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The Triple Digits Welcome Back Crude: WTI Back Over $100 Once Again
So much for the IEA's intervention. Crude is once again comfortably over $100, and by the looks of things will be heading far higher before long. Yet the climb back to triple digits was not easy. Note the numerous plunges in CL where crude prices would tumble for no other reason than having way too many trigger-fingered headline scanning algos trading each and every commodity, and massively overreacting to the smallest piece of good or bad news. Elsewhere, we expect rumblings about gas at the pump, which is now set to resume its climb to $4.00/gallon to once again return, as economic models have to be adjusted even lower as that great whooshing sound is America's marginal discretionary purchasing capacity entering millions of gas tanks side by side with the unleaded.
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qe lite july 26: success!
This is the achilles heel of the entire ponzi construct.
Gas prices are going to soar much sooner than most people believe. And there's fuck-all that Bernanke can do about it.
'Try QE'ing to infinity when gas at the pump is $8 per gallon, Ben!
Gas is going to be everything that Bondzilla was 'supposed to be'. Bernanke may have neutered the Treasury market by juicing the Primary Dealers into buying his paper. But this... this is something beyond the powers of the little man behind the curtain. Welcome to your worst nightmare Benny boy... "Gas-zilla" is coming. When gas at the pump hits $5, America grinds to a halt. At $6, America falls to pieces.
Ready for QE3, Ben? Go for it, big guy.
America can't handle Gas at $4.50/gal let alone $5.
I hope we get there soon so we can oust the members of congress. They are the biggest bunch of idiots. To think , when they call their congressional hearings, that they have ANY CLUE what they are hearing in testimony, or any idea what to do with that information.
There should be base IQ levels that one should need to surpass before being ALLOWED to make decisions for the rest of us.
And for those of you who would say "Well, YOU elected them" I say - it's tough to elect who one wants, when you want no one who is running, and the votes are manipulated ANYWAY.
We need a revolution ---- NOW
Actually it seems when gas pops over $4 avg is when things start grinding big time.
Better learn, and quickly. My guess, around September we go over $4 again (U.S. avg).
You said it, Popo. Kunstler is right. We have squandered our debt/wealth on building an unsustainable suburbia.
Read this book.
'Know it well! Great read.
Suburbia is disgusting, anyway. Who wants to see worthless malls and shit?
Smarter infrastructure development is the only way forward. Suburban America was only viable when the US had the run of the world. We don't anymore, so it's time to "get real."
You think the suburbs are bad now? Just wait. They are the slums of the future.
Many suburbs I see around here are already slums, what were once nice neighborhoods 20 years ago are just hoods today.
Agreed. Excellent book. I read it about 5 years ago. In 2006, we bought a new 2007 Yaris. One of the first here in Jacksonville. Got some strange looks back then....something like 'what the hell is that thing'. I just smiled to myself looking at all the huge SUV's driving by. Now, we don't get those looks anymore. However, I still get some condescending looks from guys driving pickup trucks/SUV's........they seem to expect some little lady to get out of the car and can't accept that a guy is driving a Yaris.
A real eye-opener of a book. But it's too late.
Falling gas prices run contrary to the Bernank's core area of academic (i.e. theoretical) expertise, which is the hazard of deflation and depression era dynamics.
At a time of high unemployment, lower purchasing power (due to falling real wages), immense slack in demand, trillions in wealth stripped away from the middle class in everything from falling home prices to failing business, the Bernank says inflation is good for you, and eat your cauliflower.
I just can't help thinking about all that shadow housing inventory the banks are holding. They are praying the Fed can stimulate the economy enough that house prices start to recover (and they don't care if it's growth or inflation as long as prices pick up). But all the while oil moves higher, those McMansions 30 miles out in the "suburbs" become less viable as it costs too much to get to where you need to go (5 miles to the mall, 30 miles to get to work, it all adds up).
Exactly!
There is talk . . . .
Some Federal agency has floated an intriguing idea.
They will forbid banks to sell foreclosed property and force them instead to rent the property to renters.
Yeah moral hazard blah blah and imperial govt blah blah, but this would put a floor on prices and hold rents down.
Interesting.
...and the bank can keep the asset at par forever.
Market forces are already keeping most defaulted property from even getting foreclosed on!
http://dont-tread-on.me/the-rothschilds-and-the-hong-kong-mercantile-exc...
it's because so many people are on vacation with their car and driving thousands of miles.
YEP!
NO INFLATION HERE! Now move along workdrones!
It's those legions of untaxed private jet owners I tell you!
