Is a PPT-like or currency-type intervention a feasible option for oil?
- Thread starter gangof4
- Start date
thanks. i pay too much attention to fundamentals. must be why i can't seem to make any money.
I'm bearish despite believing in peak oil, actually. We're at a turning point where a few laws and properly designed policies could get us off oil and onto a nuclear-electric car infrastructure fairly quickly.
Oil is clearly priced at the margin. Its value is totally determined by the amount the last seller or buyer is willing to pay. Just imagine what would happen if some policy passed to reduce our consumption by 25% in 5 years (possible with nuclear+battery+solar)? (5 million barrels/day). Thats Iran + Nigeria for you alone.
Now imagine the rest of the developed world followed suit (which tends to happen) ... That takes you to a net reduction in world consumption by 15-20 million barrels/day. With 85 million barrels production, what is the value of the last barrel then? $10?
Amazing how no one is willing to step up to the plate. Either I am brilliant or everyone else is braindead. Considering myself quite modest, I think this is a case of everyone braindead.
Instead of spending $650 billion/year on defense, imagine we spent $650/billion on requiring batteries for cars. At $3000/car, that would afford us 216 million cars subsidized with hybrid or all electric designs reducing our oil consumption as I outlined.
Not rocket science, and not terribly expensive. That would be my version of 'war on terror'. What better way to fight war than to bankrupt your enemy making them too poor to buy weapons?
The funny thing: I'm arguing about fundamentals. Whats going on here is that oil is a being supported by investment money that is buying it to store it (unless they've found a way around that too, with ICE swaps). The question: Isn't that oil being stored somewhere? I wonder if indeed storage #s aren't much higher than we see. Private storage tanks don't necessarily need to show up on EIA stocks.
And btw: I do agree .. it is curious that ever since these Iranian bourses and Dubai oil contracts came online this past year, its coincided with quite a spike. Remember, since price is determined on the margin, maybe Iran + co found its cheaper to drive price up on the margin to sell more oil on the cash market at prices indexed to what futures trade at.
Thus Iranian tankers filling up.
we think alike on this issue. i agree with everything you said. my aforementioned 12th grade paper talked about exactly this and the need to have a Manhattan project type approach (in terms of resources and time mandates) to creating energy independence. 28 years later, we just need political will.
i talk about this and also wonder why everyone seems so brain dead about this. leaders need to fucking lead. it's like we've resigned ourselves to being OPEC's bitch as if we are powerless to do anything. everyone talks like there is nothing we can do now that won't help for decades. well, yeah- better if we'd have planned the fuck ahead, but that isn't true. like you said, if the world/traders/producers conclude that the US is serious and has a no bs plan to decrease oil imports by 25% (or whatever) within 5-7 years, the future value of their oil drops off a cliff, and their desire/need to sell whatever they can NOW will drive down prices. OPEC self imposed production limits will be violated by everyone again and the national savings and support for the dollar will pay costs back in spades.
my summation of my 12th grade paper was that the costs of the project would be dwarfed by the savings- i still agree.
besides, imagine a world where the Strait of Hormuz doesn't mean dick. we could leave them to kill each other over their shithole in the sand.
for now though.... an initial salvo of intervention i talked about in my OP would be a good first message that we're sick of being someone's bitch and we're done fucking around... (and it might save my underwater short position in CL
hard to imagine less dollars spent on defense.
http://oregonstate.edu/cla/polisci/faculty-research/sahr/defn.htm
Thats quite old data. Take a look at the newest #s...
Maybe we should rename this thread ... 'how much have you lost shorting oil...'
lol- yeah. well, in my case, my initial foray wasn't til yesterday. my thinking was that we'd have a short term peak early next week, that many would think the same, and that i'd front run it before others did. oops. only a body blow- nothing like the damage i did to myself in an asian futures contract wednesday night- worst one day loss i've ever had. saying something, as i've made my living exclusively from the market since 1988.
back OT: i don't see our defense budget declining save for the additions of wartime. that said, your point about taking the $ from our enemies is spot on. from a purely national defense perspective, the amount of dollars (ie: new pesos) we're sending to enrich the wrong governments is, frankly, scary.
this is both an economic and national defense issue that needs to be treated as such.
if only the American people were smart enough to get rid of politicians who pander to the short term. unfortunately, they pander to the short term because that matches the attention span of the populous and, to do otherwise, would mean never being elected/re-elected. we have global food stores at historic lows and our politicians let a good marketing campaign turn into trashing our farmland by over planting subsidized corn for ethanol. jesus, nobody would run their own personal finances or a company like this, but somehow it's how our country is run.
/rant