Revising my prediction on a higher oil price, since I was right
Written by Michael Vass
Well it would seem that I am wrong and right. Both of which seem to be occurring sooner than I would have ever imagined. And the implications of this is going to have repercussions for quite some time.
With crude oil closing above $100 on Tuesday I am proven right in my expectation of an increase in the price. But I am incorrect for the reasoning and timing. It was my expectation that OPEC would cut production and this would help to fuel further price increases on the New York Mercantile Exchange. The OPEC meeting is on March 5th, and there are still expectations that production will be curtailed. So this may fuel even higher prices.
The cause of this sudden rise was not my presumption of actions in Venezuela and Iran either. It in fact is directly connected to the refinery accident in Texas on Monday. The refinery handled 67,000 barrels of oil a day and as such will have an impact rather quickly in the U.S. This explosion was a tragic accident that could not be expected nor factored.
But in looking at the results from this and the comments over the weekend of Hugo Chavez there are some things we can understand. Chavez, by the way, has backed off his threat to cease sales to the U.S. Obviously the threat was not a major problem for the U.S. as others nations were willing to cover any gap and the total volume from Venezuela is not enough to impact the nation. Cutting sales would impact Venezuela though. In addition I would imagine that Iran was not willing to back their friends in Venezuela on this matter.
According to AAA and the Oil Price Information Service the price for gasoline hit a national average price of $3.032 a gallon. Expectations by the Energy Department target the cost per gallon to exceed the $3.23 that was reached last May in this year. This expectation seems to be a forward indicator of higher crude oil prices, and futures contracts seem to support that theory.
I previously mentioned
Without accounting for the unforeseeable, there has been nothing that has changed except the accelerated increase in crude oil prices and futures contracts. Given that, I continue to stand by my outlook, with one change. I expect that the short-term prices will likely run to about $110 before backing off. My new target, adjusting for this accelerated move in prices, is that by the end of 2008 crude oil will exceed $125 - $130.
Hopefully there will be no more tragedies for the entire year that could accelerate this move higher.
May 7th, 2008 at 6:40 pm
[...] those that may have read my prior posts on crude oil prices (Revising my prediction on a higher oil price, since I was right) the fact that oil has now crossed $123 per barrel is only surprising in the fact that it has [...]
May 24th, 2008 at 4:47 pm
I agree with you. The oil drives much of the global economy these days. We have to live with that and if we all want to see oil prices go down we need to reduce the use therefore the global demand will decrease. Only if the demand decreases the prices will fall. We have to look for alternatives also.
Thanks
July 24th, 2008 at 12:49 pm
America needs to stay FOCUSED, AWARE and EDUCATED.
History reminds us that every time oil prices peak and the North American market/consumers start to discuss alternative energy sources, the oil exporting countries start to trim down their prices. History also tells us that the oil exporting nations have been very successful in the past and in fact, we have lost our enthusiasm and dropped many of our alternative energy initiatives after oil prices are reduced.
WE need to stay focused this time.
1) Al Gore and his energy initiative is on course.
2) T. Boone Pickens and his wind power initiative is on course.
3) BG Automotive Group’s mass production electric vehicle program is on
course.
4) The Gas Reduction Act of 2008 might not be the most environmentally sound
solution, but yet it shows that Congress has finally realized that we have an
energy crisis (again), and a real threat to our national security.
The continued dependence on foreign oil is a threat to our long term democratic values. We must become an energy independent nation, and with this, some sacrifices will have to be made by the American consumer.
Be aware!!
We are exporting approximately USD $700 Billion dollars per year of U.S. currency. The majority of this money is being transferred to the Trillion dollar “sovereign wealth funds”. This is USD $700 Billion not being spent on America’s educational system, health care and security.
The “sovereign wealth funds” are directly buying major interests (large blocks of stock) in U.S. companies, including most of the major banks. Also, billions of dollars of “sovereign wealth fund” money is being invested in our hedge funds, private equity firms, and the investment banking industry. A few of these firms are directly and indirectly investing large sums of money into our “gas combustion” automobile industry. Do we want our auto industry in the direct or indirect control of the firms that are supplying us oil? This is an interesting topic for an investigative reporter.
There are automotive consulting companies in Michigan (heart of our auto industry), lobbying States and our Federal Government, NOT to subsidize the Electric Vehicle industry. The latter seems to be contradictory to what the American public would like to see from our automobile industry. After the billions (excess of $20 billion) the automotive companies have lost in the past 6 months producing gas combustion vehicles, you would think they too would change course. Changing course is not adding 2-4 miles per gallon w/Hybrids. Drastic measures in our auto industry must take place and NOW!
Do not let the temporary reduction in oil prices push us off course….AGAIN.
Read, Read, Read- Stay on top of the issues. Let’s not be fooled again.
STAY FOCUSED, AWARE and EDUCATED!
October 31st, 2008 at 10:49 am
Graet post mate. Keep them coming….
March 20th, 2009 at 3:04 pm
I believe that in times like this, we need to look at EOR. Although a temporary solution, reducing our dependency on foreign oil will at least help OUR economy for the time being, not only saving us money, but to be able to use that money to invest in alternative fuels for the future.