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Thread: Will oil prices hit $100 per barrel this week?

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    Vulture of The Western World Eric's Avatar
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    Will oil prices hit $100 per barrel this week?

    WASHINGTON - The price of oil is approaching $100 a barrel, an important psychological barrier for Americans already hard hit by higher energy prices and the threat of a housing-induced economic slowdown.

    Even though headlines will scream, markets will get nervous, and politicians will blame each other, the real economic impact of a triple-digit price for petroleum is uncertain. It depends on whether the price is temporary or it continues to surge upward, analysts said.

    But $100-a-barrel oil and possible higher gasoline prices would come at a bad time for the U.S. economy. As an economic force, analysts said, higher oil prices alone would not be enough to cause severe economic damage. Yet on top of other major economic concerns -- a brutal housing correction, troubled financial markets and hard-hit banks -- they could be the catalyst for a possible recession.

    To energy experts such as Mary Novak of Global Insight, a Boston-based economic consulting firm, the price of oil could hit $100 a barrel before long but is likely to fall back after that. She said the high price of oil over much of the past year has been driven by speculators and by geopolitical concerns, such as U.S. clashes with Iran, and not as much by market conditions. If she is right, any damage would be minimal.

    But to Phil Verleger, an energy economist in Aspen, Colo., the price of oil could stay high through much of the winter and then a hot summer in 2008 could cause gasoline prices to rise as high as $4.50 a gallon in most places across the country. That scenario would not be good for the economy and for incumbent politicians in an election year.

    So far, the surging price of oil -- at a record $95.93 a barrel on Friday -- has affected the economy only marginally. That's because the U.S. and the rest of the world are less dependent on oil. "We basically use oil for transportation, and a small amount is used in other sectors," said Novak, Global Insight's managing director of energy services. "While significant, it is not a big drain on our economy."

    But clearly it could be a big drain if it causes the price of gasoline to surge. Joel Naroff, an economic consultant in Holland, Pa., said the worst-case scenario is if the price of oil stayed in the $90-to-$100-a-barrel range, causing gasoline prices to rise at the start of next year's driving season. As summer demand picked up, he said, gasoline prices could head higher.

    "Prices of all energy sources would really skyrocket," Naroff said. "That would cause a slowdown in consumer spending at the same time prices are going up. If consumers are looking at $4 a gallon gasoline, they wouldn't have a lot left in their pockets to spend."

    That is also Verleger's biggest worry. The U.S. may escape such a surge in the price of oil and gasoline, he said, but he added that "the conditions for another doubling of the price of oil are in place."

    He cited strong economic growth in Asia, a lack of investment in oil production and "a lack of real serious efforts to reduce consumption."

    "While it might be a big psychological thing for oil to hit $100, the first concern is where the top is," Naroff said. "The second concern is how long it stays there."

    If oil tops out at $105 a barrel and falls swiftly to $65 a barrel, he said, there is not as much cause for concern as if it topped $100 and then fell to $95 a barrel for months.

    At the pump, gasoline prices have reached a national average of $2.942 a gallon, according to AAA and the Oil Price Information Service. Gas prices have risen nearly 19 cents since mid-October, The Associated Press said.

    If Novak is right and the price of oil plunges in the next several months as speculation eases, then the outlook is for little or no damage on the U.S. economy. According to Novak, higher oil prices are not likely to sink the economy alone "until you have a second impact. And the second shoe fell when the 'subprime' mortgage market sort of broke open in August."

    David Wyss, chief economist at Standard & Poor's, the credit-rating firm, said if the winter is unusually cold, home heating oil prices could surge in the Northeast and that could have ripple effects on spending and the economy. Wyss said $100-a-barrel oil by itself is not so frightening. "It matters, but it's not the end of the world," he said. "The country isn't as dependent on oil as it used to be. ... What counts for consumer is really the price of gasoline. Americans don't buy crude [oil]."

    And if its price stays at $90 a barrel for much longer, he said, gasoline prices are likely to go up soon.

    Even if Congress passes an energy bill calling for more energy efficiency and higher fuel economy requirements, the impact will be more long term and likely would not immediately affect the price of gasoline or oil, Novak said.

    "The bill has no teeth in it," said Wyss. Should the measure raise fuel economy standards, he said, "it takes 10 years to replace the cars" that are less efficient.

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    Re: Will oil prices hit $100 per barrel this week?

    There's a pretty good article on that in today's Post, too. f

    Personally, I think that if the US doesn't quit spending money it doesn't have the value of the dollar will drop further causing the dollar denominated price of oil to continue to rise unchecked.


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    Re: Will oil prices hit $100 per barrel this week?

