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9/22/2017 12:11:25 AM
Posted: 9/5/2005 1:45:47 AM EDT
heraldsun.news.com.au/common/story_page/0,5478,16441087%5E664,00.html

Forbes warns of oil bubble

James McCullough and Mandi Zonneveldt
31aug05

PUBLISHING billionaire Steve Forbes has predicted that soaring oil prices will lead to a crash that could make the hi-tech bust of 2000 "look like a picnic".

Mr Forbes, publisher of Forbes magazine, said the price of oil, which peaked at more than $US70 a barrel on Monday as Hurricane Katrina headed for the US Gulf Coast, was unsustainable.

He said factors such as inflation and increased demand for oil from China and India accounted for only a small part of the price hike from $US25-30 a barrel three years ago.

"The rest of it is sheer bubble speculation," he said.

Mr Forbes, who was speaking at the opening of the Forbes Global CEO Conference in Sydney yesterday, said the higher the oil price rose, the harder it would eventually crash, creating more pain for hedge fund managers and their clients.

"I don't think it's going to go to $US100 but if it does the crash is going to be even more spectacular," he said.

"It will make the hi-tech bubble look like a picnic -- this thing is not going to last."

He predicted that oil would fall to $US30-35 a barrel within a year.

Mr Forbes's comments came as the price of oil eased following US Government comments that it could release some of its Strategic Petroleum Reserve.

The 700 million barrel stockpile is set aside for emergency use and could be used to counter oil shortages caused by Katrina's impact on the Gulf of Mexico, which accounts for about a quarter of US output.

After leaping nearly $US5 a barrel to $US70.70 on Monday, US oil futures retreated more than $US1 a barrel yesterday.

On the physical market, Texas Intermediate was trading at $US67.40 while London Brent Crude was up $US1.88 a barrel at $US66.75.

Katrina crossed the United States coast yesterday after closing the Louisiana Offshore Oil Port, the biggest US oil import terminal, and halting 92 per cent of normal Gulf output.

The market was nervously awaiting news of the impact of the hurricane last night.

Royal Dutch Shell reported that its production platforms in the Gulf of Mexico may have been damaged.

BHP Billiton's operations were expected to remain suspended for the next few days, company spokeswoman Emma Meade said.

She said the impact of the storm would not be known for several days.

Petsec Energy said its two offshore platforms were not in Katrina's direct path.

In Australian trade yesterday shares in BHP Billiton bounced back 44 to $20.47. Petsec finished 4 higher at $1.60.

Oil heavyweights retreated on profit-taking and after Opec indicated it would increase production to deal with any supply shortages.

Woodside slid 41 to $32.94 while Santos fell 30 to $11.52.
Link Posted: 9/5/2005 1:49:20 AM EDT
But what will it do to the rest of the market?
Link Posted: 9/5/2005 1:58:23 AM EDT
The price of oil is artificially set by OPEC... there is no reason for them to lessen the price... we are willing to pay whatever they ask.
Link Posted: 9/5/2005 6:43:33 AM EDT
We consum something like 87 million barrels a day and produce/pump 82 million barrels a day.

Its only natural that price will go up.
Link Posted: 9/5/2005 7:10:57 AM EDT

Originally Posted By glockguy40:
The price of oil is artificially set by OPEC... there is no reason for them to lessen the price... we are willing to pay whatever they ask.



OPEC is CRAP!
Link Posted: 9/5/2005 7:14:33 AM EDT

Originally Posted By glockguy40:
The price of oil is artificially set by OPEC... there is no reason for them to lessen the price... we are willing to pay whatever they ask.


OPEC does not set prices. OPEC sets production quotas. OPECs production quotas are higher now than anytime since 1981. Add to that other countries who are not part of OPEC, but are also at record production.

So why the high price? Our refineries refine light sweet crude. Production of this is down as there isn't as much of it in the ground as there once was. Much of the crude being produced is "sour" crude. Our refineries either don't want or can't use it, so they are forced to bid on the more expensive light sweet crude.
Link Posted: 9/5/2005 7:24:46 AM EDT
I hope Steve's right, but it's hard to see how oil could go down to where it was after being so high....

