I tend to agree with you 9lives. High energy cost are a form of tax on the net energy importing countries (which excludes Australia) such as USA, Europe and China/India. This could get intertwined in the financial mess that banks are in as they face an increase in bad debts (and a fall in bank capital). So far its been the acceptance by the US Fed of lower rated securities held by banks for govt treasury bonds that has supported the financial system from a further meltdown, but the US Fed only has several hundred billion of those left to exchange so Bernanke will have to find more tricks.
We could see some ugly action on world markets in the next two months as the realities start to grip economies.
I am not sure how deeply that would affect the demand for oil and hence its price. It could also be a negative factor for other commodities such as iron ore and coking coal on spot markets.
I wonder how the price of gold would be affected.
Planning for these eventualities could be as simple as just exiting all positions, or making decisions about each company. I think I will continue to hold most of mine (especially the oilers), but ensure that I can not get a margin call.
loki
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