Goldman Sachs are calling for $85 a barrell of oil by y/e

[control1]

I am sure they go out and buy a ton of oil and then start calling these higher prices to make a profit.This market should be more regulated I believe that when oil went to $140 a barrell it helped throw us into this recession.

(broken link removed to http://www.cnbc.com/id/31099515)

 

[TboneMan]

Given that the dollar isn't worth crap due to our over spending, it is not surprising that people with money to invest are putting it someplace that know will actually rise in value.

The outcomes, however, are very unfortunate (and yes, I also believe last year's run on oil was the "straw that broke the camels back").

 

[webbie]

Funny that after all is said and done, oil may find a home at about the price is should be - that being 75-95 a bbl.

In a historic view, that is a very decent price and would reflect much less than the inflation of many other important goods and services we use.....say, over the last 30 or 40 years.

I find it interesting that people think the dollar is worth nothing. I have found exactly the opposite. My dollar is going MUCH further than ever before when it comes to housing, vehicles and many other goods and services. The only place it is really lacking are those monopolies like health care (yeah, we think we have a choice, but we really don't. They all charge close to the same because the costs are all the same).

So send all those worthless dollars this way! I know plenty of places where they will go MUCH further than they have before.

 

[webbie]

The Business of Business is what makes the world go round. So it is, so it always was. I think a lot of people make the mistake of thinking this is all something new, but as a bit of a history nut (reader), I can assure you that it is as old as time. I just finished a book about the history of RI, for instance, and the entire ebb and flow has 100% to do with MONEY (business). Money from the slave trade, from the rum trade and from other ventures. Back then, the government didn't even attempt to fool people as far as it's business interests. The bigwigs in power flat-out stated their purpose as being "for the business man", which in general worked out to be against the working people (most people).

I guess the question becomes what people think banks do. They finance business, war, energy, housing and/or ANYTHING else which can make a profit and has a reasonable risk. They don't make moral judgments.

According to economic theory, energy companies can charge whatever they want at any time. The exception being regulated utilities. I agree that more regulation is needed, but the only party to do that is the big bad government that everyone is so quick to blame for everything.

There are so many hypocrites on these issues that I have stopped counting. For instance, a lot of people and pols said the government should not have helped GM, etc. be let down slowly. They should have been allowed to fail instantly and spectacularly, with the resulting closing of ALL plants and dealerships and a resulting asset sale (liquidation). But, the SAME PEOPLE - and I find this truly amazing - are now complaining that GM and Chrysler shut down hundreds of dealers! Some Congress members even own auto dealerships...

Not much has changed over the years.

I understand our early governments being so pro-business as the country and economy was growing very quickly and, to some extent, a rising tide lifted all boats. But we now have a situation, many would agree, where we have plenty of "stuff (production, resources) and our government needs to be "tuned" a bit more toward Power to the People.

To some extent I think that is what you are seeing out of DC.

Oh, and J P Morgan is rumored to be the first bank that will pay back the TARP, of which they only have 25 billion (tiny compared to AIG, etc.).

So the taxpayer will be 100% paid back, and maybe with interest.

Back to the subject at hand, I also believe in regulation of the energy markets....and definitely making it tougher for a little bit of money to control a lot of oil. Nothing wrong with speculation, but it has to be kept within the bounds of knowing that the players can make good on bad AND good bets. They obviously could not do that with the current crisis....that is, make good on their bets against the housing market, etc.

 

[CrappieKeith]

Great response Craig!

 

[geek]

couldn't be said better than that craig.

 

[Stentor]

The Business of Business is what makes the world go round. So it is, so it always was. I think a lot of people make the mistake of thinking this is all something new, but as a bit of a history nut (reader), I can assure you that it is as old as time. I just finished a book about the history of RI, for instance, and the entire ebb and flow has 100% to do with MONEY (business). Money from the slave trade, from the rum trade and from other ventures. Back then, the government didn't even attempt to fool people as far as it's business interests. The bigwigs in power flat-out stated their purpose as being "for the business man", which in general worked out to be against the working people (most people).

..........


According to economic theory, energy companies can charge whatever they want at any time. The exception being regulated utilities. I agree that more regulation is needed, but the only party to do that is the big bad government that everyone is so quick to blame for everything.

............


Back to the subject at hand, I also believe in regulation of the energy markets....and definitely making it tougher for a little bit of money to control a lot of oil. Nothing wrong with speculation, but it has to be kept within the bounds of knowing that the players can make good on bad AND good bets. They obviously could not do that with the current crisis....that is, make good on their bets against the housing market, etc.

Yes, reading the history is fun and provides explanations. But it's tricky.

1. The "bigwigs in power" were mostly wealthy Londoners just as some of our more recent rich people were in today's new financial capital, New York. And there was more going on than business. The religious dissenters who left England for Massachusetts and then the Mass. dissenters who moved to Rhode Island had their own agendas which played out in parallel and semi-independently from the business interests. The real story back then was how the French, English, Dutch, Spanish and Portuguese would settle ownership of the western hemisphere. No one would have dreamed in the beginning that we would exist and would at least equal the Europeans combined.

