corrode pipelines. And according to University of Minnesota economist Jason Hill, even if all the corn grown in the U.S. were converted to ethanol, it would replace only some 12 percent of the 146 billion gallons of gasoline we use every year. Cellulosic ethanol—fuel produced from the cellulosic matter contained in plant stalks and stems rather than from seeds—would solve that problem, but the technology to produce it on a large scale is still a way off. Plus, ethanol simply isn’t as energy dense as petroleum-based fuels. - Popular Science

One of the things I find very warming to the spirit is that this research isn’t coming from the United States Government or sponsored by XYZ oil company. It’s coming from American’s with an attitude, American’s with a spirit and sense of what is right and what is wrong. It’s coming from a displaced sense of the American way of life. For the last eight years we as a people have been jerked around by circumstances beyond our control and if you know anything about Americans, we hate being told that the price of our greatest energy resource is beyond our control. That’s a tough pill to swallow and we American’s tend to hate having anything shoved down our throats. Even when it comes from within our own nation with the people we allow a free market to dictate prices.

This is an Energy Revolution and it is starting in garages, chemistry labs, brain storming sessions, and with individuals sick and tired of having the money they earned spent on fuels to run our vehicles or buying a gallon of milk for their families. That is an argument that will never be won when it comes to the hundreds of thousands of brilliant minds working today all across America to pretty much chuck the Middle East and all OPEC nations the bird.

This countries energy needs will pretty much be self reliant in twenty to thirty years. It’s not going to be easy and it isn’t something that can happen overnight or from any one technology. It will happen with one advancement at a time. Think of it as a slow strangling end to imported oil much like the horse and buggy day.

One last quote from the same Popular Science piece…

Before I leave, though, he shows me a painting he keeps in his office. It’s of a little boy leaping from one cliff to another across a chasm. The boy’s arms are stretched out. His head juts forward. “He isn’t even looking at the edge. He’s looking beyond the edge,” Reiling says. “He’s 100 percent committed to that jump. That’s what you’ve got to do when you’re going after something.”

You have my best wishes on success Amyris!

Papamoka

Feel free to link to this post…

Technorati Tags:
Gasoline, Energy, Bio Diesel, New Gasoline, Popular Science, Amanda Schaffer, OPEC, Gas Prices, Energy developments, Oil and Gas, Exxon, Hess, BP, Mobile, Chevron, Solar, Amyris, New Energy Technology, Latest breakthrough in fuels, Bush, Cheney, Haliburton, KBR, Saudi Arabia, Iraq, Iran, Venezuela, Hugo Chavez, Oil Dictators, Gas Prices, Oil Prices, Fuel Prices, Energy based economy, Energy Economics, Politics of energy, Corn based fuel, Jack Newman, Jay Keasling, Kinkead Realing, Venture Capitalist, Energy business, Neil Renninger, Molecular Manipulation for Fuel

Solar Power Research

Solar Power is going to be a big part of your future life whether you like it or not. With the cut throat politics of big oil, the future is going to be very different. America much like in the past will change the world with our direction. Not from some group in some far away lands demands, but on our own terms. American’s are a funny people, we will buy your product on our terms if it is affordable and reliable. That includes our energy needs. While the nice folks sitting on mega trillions of oil think that they have “We the People” over their barrel, creative Americans are turning those same barrels into wood stoves and home made bio-fuel tanks.

I love the New York Times and I have to thank my friend Jeff from Worm Town Taxi for turning me onto this story. The New York Times writer could not find his back side from his elbow on this topic. Rather than reporting on the true research they condemn solar power as a fad for this generation. Different paper, different generation but the same is true, Solar power is not good enough once more over at the NYT…

A link between Moore’s Law and solar technology reflects the engineering reality that computer chips and solar cells have a lot in common.

“A solar cell is just a big specialized chip, so everything we’ve learned about making chips applies,” says Paul Saffo, an associate engineering professor at Stanford and a longtime observer of Silicon Valley.

Financial opportunity also drives innovators to exploit the solar field. “This is the biggest market Silicon Valley has ever looked at,” says T. J. Rogers, the chief executive of Cypress Semiconductor, which is part-owner of the SunPower Corporation, a maker of solar cells in San Jose, Calif.

Mr. Rogers, who is also chairman of SunPower, says the global market for new energy sources will ultimately be larger than the computer chip market.

“For entrepreneurs, energy is going to be cool for the next 30 years,” he says.
Optimism about creating a “Solar Valley” in the geographic shadow of computing all-stars like Intel, Apple and Google is widespread among some solar evangelists.