    Quote Originally Posted by jdm
    if the US doesn't quit spending money it doesn't have the value of the dollar will drop further causing the dollar denominated price of oil to continue to rise unchecked.
    For Americans maybe prices for fuel will rise, but your lower dollar means we in the frozen wastes of the real world don't actually notice the price increase..


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    Vulture of The Western World Eric's Avatar
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    Re: Will oil prices hit $100 per barrel this week?

    Quote Originally Posted by jdm
    There's a pretty good article on that in today's Post, too. f

    Personally, I think that if the US doesn't quit spending money it doesn't have the value of the dollar will drop further causing the dollar denominated price of oil to continue to rise unchecked.
    The slide in the value of the dollar is very worrisome... I have some things I need to take care of on that score myself....

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    Senior Member Kwozzie1's Avatar
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    Re: Will oil prices hit $100 per barrel this week?

    Are the maggot oil barons talking the price up????
    Rex
    On the Sunshine Coast, in the Sunshine State Queensland (QLD), Australia

  6. #6
    mrblanche
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    Re: Will oil prices hit $100 per barrel this week?

    Quote Originally Posted by Eric
    The slide in the value of the dollar is very worrisome... I have some things I need to take care of on that score myself....
    Well, 20 years ago, I would have said to buy a bunch of Swiss francs. You could buy gold. It is at the highest point in 30 years.

    Of course, those who bought it at the high point 30 years ago have had to wait that long to get their investment back.

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    Vulture of The Western World Eric's Avatar
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    Re: Will oil prices hit $100 per barrel this week?

    Quote Originally Posted by mrblanche
    Quote Originally Posted by Eric
    The slide in the value of the dollar is very worrisome... I have some things I need to take care of on that score myself....
    Well, 20 years ago, I would have said to buy a bunch of Swiss francs. You could buy gold. It is at the highest point in 30 years.

    Of course, those who bought it at the high point 30 years ago have had to wait that long to get their investment back.
    Anything that has real value (unlike the dollar)!

    Such as land, for example.

    I've been hoping to get my neighbor to sell me some acreage (his land abuts ours); now seems like a good time to bring it up...

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    Re: Will oil prices hit $100 per barrel this week?

    Quote Originally Posted by Eric

    I've been hoping to get my neighbor to sell me some acreage (his land abuts ours); now seems like a good time to bring it up...
    Land is often the same as 'production of wealth', and if you see potential in that youi could match the risks.

    I see a lot of land in my drives in weekday rural and semi-rural areas. Any land which has known qualities, developed or undeveloped has the likelihood of appreciation.
    I like the sheep farming myself, it 'fits' the general demeanor of the land, but dairy is taking over with big profits; the old landowners want irrigation and I cannot say what is right, the old landowners of course split the risk.


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    Re: Will oil prices hit $100 per barrel this week?

    Quote Originally Posted by robmcg


    I see a lot of land in my drives ...
    We have land here in the US, too, my house happens to be built on land.

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    Re: Will oil prices hit $100 per barrel this week?

    Quote Originally Posted by jdm
    Quote Originally Posted by robmcg


    I see a lot of land in my drives ...
    We have land here in the US, too, my house happens to be built on land.
    Lorna says "Hi John".

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    Re: Will oil prices hit $100 per barrel this week?

    Quote Originally Posted by robmcg
    Quote Originally Posted by jdm
    Quote Originally Posted by robmcg


    I see a lot of land in my drives ...
    We have land here in the US, too, my house happens to be built on land.
    Lorna says "Hi John".
    Yo, Lorna!

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    Re: Will oil prices hit $100 per barrel this week?

    I'll pass that on.

    She is out stooking oats or something in the garden.

    I have writing to do with trains.... gimme space. KBB is well.

    Lorna sings a lot... and wants to go hang-gliding.



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    Re: Will oil prices hit $100 per barrel this week?

    Quote Originally Posted by Eric
    Quote Originally Posted by jdm
    There's a pretty good article on that in today's Post, too. f

    Personally, I think that if the US doesn't quit spending money it doesn't have the value of the dollar will drop further causing the dollar denominated price of oil to continue to rise unchecked.
    The slide in the value of the dollar is very worrisome... I have some things I need to take care of on that score myself....
    I wish I could get paid in Euros.

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    Senior Member misterdecibel's Avatar
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    Re: Will oil prices hit $100 per barrel this week?

    Quote Originally Posted by swamprat
    Quote Originally Posted by Eric
    Quote Originally Posted by jdm
    There's a pretty good article on that in today's Post, too. f

    Personally, I think that if the US doesn't quit spending money it doesn't have the value of the dollar will drop further causing the dollar denominated price of oil to continue to rise unchecked.
    The slide in the value of the dollar is very worrisome... I have some things I need to take care of on that score myself....
    I wish I could get paid in Euros.
    I'd settle for Canadian Tire Money right now, even that's probably worth more than US currency at present.

