gold down ... oil down ... but ...., page-6

Huntleys thoughts on Oil..back in August
Oh dear supply and demand.

OIL
We've pushed the oil scenario very hard, as it is
important from a sector sense, but also from the
big picture economic sense. We obviously give
the Hubbert's Peak thesis considerable credibility,
and it argues that the world is either at or close to oil demand exceeding supply. We've thought whether it was this year, or a few years out, the oil scene would see sharp upward moves, reflecting this tightness, and we're sure getting that.

The way oil is going it could reach $US50 by next January. It's argued by credible economists in US that every $US10 rise in the price, knocks 0.3% off American GDP which is half as dependent on oil as it was 24 years ago. The arithmetic may not be that simple, as it is difficult to arithmetically represent consumer psychology in reacting to hikes in the price as it hits disposable incomes.

US consumer confidence is currently at record levels, indicating that they can live with the current prices.
The US is the largest world consumer of oil at 20million barrels per day (MBPD), but produces only 5.7mbpd, so you can see along with Al Qaeda just how large its imports rank. No wonder the US is adding to its strategic stockpile this year. OPEC production appears to have plateaued, while the rest of the world's production continues to rise, but it is doubtful if it is outstripping (a) demand and (b) the ability of revolutions, natural disasters and terrorism to interrupt oil supplies.

One of the results of the Iraq war was to be a very
substantial increase in that country's oil exports, and thus a lower global price for energy. It's a long time coming!



Tp