Ironically, one of the most enviable aspects of private jets is not champagne and caviar (you can get that in first class on a commercial flight), but because it allows you to bypass the government molestation of security scanning. So instead of making regular air travel less hellish, why don't we just demonize those who are willing to pay more to avoid the rubber-gloved hand of the TSA.
Don't worry.
The Bernank says its 'transitory,' and Dudley says you can substitute iPad2s, or in this case, homemade ethanol (made from potatos, and not corn - corn's too damn expensive), bitchez.
I'd rather turn the potatos into rotgut vodka, we'll need something to dull the pain in the coming months.
We need to build motors that are plentiful, cheap to build and cheap to buy, that can run on rotgut vodka. In the coming times, we can both drink and drive on the same fuel.
oil only costs like 10 bucks to get it out of the ground
lol, source?
based upon a paradigm of facts from various experts who have posted on ZH and the correalation or relationship that it costs 5 dollars to dig up an ounce of silver. And i think that cost goes down signficantly if you dig up the silver or drill up the oil from your own back yard.
None of that makes any sense. If you're comparing oil to silver, as well not putting due wight to transportantion costs and all those other "factors" please label your ten bucks per barrel figure as something you just pulled out of your ass. Otherwise you can cite an article or some other evidence/reasoning for that number.
Personally, I would contend that the cost of extracting, refining and transporting a barrel of light sweet which turns into gasoline in an american gas pump is significantly higher than 10 bucks.
I think he's being sarcastic.
That being said, oil's extraction cost per barrel varies widely.
The barrel that comes out of wells at Ghawar drilled 40 years ago is pretty cheap per barrel. A lot less of it is coming out than came out 39 years ago, but what comes out is cheap.
On the other hand, a barrel of oil coming out of the Thunderhorse ultra deep platform in the Gulf of Mexico, amortizing platform building costs and operations . . . nah, sorry, that ain't $5/barrel.
Costs to pull oil out of the ground haven't gone up that much since oil was $17 a barrel in the late 1990s, if at all. All of the cost is in the initial drilling procedure. Middle East oil is pulled out of the ground for under $5 a barrel. I remember reading a story where oil from middle east nations are sold to the exchange for something like $7 a barrel. I was also told by an oil man that once a rig is operational the cost to pull a barrel out of the deep sea is something like $17. The total aggregate base cost of drilling oil is somewhere around $10-$11 a barrel. An associate of mine left to follow his friend to the Dakotas to build oil pipelines and they are making a killing. Even tar sands and oil shale cost less than $25 a barrel to pull out. Most of the cost is due to environmental regulations, not the cost of getting it out of the ground. Fracking is actually very low cost compared to deep sea drilling.
$100 oil is complete BS no matter what anyone says. When oil was on its first BS record run every single analyst said that $60 oil was way overpriced and that a demand based case couldn't even be made for $40 oil. That was until oil went to $147 a barrel. Then they all said $60 oil was a fair price. Based on the increased demand from China and India oil should be trading at $35 a barrel, no more.
It is just bubblenomics 101. Run the price far above what any market scenario can handle and then drop the price back down once the sheep forget how much it used to cost. You'll settle at a price three times what the market should dictate but since it is less than what the top was the sheep will cheer. Meanwhile those responsible for the mess are laughing all the way to the bank.
Between pulling the oil out of the ground and loading it on a tanker or into a pipeline there stands either a taxman or a government shareholder, and his substantial take isn't factored into your cost model.
adr - no problem, continue driving your 12 mpg SUV.
Most of it ain't light sweet crude.
And most of it is under massive pressure at the bottom of the ocean floor.
and... it only costs pennies to put politicians into the ground!
Yes. You are right, but I forget the quantity of crude that one can obtain for $10 of infrastructure and operating costs. Perhaps you can remind me.
aneurysm crude: where catching falling daggers is actually good for your health.
There is a reason why oil is called, "Black Gold."
More like a case of Dollar Devaluation. DXY @ 73.6, USDJPY @ 78.02
Early this morning the yen was up to 77.9.
Sorry, bud. The deniers of reality want to blame it all on dollar issues and printing money, but the spike of $147/barrel was in July of 2008 . . . BEFORE BEN STARTED PRINTING.
You're going to die from non natural causes. Just accept it and try to get more than 5-10 more years, which is your likely expectancy at this point.
ZIRP has the same effect on USD over time as direct printing, and Greenspan started it after 9/11.
Comments are unreadable now.
Those scores need to be moved either to the top (and replace meaningless "Total Score:1") or to the very right part of the post window. And it needs to be much smaller, too.
