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Originally Posted by Greg B
A barrel will be $100 before year's end. I thought that prediction was crazy but looking at how high it's gone already I wouldn't be surprised.
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On a purely techincal analysis, barring unforeseeable events, I think $67 was the peak. It will take time for it to go down and things need to cool (i.e. shit blowing up in the middle east), but I think the worst is over.
The biggest issue most Americans do not understand is that these high prices are caused by a series of issues, mainly of our own causing.
A short list (NO PARTICULAR ORDER OF EFFECT)
1. Declining dollar - Oil is priced in dollars (as is gold), both have risen because of the weakened dollar.
2. War in Iraq
3. Lack of refineries. It is a bitch to build a new refinery because no one wants them in their back yard. Saudi Arabia said they would build one tomorrow if they permitting was guaranteed. They do not want to jump thru hoops to build something that in the end is mutually beneficial... no one has teken them up on the offer.
4. Weather/Strikes/Refinery issues. The hurricans going thru the gulf shutdown oil rigs, Nigeria had strikes, etc etc
5. China. Multi-National companies have flooded China with business to produce low quality trinkets and shoes. They need oil to do this. So while saving on labor and material costs they have accelerated China's use of oil. So the USA is no longer the #1 purchaser of oil.
A lot of the above and other issues has caused the market to deem oil's value $60+ a barrel. Opec has increased production to record levels, so there is no shortage, but the market is pricing in the uncertainty...
At this point, the additional cost of gas has not hurt the economy, but if it continues this 'tax' on the economy will put us into slow down/recession shortly.