Comments on: A Market Adjustment is Coming: Oil Prices Are About to Fall http://www.intellectualconservative.com/2008/06/25/a-market-adjustment-is-coming-oil-prices-are-about-to-fall/ Conservative and Libertarian Intellectual Philosophy and Politics Wed, 08 Feb 2012 23:00:53 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Bob Stapler http://www.intellectualconservative.com/2008/06/25/a-market-adjustment-is-coming-oil-prices-are-about-to-fall/comment-page-1/#comment-72645 Bob Stapler Thu, 26 Jun 2008 23:32:01 +0000 http://www.intellectualconservative.com/2008/06/25/a-market-adjustment-is-coming-oil-prices-are-about-to-fall/#comment-72645 Armentano says: “... most fundamental reason to expect prices to fall is that the gap between the price of crude oil and the cost of producing it is way too large to be sustained in the long run”. The most fundamental reason the price will fall is the market has, at worst, overreacted to a supply problem that is too far into our future (at best, it is a false signal of peak oil). The market is behaving as if oil is already in short supply, not 'will be in short supply'. Supplies have been affected by a number of short-term factors (e.g., long, cold winter depleting domestic stocks, futures hedging, bear market driving investors to seek alternate money makers) and one long-term factor (Peak-Oil anxiety). Winter is over and we can expect the usual lag between replenishment and seasonal price adjustment. Prices will probably fall slowly compared to similar returns to normal simply because the hysteria will retard confidence. But, once investors and consumers see prices heading steadily downward, should accelerate. http://www.randomuseless.info/gasprice/gasprice.html - this guy says we aren’t at all time high yet, adjusting for inflation (indexed to deflated GPD) http://www.eia.doe.gov/emeu/aer/txt/ptb0524.html - source for above opinion http://www.eia.doe.gov/emeu/aer/pdf/perspectives.pdf - lots more charts at EIA http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/oil_market_basics/full_contents.htm - EIA oil market primer http://www.wtrg.com/ - analysis by producer consultant Meaning of various inflation indexes and guide for where and how to use each http://www.measuringworth.com/uscompare/ inflation and worth calculator bundle http://www.measuringworth.com/guide.html user guide for calculator http://www.nytimes.com/interactive/2008/06/09/business/20080609_GAS_GRAPHIC.html?#tab2 - shows relation between price and local income, i.e., share of household budget http://www.financialsense.com/fsu/editorials/rapier/2007/0531.html - good explanation of price drivers; including lag between inventories and price, and market incentives/disincentives to keep up with demand http://www.financialsense.com/editorials/swenlin/2008/0620.html oil price bubble (and eventual collapse) explained, feels price is 2-3 times what it should be. Armentano says: “… most fundamental reason to expect prices to fall is that the gap between the price of crude oil and the cost of producing it is way too large to be sustained in the long run”. The most fundamental reason the price will fall is the market has, at worst, overreacted to a supply problem that is too far into our future (at best, it is a false signal of peak oil). The market is behaving as if oil is already in short supply, not ‘will be in short supply’. Supplies have been affected by a number of short-term factors (e.g., long, cold winter depleting domestic stocks, futures hedging, bear market driving investors to seek alternate money makers) and one long-term factor (Peak-Oil anxiety). Winter is over and we can expect the usual lag between replenishment and seasonal price adjustment. Prices will probably fall slowly compared to similar returns to normal simply because the hysteria will retard confidence. But, once investors and consumers see prices heading steadily downward, should accelerate.

http://www.randomuseless.info/gasprice/gasprice.html – this guy says we aren’t at all time high yet, adjusting for inflation (indexed to deflated GPD)

http://www.eia.doe.gov/emeu/aer/txt/ptb0524.html – source for above opinion
http://www.eia.doe.gov/emeu/aer/pdf/perspectives.pdf – lots more charts at EIA

http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/oil_market_basics/full_contents.htm – EIA oil market primer

http://www.wtrg.com/ – analysis by producer consultant

Meaning of various inflation indexes and guide for where and how to use each
http://www.measuringworth.com/uscompare/ inflation and worth calculator bundle
http://www.measuringworth.com/guide.html user guide for calculator

http://www.nytimes.com/interactive/2008/06/09/business/20080609_GAS_GRAPHIC.html?#tab2 – shows relation between price and local income, i.e., share of household budget

http://www.financialsense.com/fsu/editorials/rapier/2007/0531.html – good explanation of price drivers; including lag between inventories and price, and market incentives/disincentives to keep up with demand

http://www.financialsense.com/editorials/swenlin/2008/0620.html oil price bubble (and eventual collapse) explained, feels price is 2-3 times what it should be.

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