ABC
Agreed.
Total Score:1
What is this total score anyway ????
Eat your peas. Buy a car with better MPG
-Prez
Now your post will pass the .gov censors.
http://www.telegraph.co.uk/earth/earthnews/5389278/Obamas-green-guru-calls-for-white-roofs.html
pennant breakout in CL
Trade'ja... More USA Paper Debt for Oil tanker on high seas full of WTI ... LOL
Good! Can't wait to see it at $120 a barrel so we can end this farce already! Nothing like Ameircans having to park their status symbol becuase they can't afford the gas. Hello Carpooling!
I am tired of seeing these people making 30K a year driving Escalades, BMW's and infinities acting as if they have money.
Sorry...in a pissy mood today.
Agreed... Canyonero!
I saw someone put $5 in their Escalade a few days ago. Too funny.
Gasoline consumption(USA) is already off by 2% yet prices are very firm. OIl demand is tough to curtail. Oil itself can be stored, or purchased in futures many years into the future. The economic effects of higher prices could be more harmful than our last bout with peak oil. Add in food and other resources and most nations broke, a few owning most of the wealth, not so good.
I ride a bicycle to work about 3 times each week.
Let the price rise.
Same here! Rountrip VA to DC every day! Some 3500 miles/93K calories/$1500 savings per year! Ditto for short trip errands. I now joke with my gas station about coming in to fill up once per month!! No kidding! And the best part is watching the frustrated drones jammed up in traffic on the freeways/downtown streets! It's amazing how addicted people are to the car!
Do you wear the shorts and helment and ride in the middle of the road, like the rest of your tree huggin faggit buddies in Austin do ??
Wow, what a reversal in crude.
Looks like the U.S. Dollar is about to crater.
I'm also watching DBA, in case I need to buy some in order to hedge the cost of my 99 cent cheeseburgers from McDonald's and Wendy's.
Junk away.....
Momo, you are the perfect fade. LOL. Only you could post that oil folded like a cheap suit an hour before it soared. How do you do it Momo? You must be puking up blood. Hopefully you faded yourself. lololol...
Wow you must have really gotten kornholed big time on your NFLX youve been chirping about in every post for weeks.
no need to prompt the board to "junk away" your posts. you've earned the junks one post at a time for two years.
Oh, the old greenback, she ain't what she used to be,
Ain't what she used to be, ain't what she used to be.
The old greenback, she ain't what she used to be,
Many long years ago...
This is good so that Saudis and Russians can buy more IPad.
I think they need the WTI to jack up over 107 in order for JPM to flip our- er.. Obama's SPR release to the Chinese at a profit
I dont count on the Chinese being so retarded. We just pump up prices and flip it to the dumb Chinese? I dont believe that line. SPR release was for upcoming Iran war.
Can the Bernank not digitally print Oil Futures too? And then we simply download them on the Energy Applications on our iPads 2 and transfer them into our vehicles and heaters?
You guys are sooo 20th century with your scarce resources capers.....
I hear Barnank has an oil printing machine designed as well as a gold printing machine. Should be great.
The 1 dollar cheeseburger at McBernanks sure is meager.
And it's kind of them to give a handful of onion fragments with it.
1930's Depression=No Jobs/Low prices
2010's Depression=No Jobs/High Prices
At least with deflation you can live off your savings.
"1930's Depression=No Jobs/Low prices"
This time, the job situation has surpassed the lesser depression's 20% unemployment, currently at 23%+, and we still had manufacturing capability then.
Yesterday, I was talking to my mother (this is her second depression) and she started rattling off names of manufacturers that were here in the past, and gone today.
GE, Farnsworth, Tokheim, International Harvester, Magnavox, Seyfert's, Zollner Pistons, and on and on and on. Probably about two dozen she named off the top of her head. All gone. Amazing.
We're not gonna make it this time.
Zenith! "The quality goes in BEFORE the name goes on!"
ben can kill oil. all he has to do is delete "extended period", or hint at rates rising due to inflationary pressure. buck goes nuts, oil crashes.
That might last for an hour until people say 'Wait...what?' and then the roof caves in.
Who in their right mind would ever believe Bernank is suddenly 'pump off' and will raise rates to this dead economy? Simply cant happen.
I have come to accept that I can't help people.
They cannot accept that oil is finite and it's scarcity will kill billions in a short period of half a decade.
If they cannot accept it, they cannot prepare. If they don't prepare, they'll be one of the dead.