“The solar industry today is like the late 1970s when mainframe computers dominated, and then Steve Jobs and I.B.M. came out with personal computers,” says R. Martin Roscheisen, the chief executive of Nanosolar, a solar company in San Jose, Calif.

Nanosolar shipped its first “thin film” solar panels in December, and the company says it ultimately wants to produce panels that are both more efficient in converting sunlight into electricity and less expensive than today’s versions. Dramatic improvements in computer chips over many years turned the PC and the cellphone into powerful, inexpensive appliances — and the foundation of giant industries. Solar enterprises are hoping for the same outcome. - New York Times

This is where the article should have ended but it didn’t. You can read the rest of it if you like but it is more or less if you can’t have the whole loaf of bread then you don’t want even one slice.

When it comes to our nations energy needs in the future you can no longer put all your eggs in one basket. You need to look at all options and Solar Power is just one option of many for your individual energy needs. There isn’t a person involved in the real life business of solar power that will tell you it will serve all of your energy resources. That kind of science and technology just doesn’t exist… YET! When you think of solar power you have to think of your vegetable garden, it offsets your grocery bill with food grown by your own hand that you know will help your family budget. It’s only the vegetables. As in the old commercials from long gone by political campaigns “Where’s the BEEF?”

The beef is in the current research that will mass produce the solar panels to the point where Joe and Joanne Sixpack can afford to install a solar panel on their home. That is where Moore’s Law meets the common consumer. That is where engineers and scientist break the back of OPEC and pretty much look at locations in the middle of the desert here in America with sunshine year round that are not in the Middle East for our nations electric power needs.

Solar Power was not a fad in the 70‘s, or the 80‘s, or for that matter in the 90‘s. It is and will be part of your life, it is only a question of what part it will be producing power for your families needs. Ten years from now you could probably pick up a whole house solar panel unit that you plug into your outdoor outlet that powers your entire home from Home Depot or Lowes. Then again Walmart might have those nasty falling prices and outsource the American designed technology to China to mass produce it. Any way you look at it, the technology will be cheaper and our nations energy needs will come from somewhere else and solar power is just one piece of the puzzle.

The only thing that will hold solar power back is the people most afraid of it and how much of their bottom line it will take away. Those are the people that this story in the NYT’s should have looked at more closely. That is when you will smell the sense of smoke in the air and new patents for new energy smoldering on the bonfires of big energy R us. Capitalism at its worst.

Papamoka

Cross posted at MichaelLinnJones.com and Bring IT ON!

Feel free to link to this post or borrow it…

*****Wall Street Journal Online has linked to this post in "More related content"

Technorati Tags:
Gorilla Power, Home Power, Off Grid, Solar Power, Sun Power, Batteries, Technology in Solar Power, Battery Advances, Solar Cars, New York Times, Rooftop Power, No Electric Bill, Solar Power research, Energy, Capitalism, Home Depot, Green Power, Green Energy, OPEC, Oil, Coal Power, Coal, Switch Grass, Corn, Energy Markets, Electric Bill, Energy Research, RWS Schott

AHMADINEJAD DISPLAYS HIS IGNORANCE ONCE AGAIN

By MICHAEL LINN JONES

OPEC comment drives oil close to $95 is the headline for this AP story by Pablo Gorondi.

Iranian President Mahmoud Ahmadinejad, in Riyadh, Saudi Arabia, called the dollar a "worthless piece of paper," and said the cartel's members have expressed interest in converting cash reserves into a currency other than the U.S. dollar — a sentiment echoed by Venezuelan President Hugo Chavez, who called the euro a better option.

This is the best president a theocracy can come up with? What a putz. Referring to the dollar as a "worthless piece of paper" shows how ignorant this guy really is. Yeah, yeah, I know Ahmadinejad has it in for the U.S. We're the great satan, blah, blah, blah.

At least he could get his facts straight. Everyone knows that it's the U.S. CONSTITUTION that is a worthless piece of paper. Our own President Bush said so, and he should know since he's the Decider and all that.

His quote did not use the word "worthless" but the meaning was the same, I think. "It's nothing but a goddamned piece of paper" translates pretty close to "worthless" but then I'm no linguistic expert.

On top of that, President Ahmadinejad needs to do some polling of President Bush's "base," that is the "haves" and "have-mores" (as Bush refers to them). There ain't a one of them going to tell you that a dollar (or the puruit of them) is less valuable than a constitution, human rights, national security, or much of anything else.

So if the president of Iran has plans to wreck the U.S. economy, I have news for him. Someone's already way ahead of you on that score.

So you're wasting your time. Being Americans, we can destroy an economy better than anybody else.

We're # 1, after all.
************************
Cross-posted at Michael Linn Jones.com

Saudi Arabia... Screw You Wall Street!

