Comments on: Offshore Drilling? Come On.

By: Frank

Frank — Wed, 13 Aug 2008 15:51:20 +0000

“Speculation is a naturally-occurring cancer on free market societies.”

Cancer? Malicious? To the contrary. Speculators save in times of abundance and sell in times of scarcety. Without times of scarcity would be harder.

Thank you speculators!!

By: Tom

Tom — Wed, 06 Aug 2008 01:34:38 +0000

I think that gold is just as rife with speculation as oil is, so I think what this shows is that commodity speculation hasn’t favored oil over gold or vice versa. It’s interesting how close they are. I’m not really sure what the best comparison of actual value would be other than inflation-adjusted $$.

I think airlines and others buying futures is overall a good thing. That’s really what financial markets are for — paying (on average) a premium to avoid risk… you don’t pay today’s prices on a futures contract. Also this doesn’t have much affect on their total oil consumption so over a period of time (and spread among all the airlines) I don’t think this would have a big net effect on prices over time. But I still have some things to learn about futures…

By: james dilts

james dilts — Mon, 04 Aug 2008 15:06:26 +0000

Yup! Good ole’ government interference to the rescue. France, I’ve heard, uses 80% nuclear power. Good for them. Next - getting Yucca Mountain okayed for storage. I did a research paper essentially on that, and looked at the government reports. Except the worst case disaster scenario, the max radiation output of that would only double the background radiation for a small area around the site after 100,000 years. That’s right, 100,000 years.

By: Bryan Dilts

Bryan Dilts — Mon, 04 Aug 2008 11:52:11 +0000

Not a bad thought, but just GW Bush removing the executive order against offshore drilling caused a $20/bbl drop in price. So the threat of offshore drilling has a huge short term impact. The congressional law now needs changing. Then watch a price collapse.

Also, new production will really start flowing in 18 months or less. Oil companies want to get the $$$ out of any oil wells as quickly as possible, before the inevitable price collapse. When I was in the oilfield the price dropped over 50% in one month because Congress finally got some regulations out of the way.

Is the speculation causing the problem? No. Speculation is causing the solution. With the price of oil so high, alternative energy sources like nuclear may restart, drilling is dramatically increasing on dry land, and conservation is happening. All because the price got so high.

Oil and Gold. Yep. An amazing link. I think it may only prove that we have an underlying inflation bubble caused by runaway government money creation and spending. In other words, we may go through a period of 100% inflation over the next 5 years caused by The Federal Reserve and US Congress.