Comments on: $135 Oil: Who is the Culprit? http://www.sapinvestments.com/2008/06/10/135-oil-who-is-the-culprit/ Wed, 07 Jan 2009 03:09:45 +0000 http://wordpress.org/?v=2.3.3 By: Gustaf Rounick http://www.sapinvestments.com/2008/06/10/135-oil-who-is-the-culprit/#comment-19 Gustaf Rounick Fri, 20 Jun 2008 10:42:48 +0000 http://www.sapinvestments.com/2008/06/10/135-oil-who-is-the-culprit/#comment-19 China has just indicated that they will be raising price of fuel by between 17% and 25% depending on the grade. This is a welcome step but is unlikely to lower the amount of subsidies (just keep it from increasing). As a result of this, I see an increased chance of more rapid yuan appreciation as a measure to combat the immediate inflation that will occur. China has just indicated that they will be raising price of fuel by between 17% and 25% depending on the grade. This is a welcome step but is unlikely to lower the amount of subsidies (just keep it from increasing). As a result of this, I see an increased chance of more rapid yuan appreciation as a measure to combat the immediate inflation that will occur.

]]> By: Mats Hultnes http://www.sapinvestments.com/2008/06/10/135-oil-who-is-the-culprit/#comment-17 Mats Hultnes Fri, 13 Jun 2008 23:02:15 +0000 http://www.sapinvestments.com/2008/06/10/135-oil-who-is-the-culprit/#comment-17 I think that whatever is going on driving the price of oil, if it is short supply, peak oil, speculators buying futures etc. the interesting thing is how quick the western world now is developing alternative sources of fuel. It is not a question of if but when they are succesful in doing that. Studies have shown that when crude goes over $30 a barrel other energy sources and inventions are come in to play. Friends of mine are building a refinery in India at the cost of $1.2 billion USD that will be ready in 2010. Will that be worth what they expect in 2010? Maybe, maybe not. During the crisis in the early 1970's, we in Sweden were told that oil and gas recuorces were almost exhausted, so at times I cant help but wonder if the "peak oil" fear is being overblown. Today in the US people are starting to pay the real prices of gas and adjusting their consumption by selling their gas guzzlers for nothing and driving less. I think that whatever is going on driving the price of oil, if it is short supply, peak oil, speculators buying futures etc. the interesting thing is how quick the western world now is developing alternative sources of fuel. It is not a question of if but when they are succesful in doing that. Studies have shown that when crude goes over $30 a barrel other energy sources and inventions are come in to play. Friends of mine are building a refinery in India at the cost of $1.2 billion USD that will be ready in 2010. Will that be worth what they expect in 2010? Maybe, maybe not. During the crisis in the early 1970’s, we in Sweden were told that oil and gas recuorces were almost exhausted, so at times I cant help but wonder if the “peak oil” fear is being overblown. Today in the US people are starting to pay the real prices of gas and adjusting their consumption by selling their gas guzzlers for nothing and driving less.

]]> By: Gustaf Rounick http://www.sapinvestments.com/2008/06/10/135-oil-who-is-the-culprit/#comment-16 Gustaf Rounick Tue, 10 Jun 2008 21:45:10 +0000 http://www.sapinvestments.com/2008/06/10/135-oil-who-is-the-culprit/#comment-16 Thank you! I agree that there are many avenues that the government could be taking to improve the energy situation or, ideally, not be such a hindrance to the free market. Nuclear power would be much more effective than the alternative energy sources being promoted by the government such as ethanol. Finding and drilling for more oil might help some but it is time to allow the markets to discover and establish alternatives since we are running out of oil anyway. If governments would just stay out of the picture we might just use the most efficient one instead of wasting a valuable food resource. That's a big if. Thank you! I agree that there are many avenues that the government could be taking to improve the energy situation or, ideally, not be such a hindrance to the free market. Nuclear power would be much more effective than the alternative energy sources being promoted by the government such as ethanol. Finding and drilling for more oil might help some but it is time to allow the markets to discover and establish alternatives since we are running out of oil anyway. If governments would just stay out of the picture we might just use the most efficient one instead of wasting a valuable food resource. That’s a big if.

]]> By: Bill Butos http://www.sapinvestments.com/2008/06/10/135-oil-who-is-the-culprit/#comment-15 Bill Butos Tue, 10 Jun 2008 20:57:39 +0000 http://www.sapinvestments.com/2008/06/10/135-oil-who-is-the-culprit/#comment-15 Very much enjoyed your comments, Gus. Your consistently free market stance allows you to cast considerable light on events that seem to confound most commentators and certainly the politicians. I agree that high energy prices are here to stay and that the sorts of government policies you describe have fomented or exacerbated the situation. Do you think, though, that anti-energy supply-side policies and the regulations that give them effect should are also be more directly highlighted in your analysis? When was the last nuclear-generating plant brought online in the U.S.? Offshore drilling? ANWAR? Cheers, Bill Very much enjoyed your comments, Gus. Your consistently free market stance allows you to cast considerable light on events that seem to confound most commentators and certainly the politicians. I agree that high energy prices are here to stay and that the sorts of government policies you describe have fomented or exacerbated the situation. Do you think, though, that anti-energy supply-side policies and the regulations that give them effect should are also be more directly highlighted in your analysis? When was the last nuclear-generating plant brought online in the U.S.? Offshore drilling? ANWAR?

Cheers, Bill

]]> By: Gustaf Rounick http://www.sapinvestments.com/2008/06/10/135-oil-who-is-the-culprit/#comment-14 Gustaf Rounick Tue, 10 Jun 2008 19:16:28 +0000 http://www.sapinvestments.com/2008/06/10/135-oil-who-is-the-culprit/#comment-14 That is difficult to say. I would not be making any new long bets on oil right now considering it has come so far so fast and could be adversely effected by a global slowdown but that is not to say it cant go much higher. Its just that the risk/reward is no longer appealing. I cannot see the dollar going much lower against the Euro but I do see it potentially losing a lot of ground against the Asian currencies. Any major gains by the dollar would be seen as a selling opportunity in my mind. That is difficult to say. I would not be making any new long bets on oil right now considering it has come so far so fast and could be adversely effected by a global slowdown but that is not to say it cant go much higher. Its just that the risk/reward is no longer appealing. I cannot see the dollar going much lower against the Euro but I do see it potentially losing a lot of ground against the Asian currencies. Any major gains by the dollar would be seen as a selling opportunity in my mind.

]]> By: Brian Anderson http://www.sapinvestments.com/2008/06/10/135-oil-who-is-the-culprit/#comment-13 Brian Anderson Tue, 10 Jun 2008 19:02:10 +0000 http://www.sapinvestments.com/2008/06/10/135-oil-who-is-the-culprit/#comment-13 How much further do you think oil can go? Can the dollar get any lower? Don't you think we are getting close to the bottom? I hope so. How much further do you think oil can go? Can the dollar get any lower? Don’t you think we are getting close to the bottom? I hope so.

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