energy speculation
I read an article about a lot of the celebrities at the Oscars showing up in Toyota Prius and various Ford hybrid models. Can anyone confirm? Of course, GM did rent out about 50 frickin Escalades to the hoity toities, too, so it's good to see that Hollywood has the same split the rest of America does. *shrug* That's neither here nor there. Here's some speculation on my part based on a few brief reports I read about the oil market in the near (week) future.
OPEC meets in Vienna this week. There's a lot of market forecasting saying they won't cut production. I agree. Why? Well, a lot of our alternative energies aren't productive right now if oil is below $40 a barrel. It's hovering around $60. We're looking at about 5 years before a lot of our alternatives become viable as mainstream sources, but if it spikes up too much more there's nothing that says the people of the world won't put more effort and money into researching said sources to bring them online faster. Right now that's about what's keeping things slow in my opinion. That and most of the companies trying to capitalize on the new industries still aren't turning a profit from those industries. Exxon, BP, those guys (and maybe not so much BP) probably still see it all as a tax right off. At this point, it's pretty clear to everyone that OPEC can't bring oil back to $40 a barrel, so aiming for $60, where it's been for awhile now does a couple of things. It let's the oil producing nations bring in cash quicker and it keeps the raw price of oil out of the news so us lazy Americans (and Brits from what I read) don't get force fed the energy news we should be paying attention to...
BUT, Iran is vocalizing that if the Security Council says "Here's some sanctions, Dickhead," it might just have to cut production. That makes me wonder about two things. First, how long until any OPEC nations step into that mess? Certianly, if Iran cuts production more than Saudi Arabia can pick up, oil spikes, we look at alternatives, and there's always the chance that a wave of anti-oil trendiness hits the pop culture thoughts of the pampered world with too much free time. In a mid term election year in the U.S. that kind of wave won't be good for OPEC for sure. So, it makes sense for them to be thinking about what it would take to keep Iran from cutting production. However, Iran can't cut production too much or it's shooting itself in the foot. Too big a cut and it can't afford to research it's tactial nukes...I mean nuclear energy facilities. Still, right now Iran's toting a rep only slightly less insane than North Korea, and that's only cause in Iran, people get to eat. Where was I going? Oh yeah, here's a serious problem for the OPEC countries...right now isn't the best time to be seen as having pro-Western associations, and telling Iran to put up or shut up without seeming to be catering to our demands for more Black is a tough one for them to pull off. Considering the Saudis are taking a few terrorist hits because of their associations already, I don't see OPEC moving on that til it's too late, despite the fact that it'd be a big PR move in the face of the Western world.
Which brings me to why OPEC might still decide to cut production a tich this week. If they do, prices for oil will spike (so fill up your tanks now) briefly, but most likely return to the mid to low $60's before Iran decides to turn off the valves. Then, IF Iran does cut production, the other OPEC nations (I'm not sure if Iran is in OPEC or not) have some wiggle room to crank up production back to normal or slightly higher, all the while playing the altruism card in the short memoried world media. If oil did hit $70 because they slowed production, but they were able to keep at $70 even if Iran cuts us out, the only way anyone will get too huffy with them at all is if the western media makes a big deal out of them cutting production this week. If they do. I still don't think they will, though. I'm pretty sure that the energy market has fully slipped out of the Saudi's hands and everybody that can produce oil is just freaking out trying to keep their heads above the tide.
That's all just speculation over my lunch break, though. Let me know if you disagree, agree, or could care less. Well, if you could care less, just don't say anything....
OPEC meets in Vienna this week. There's a lot of market forecasting saying they won't cut production. I agree. Why? Well, a lot of our alternative energies aren't productive right now if oil is below $40 a barrel. It's hovering around $60. We're looking at about 5 years before a lot of our alternatives become viable as mainstream sources, but if it spikes up too much more there's nothing that says the people of the world won't put more effort and money into researching said sources to bring them online faster. Right now that's about what's keeping things slow in my opinion. That and most of the companies trying to capitalize on the new industries still aren't turning a profit from those industries. Exxon, BP, those guys (and maybe not so much BP) probably still see it all as a tax right off. At this point, it's pretty clear to everyone that OPEC can't bring oil back to $40 a barrel, so aiming for $60, where it's been for awhile now does a couple of things. It let's the oil producing nations bring in cash quicker and it keeps the raw price of oil out of the news so us lazy Americans (and Brits from what I read) don't get force fed the energy news we should be paying attention to...
BUT, Iran is vocalizing that if the Security Council says "Here's some sanctions, Dickhead," it might just have to cut production. That makes me wonder about two things. First, how long until any OPEC nations step into that mess? Certianly, if Iran cuts production more than Saudi Arabia can pick up, oil spikes, we look at alternatives, and there's always the chance that a wave of anti-oil trendiness hits the pop culture thoughts of the pampered world with too much free time. In a mid term election year in the U.S. that kind of wave won't be good for OPEC for sure. So, it makes sense for them to be thinking about what it would take to keep Iran from cutting production. However, Iran can't cut production too much or it's shooting itself in the foot. Too big a cut and it can't afford to research it's tactial nukes...I mean nuclear energy facilities. Still, right now Iran's toting a rep only slightly less insane than North Korea, and that's only cause in Iran, people get to eat. Where was I going? Oh yeah, here's a serious problem for the OPEC countries...right now isn't the best time to be seen as having pro-Western associations, and telling Iran to put up or shut up without seeming to be catering to our demands for more Black is a tough one for them to pull off. Considering the Saudis are taking a few terrorist hits because of their associations already, I don't see OPEC moving on that til it's too late, despite the fact that it'd be a big PR move in the face of the Western world.
Which brings me to why OPEC might still decide to cut production a tich this week. If they do, prices for oil will spike (so fill up your tanks now) briefly, but most likely return to the mid to low $60's before Iran decides to turn off the valves. Then, IF Iran does cut production, the other OPEC nations (I'm not sure if Iran is in OPEC or not) have some wiggle room to crank up production back to normal or slightly higher, all the while playing the altruism card in the short memoried world media. If oil did hit $70 because they slowed production, but they were able to keep at $70 even if Iran cuts us out, the only way anyone will get too huffy with them at all is if the western media makes a big deal out of them cutting production this week. If they do. I still don't think they will, though. I'm pretty sure that the energy market has fully slipped out of the Saudi's hands and everybody that can produce oil is just freaking out trying to keep their heads above the tide.
That's all just speculation over my lunch break, though. Let me know if you disagree, agree, or could care less. Well, if you could care less, just don't say anything....
posted by Amazing Shafeman at 12:30 PM
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