There is not one person that knows the oil business better than the folks in Saudi Arabia when it comes to supply and demand on the world oil market. Even Saudi Arabia is wondering how the world of oil market speculation has the price of a barrel of oil tempting at the hundred dollar mark. With that thought in mind the nation of Saudi Arabia is exploring for new oil fields with all of the new technology available to ramp up production thus saying to oil market speculators in the market, SCREW YOU!

Wall Street can play the game and pocket the cash but I’m thinking that the producers of oil in the world are looking at the bigger picture and alternative energy sources are more than attractive with oil at one hundred dollars a barrel. That is and will be a direct effect to the bottom line of all oil producing exporting countries, aka OPEC. Oil has only been the main source of heating and vehicle power because it was cheap and affordable to the masses. That is no longer the case.

Then again, I have to give the nation of Saudi Arabia credit for bumping up the supply to offset the non stop rumor mills on Wall Street that speculate that the oil supply to the world is limited thus driving the price up into Never Never land. Peter Pan and Tinker Bell have nothing to worry about as long as Wall Street believes in Fairies and an oil market with a supply problem. Over at the Washington Post they have this amazing post on this very subject…

Saudi Arabia Works the Vast Desert To Pump Out More High-Quality Oil

By Steven MufsonWashington Post Staff Writer
Saturday, November 17, 2007; Page D01

SHAYBAH, Saudi Arabia -- For a decade, Hussain al-Obaid has been working in the soft red dunes that stretch across the vast desert known as Rub al-Khali, or the Empty Quarter. In summer, temperatures climb as high as 130 degrees and sandstorm winds gust up to 80 mph, though on a mild fall evening the stars shine and the air is mild.

A graduate of the University of Oklahoma at Tulsa, Obaid is the engineering superintendent of a project that pumps half a million barrels of crude oil a day from beneath the sand and delivers it through a 400-mile pipeline. The oil is some of the world's purest, highest-quality crude, easily refined into gasoline.

To complete the project, construction crews built a road across the desert and moved 100 million cubic feet of sand to make way for an airplane runway.

Next year, Saudi Aramco, the state oil company, plans to boost production by 250,000 barrels a day, one step in an effort to expand the kingdom's oil-production capacity to 12.5 million barrels a day from the 11.3 million barrels. The new production is part of a strategy that could ease market tension and is designed to preserve Saudi Arabia's ability to produce 1.5 million to 2 million barrels a day more than its actual output in the face of rising world oil demand, said a senior Saudi Oil Ministry official who spoke on condition of anonymity.

"Tell me of any other country that's made commitments this broad on its own," Prince Abdulaziz bin Salman, the deputy minister of petroleum and natural resources, said during preparations for this weekend's summit of the Organization of the Petroleum Exporting Countries in Riyadh, the Saudi capital. "We are the only country with a policy of maintaining excess capacity."

Snip-sa-doozey

… it costs Saudi Arabia about $2 to produce a barrel of oil. Developing new fields is also cheap, he said, running about a quarter or less of exploration and development costs elsewhere. - Washington Post

Unless the Washington Post is making things up… Did that say $2 cost to produce a barrel of oil? Where else in the world can you get a cost to market price mark up like that? This sort of thing only happens when the market is let loose to run wild and around the corner is the market crash. That is where the end of the line is because the bottom of this feeding frenzy is the consumer all around the world and when they can no longer afford the product they will not buy it.

Thus is the major investment in renewable energy like wind power, solar power and of course Ethanol or bio fuels. That is why Saudi Arabia is ramping up production. It is in fact to the better interest of the Kingdom for the price of their product to be affordable. Where President Bush sees a free market the Saudi’s see a market out of control that will eventually threaten the bottom line of their nation.

It does not take a rocket scientist to figure out the oil market is raping the market. What it takes to offset the overblown cost of oil is chemists and creative minds to invent alternatives to oil that will make that profit driven market as much as yesterdays news as whale oil is for lighting your home at night. That process has already begun.

Papamoka

Feel free to link to this post...