2. We may need some more energy regulation but that will bring its own problems. In a democracy like ours, interest groups are as likely as not to preserve a profitable status quo. I don't believe crazy theories like Detroit blocking invention of alternatives to the combustion engine but they have had little incentive for radical technical innovation. Same's true of areas like consumer credit - - better regulation, yes, but I sure don't know how far we should go! For my own benefit, I hope the pellet industry stabilizes and moves beyond niche player. Some very limited standardization and labelling laws might help.

Sorry if these comments are off topic. My excuse is that I'm meditating on Craig's comments.

P.S. Here's a reform all can agree on - - whenever we log on to this site we see a picture of Our Founder at the top of the screen!

 

[Souzafone]

............


Back to the subject at hand, I also believe in regulation of the energy markets....and definitely making it tougher for a little bit of money to control a lot of oil. Nothing wrong with speculation, but it has to be kept within the bounds of knowing that the players can make good on bad AND good bets. They obviously could not do that with the current crisis....that is, make good on their bets against the housing market, etc.

Yes, reading the history is fun and provides explanations. But it's tricky.



2. We may need some more energy regulation but that will bring its own problems. In a democracy like ours, interest groups are as likely as not to preserve a profitable status quo. I don't believe crazy theories like Detroit blocking invention of alternatives to the combustion engine but they have had little incentive for radical technical innovation. Same's true of areas like consumer credit - - better regulation, yes, but I sure don't know how far we should go! For my own benefit, I hope the pellet industry stabilizes and moves beyond niche player. Some very limited standardization and labelling laws might help.

[/quote]


Our government is not a democracy, it was never meant to be one, and there is no law stating so. The law of the land is still our Constitution, which declares our government to be a republic. Free enterprise left alone is self regulating, it's only when government becomes involved in business does failure of the economy result, often compounded by deregulating after enforced regulation. End rant.

 

[dac122]

June 3 (Bloomberg) -- JPMorgan Chase & Co., the second- largest U.S. bank by deposits, hired a newly built supertanker to store heating oil off Malta, ship brokers reported, in the company’s first such booking in at least five years.

The bank hired the Front Queen for nine months, according to daily reports from Oslo-based Sea League A/S and Athens-based Optima Ship Brokers Ltd. David Wells, a spokesman for JPMorgan in London, declined to comment....

From what I know, since the price of oil has crash in the $30s per barrel, companies have been scrambling to rent all available storage, including unused tankers to store the overhang of global supply. This seems normal and natural when an industry goes through this. I have no problem with drillers, refiners and distributors, or anyone in the supply chain doing this. I see the need and have no problem with a futures market. But TARP funding aside, why is a bank doing this?

 

[summit]

From what I know, since the price of oil has crash in the $30s per barrel, companies have been scrambling to rent all available storage, including unused tankers to store the overhang of global supply. This seems normal and natural when an industry goes through this. I have no problem with drillers, refiners and distributors, or anyone in the supply chain doing this. I see the need and have no problem with a futures market. But TARP funding aside, why is a bank doing this?[/quote]

why not? if oil jumps up again this winter, its gonna be a great investment for them... while most people speculating on oil never take delivery of the physical product, at least they are handling the product! they owe us money, let them pay it back however they can. people can shout foul, but it is a business. If they can sit on it and turn a better profit, so be it! We do the same thing with some stoves... one brand in particular jumped up almost 20% overnight during the pellet stove crisis last yr.
within the course of a week, we were turning a 60% profit instead of 40% on inventory that we had the foresight to buy ahead of time. it also enabled us to take discounts off these stoves, and still make a better return for the investment. you don't get that kind of interest rate at a bank

 

[rowerwet]

it makes business sense to invest in oil now also, as the dollar continues to drop against the world markets due to irrational spending, it has more value now than it will 6 months from now or a year from now, putting money into a easily convertable (and likely worth more in the future) currency (crude will always be needed until cold fusion is a everyday reality) is the smartest thing the banks can do. Gold is at a high right now for the same reason, buying US govt. bonds would get the bank officers unelected at future stock holder meetings as they will continue to drop being backed up by play money. Banks make money off investments and lending and oil is probably the safest bet right now. I hope the banks are alowed to pay back their "loans" and TARP doesn't become the way they all become the next GM. I have still yet to hear a good reason for the govt. closing dealerships, it would be like a big oil company deciding which home heating oil dealers and gas stations it would no longer sell to. If these dealerships are in trouble the economy will take care of them, how are GM and chrysler going to increase sales from fewer outlets? (of course I think the free market does a much better job than central planers in DC, the soviet union should have proved that) It makes me think some of those dealers donated to the wrong party last time around, and knowing how business owners look at things I bet I am right.
Some dealerships were expecting the notice anyway, there is a dealership in Sanford, ME that hasn't sold a new chevy for almost a year now so they knew it was coming, unfortunatly they will also loose all the warranty work now and have to lay off mechanics, adding to the 9.4% unemployment rate. (higher in ME)
Investment in oil is what helped crude drop so far as quite a few investment holders were holding oil futures and when they saw the prices dropping they sold at a slight loss to avoid a huge one later.