Dollar value and dollar printing has no effect on geology. Please . . . PLEASE . . . try to understand that. Those rocks were there before Ben. They'll be there after Ben. They'll be emptier of oil in pores after Ben, but Ben doesn't have a lot to do with that -- other than an ability to destroy growth and consumption rate. That . . .has nothing to do with what's there.
...equity market crashes and bond market crashes.
The banks don't really want that, do they? ZIRP-4-EVER.
Benicopter did it.
been saying oil is extremely udervalued and should at very least have been at $112 for last month and would have reached high 120's when this round of $112-115 is achieved shortly.
God damn, I first read that as oil over $100 an ounce. Hello hyperinflation. Heh.
haha +1
refreshing home page in ZH does not bring up new articles/comments in IE9....glitch? frozen
Oh fuckola, now you've gone and pissed in the campfire! The Firefox, anti miccrosoft and pro-apple nerds are gonna swarm on your post like flies to shit.
Yeah, it seems like you have to hit homepage PLUS a refresh; same goes for comment edits, 'recent comments' in acct., etc.
Not just you...
I remember a time of chaos. Ruined dreams. This wasted land. But most of all, I remember The Road Warrior. The man we called "Max". To understand who he was, you have to go back to another time. When the world was powered by the black fuel. And the desert sprouted great cities of pipe and steel. Gone now, swept away. For reasons long forgotten, two mighty warrior tribes went to war and touched off a blaze which engulfed them all. Without fuel, they were nothing. They built a house of straw. The thundering machines sputtered and stopped. Their leaders talked and talked and talked. But nothing could stem the avalanche. Their world crumbled. The cities exploded. A whirlwind of looting, a firestorm of fear. Men began to feed on men. On the roads it was a white line nightmare. Only those mobile enough to scavenge, brutal enough to pillage would survive. The gangs took over the highways, ready to wage war for a tank of juice. And in this maelstrom of decay, ordinary men were battered and smashed. Men like Max. The warrior Max. In the roar of an engine, he lost everything. And became a shell of a man, a burnt out, desolate man, a man haunted by the demons of his past, a man who wandered out into the wasteland. And it was here, in this blighted place, that he learned to live again...
http://www.youtube.com/watch?v=bsRpNFXL67c
Yes we're gonna have a wingding
A summer smoker underground
It's just a dugout that my dad built
In case the reds decide to push the b_tton down
We've got provisions and lots of beer
The key word is survival on the new frontier
Introduce me to that big blonde
She's got a touch of Tuesday Weld
She's wearing Ambush and a French twist
She's got us wild and she can tell
She loves to limbo, that much is clear
She's got the right dynamics for the new frontier
Well I can't wait 'til I move to the city
'Til I finally make up my mind
To learn design and study overseas
Have you got a steady boyfriend
Cause honey I've been watching you
I hear you're mad about Brubeck
I like your eyes, I like him too
He's an artist, a pioneer
We've got to have some music on the new frontier
Well I can't wait 'til I move to the city
'Til I finally make up my mind
To learn design and study overseas
Let's pretend that it's the real thing
And stay together all night long
And when I really get to know you
We'll open up the doors and climb into the dawn
Confess your passion your secret fear
Prepare to meet the challenge of the new frontier
Imho, I don't fully buy the peak oil argument. Peak oil is upon us, this is certain. But what we are now seeing aren't the effects of peak oil.
What we are seeing are the consequences of QE to infinity approach.
Dollar was the oil meter. Now that dollar is diluited and worthless, oil is morphing in it's meter. It is becoming money. If you don't believe me, check the gold/oil ratio. It spells deflation.
Further, oil producing countries are setting barting agreement with China and non western oil guzzling countries in order to avoid dollar based contracts and the linked problems (like that of China that has a sitting mountain of dollars that has to handle like shangai, the game, in order to avoid setting an avalanche that would turn all dollars in crap)
(on this arguments check the concept of "too big to trade" in the last articles of Martin Armstrong).
This will drive us and US to two scenarios:
1) We will have higher oil prices via an artificial engineered oil crisis like that of Nixon in the 70s check this link http://dont-tread-on.me/the-rothschilds-and-the-hong-kong-mercantile-exc...
2) We will see US at war in order to prevent non dollar based oil deals (Saddam Hussein was a good guy when he was at war against Iran, then a bad guy when he wanted to export crude priced in euros; Iran is a rogue nation non becouse of terrorism, but becouse in its oil bourse, crude is trade too in other currencies than the dollar.
At this moment we are seeing G. Bush carrier entering Persian Gulf. The next step could be a false flag event and an aggression war to Iran by an US - Israeli alliance.
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