*****WormTown Taxi has linked to this post... Worcester Rocks!

*****Wall Street Journal - Online has linked to this post...

*****Equity Groups has cross posted this post...

*****Buzz Tracker has linked to this post...

Technorati Tags:
Exxon Mobil, Shell, Hess, Haliburton, Bush, Cheney, Futures Market, Home heating oil, Gasoline, Cost of home heating, oil price, Saudi Arabia, Iraq, Iran, OPEC, Organization of Petroleum Exporting Countries, Chaves, BP, Chevron, GE Wind Power, Wood Pellet Stoves, alternative energy, ethanol, bio fuel, switch grass, sugar cane, electric cars, Wind Turbines, SPR, Strategic Petroleum Reserve, Election, Green Power, Riyadh, New York Mercantile Exchange, End of Oil, Oil Exploration, Market Manipulation, oil profits, record oil profits

The End of Big Oil and the Middle East Strangle

Picture courtesy of Biodiesel America .org


I’ve heard it said that the very last stage coach company in the world built the best damn coach around but the end of the horse and stage coach was inevitable with the invention of the combustion engine. Isn’t it ironic that the hay that once fed horses to pull that same stage coach is now somewhat replacing the fuel that runs the combustion engine little by little?

Our world is held hostage by our energy needs and the ones holding the knife to our throats are not just in the Middle East. Corporate America with its own multi nation partners is hijacking your wallet every time you pull up to the pump.

With any monopoly in any given industry comes the frugality of the American people in our selfish desire to overcome that strangle hold on our lives. Such is the American spirit that the brightest amongst us have had enough and all it took was the oil industry stealing not just food off of our tables but the unmitigated audacity of the oil barons of today telling us to pay it or do with out it. New inventions are popping up daily on saving gasoline in your car or mini-van and the tide is just starting to rise as far as more savings and new ideas go.

Hurricane Katrina is long gone, the gas refining plants are pretty much rebuilt and yet gasoline is over $3.00 per gallon. My only thought on this is that the industry is robbing the American people blind while they still can and the President simply has no authority or desire to intervene.

When faced with a bully, Americans fight back. Then we spread the word on how to fight back. There is a great web site on the daily progress of Biodiesel as it is happening in this country and around the world. It’s called Biodiesel America .org and it is a wealth of information. This is just one solution to the crime that is happening at the pump every single day…

Over at the New York Times they are pointing out that the threat from big oil that is raping and pillaging Europe much like Attila the Hun of centuries long ago has finally had its people saying enough is enough. Farmers are being paid higher premiums for raising crops that can be converted to biodiesel…

Europe Pushes to Get Fuel From Fields
By ELISABETH ROSENTHAL
Published: May 30, 2007

ARDEA, Italy — The previous growing season, this lush coastal field near Rome was filled with rows of delicate durum wheat, used to make high-quality pasta. Today it overflows with rapeseed, a tall, gnarled weedlike plant bursting with coarse yellow flowers that has become a new manna for European farmers: rapeseed can be turned into biofuel.

Motivated by generous subsidies to develop alternative energy sources — and a measure of concern about the future of the planet — Europe’s farmers are beginning to grow crops that can be turned into fuels meant to produce fewer emissions than gas or oil. They are chasing their counterparts in the Americas who have been raising crops for biofuel for more than five years. – The New York Times

I was watching the local television magazine program the other day and the Massachusetts Maritime Academy that has over one thousand students is almost an entirely off the grid educational facility. With a constant breeze off of the ocean they have a huge wind turbine that runs non stop. If that isn’t supplying enough power for them then they are installing solar panels on the roofs of many of the buildings on the campus. At some points during the generation of all this green electric power the local utility is paying the MMA for excess power generation. That is just one campus in America. Can this be duplicated across America?

This movement towards alternative clean energy is not going to end any time soon. With the knives to our throats on our energy needs America has a few new solutions that pretty much turn that knife into a limp noodle. Europe and the rest of the world will follow our lead.

I do have to say that much like the attack on Pearl Harbor at the start of World War II, I believe it was Admiral Yamamoto that said we have only woken the sleeping dragon. America is an industrial nation and if our source for energy is threatened then we can fight on the fields of foreign lands to secure our needs or we can think of a better way to turn the wheels of our industry and society. One simple fact is that if the American people want independence from foreign sources for our energy needs then no amount of money will stop us to fight this side of the war on terror. Take away the source funding them and they have no teeth to bite us back with.

My only concern with this new alternative energy market is that the good old boys with the tens of billions of profits quarterly are going to try to buy up the future of America’s and for argument sake the world’s energy movement away from fossil fuels.

Papamoka




Cross posted at Bring It ON!

***** Alternative Energy HQ has linked to this post...

Technorati Tags:biodiesel, biodiesel, wind turbine, wind energy, fossil fuel, new york times, elisabeth rosenthal, exxon, mobile, shell, chevron, saudi arabia, opec, venezuala, energy independence, solar power, solar panels, green power, off the grid, independent energy, self sufficient energy, energy, power, gas, fuel, coal, carbon dioxide, green house, al gore, ge, wind farms, nuclear power, saving electricity, saving gas, family budget buster
Generated By Technorati Tag Generator