  15. #15
    mrblanche
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    Re: Will oil prices hit $100 per barrel this week?

    I remember the Canadians crying about their money back in the 70's.

    Do they use the Euro in Switzerland? If not, it's an excellent investment.

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    Vulture of The Western World Eric's Avatar
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    Re: Will oil prices hit $100 per barrel this week?

    "Land is often the same as 'production of wealth', and if you see potential in that youi could match the risks."

    No real risks that I can see; land is a tangible good. And we'd be buying outright - so no fat loan to worry about. No need to generate income from it, either - as the only cost of ownership is a small annual hit from the taxman.

    My medium-term goal is to be able to live off the grid entirely. I don't have enough open land right now for a solar array, so the one thing I'm still stuck paying for is electricty. But with say 10 acres more of open pasture, I could hook up a solar array if I wanted to - and be pretty much self-sufficient. We're on a well, so the water's pretty much free; we have enough land already to raise animals/vegetables if it became necessary or desirable to do that.

    I enjoy all the above stuff - but I also like to hedge my bets. And I think we may be heading into some dark, deep waters in the years ahead....

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    Re: Will oil prices hit $100 per barrel this week?

    Isn't there a lot of coal around your part of the world?

    Seems to me that whatever you do, the USA is likely to need coal to produce electricity, just as it does now. The manufacture of solar panels and attendant energy storage tech may create as big a carbon footprint as the best coal-electricity stations...

    of course myself being utterly unbiased I would just look for numbers to support my prejudice...

    Growing food and land ownership and trading surpluses would seem to me to require a robust legal system , which in turn requires a degree of consensus, which to my mind makes 'individual rights' problematic.

    My medium-term goal is to be able to live off the grid entirely. I don't have enough open land right now for a solar array, so the one thing I'm still stuck paying for is electricty. But with say 10 acres more of open pasture, I could hook up a solar array if I wanted to - and be pretty much self-sufficient. We're on a well, so the water's pretty much free; we have enough land already to raise animals/vegetables if it became necessary or desirable to do that.
    Is there a degree of escapism in this? Or is it demonstably a lifesyle which might serve as an example? Forgive me, I am just musing...

    I have a curious noise in the LS1 too; sounds like pinking [knocking tinking] but goes away after engine is warm... and if it is belt or tensioner why only under acceleration?, if it is pre-igntion or exhaust why does it disappear after about 5kms of driving?
    A good one for the late Joe Woods' "Clank Factor" pages in trade magazines of the 90s. It's got me stumped.
    I'm suspecting the belt tensioner but only under acceleration?
    The alternator is working after a cold start... nope it's only under acceleration, even very light acceleation
    by the time I get to a mechanic the damn thing is silent again.
    The 'tinking' noise is quite loud. ... throttle dependent, but isn't quite like pre-ignition, more like under any acceleration cold there is a kid hitting a tin drum, serioisly audible to anybody on the street. And at Dave's V8-building workshop they went right over the serpentine belts found no obvious faults.
    I don't know if the ECU could be getting a bad signal cold but if it was maybe it should show 'check engine' ... and this is after the new exhaust system and probable issues with the double-skin manifold-pipe flange [a exhaust rattle on start up in the same general area as the tink tink noise]
    I could always solve it by selling the SOB. I'd say it was that exhaust thing but it is seriously loud... and why does it entirely go away warm?

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    Re: Will oil prices hit $100 per barrel this week?

    Quote Originally Posted by robmcg
    Isn't there a lot of coal around your part of the world?

    Seems to me that whatever you do, the USA is likely to need coal to produce electricity, just as it does now. The manufacture of solar panels and attendant energy storage tech may create as big a carbon footprint as the best coal-electricity stations...
    The US has at least a 400 year supply of coal at present and projected usage and more than half of the electicity is generated using coal as a power source.

    The only way to make the carbon footprint go away would be to go nuke which is not likely for political reasons.

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    Re: Will oil prices hit $100 per barrel this week?

    Yes, but that's far too logical.

  20. #20
    Vulture of The Western World Eric's Avatar
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    Re: Will oil prices hit $100 per barrel this week?

    "Is there a degree of escapism in this? Or is it demonstably a lifesyle which might serve as an example? Forgive me, I am just musing..."

    Both!

    I enjoy the rustic life; I like having animals (we already have chickens - hope to have some goats this spring)..

    "I have a curious noise in the LS1 too; sounds like pinking [knocking tinking] but goes away after engine is warm... and if it is belt or tensioner why only under acceleration?, if it is pre-igntion or exhaust why does it disappear after about 5kms of driving?"

    Piston slap-? GM had some issues with the 5.3 liter version of the Vortec engine... maybe some valvetrain chatter that goes away as clearances tighten up?


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