HH
Link Posted: 9/5/2005 7:27:30 AM EDT

Originally Posted By HoustonHusker:
I hope Steve's right, but it's hard to see how oil could go down to where it was after being so high....

HH



Pick up a history book you will learn how rather quickly.
Link Posted: 9/5/2005 7:29:00 AM EDT
I believe in this too. Many speculators are buying oil futures, bidding up the price. And I see the Chinese economy, using tons of oil, will have a major setback as the businesses losing money drag down the banks.
Link Posted: 9/5/2005 7:33:42 AM EDT


Link Posted: 9/5/2005 8:33:10 AM EDT
What people are forgeting is that the other countries hurt much more then us with the high prices. It damages their economy more then ours and thats part of the reason we have not acted to bring them down.
Link Posted: 9/5/2005 8:44:19 AM EDT

Originally Posted By ARDOC:
What people are forgeting is that the other countries hurt much more then us with the high prices. It damages their economy more then ours and thats part of the reason we have not acted to bring them down.




Look at the chinese paying $4.00/ gallon. And what they make on a daily basis, compared to the U.S. Don't think they are screaing bloody murder?

TXL
Link Posted: 9/5/2005 8:46:25 AM EDT

Originally Posted By TxLewis:

Originally Posted By ARDOC:
What people are forgeting is that the other countries hurt much more then us with the high prices. It damages their economy more then ours and thats part of the reason we have not acted to bring them down.




Look at the chinese paying $4.00/ gallon. And what they make on a daily basis, compared to the U.S. Don't think they are screaing bloody murder?

TXL



Exactly, they suffer WAY more then we do. Thats the whole point. We still drive our big trucks and SUVs and bitch but we still buy and drive. They will NOT be able to do the same. So their economy will slow down.
Link Posted: 9/5/2005 8:59:22 AM EDT

Originally Posted By Airwolf:

He said factors such as inflation and increased demand for oil from China and India accounted for only a small part of the price hike from $US25-30 a barrel three years ago.

"The rest of it is sheer bubble speculation," he said.



I wondered and supected such.
If it was only "market forces/supply and demand", then why is there a $0.40 price spread across my medium sized city? Have also noticed that stations with the lowest prices today were among the those with the highest prices a few days ago/last week. And, a given "brand" can cover the range of price. This has all been going on for months.

Anyone else noticed this?
Link Posted: 9/5/2005 9:06:22 AM EDT

Originally Posted By dport:
So why the high price? Our refineries refine light sweet crude. Production of this is down as there isn't as much of it in the ground as there once was. Much of the crude being produced is "sour" crude. Our refineries either don't want or can't use it, so they are forced to bid on the more expensive light sweet crude.


Refining crude oil is a very exacting science. Most refineries are set up to refine crude oil from a specific region. Sweet crude is crude that is low in sulphur because you can get more gallons of product. I toured the Ultramar Refinary in El Segundo Calif(a suburb of 20 miles south of Los Angeles) a few year ago, and they had ponds lot of sulphur that they must get rid of as part of the refining process. They consider this a waste, and has to be trucked away. The Calif EPA has already mandated that the sulphur content of diesel fuel be lowered because the Cal EPA wants to mandate equipment on deisel engines cut down on the amount of carbon particulates that diesel engines emit.
Link Posted: 9/5/2005 9:11:03 AM EDT

Originally Posted By HoustonHusker:
I hope Steve's right, but it's hard to see how oil dotcoms could go down to where it was they were after being so high....

HH



The tipoff is when you hear, "It's different this time."
Link Posted: 9/5/2005 9:12:26 AM EDT

Originally Posted By TxLewis:

Originally Posted By ARDOC:
What people are forgeting is that the other countries hurt much more then us with the high prices. It damages their economy more then ours and thats part of the reason we have not acted to bring them down.




Look at the chinese paying $4.00/ gallon. And what they make on a daily basis, compared to the U.S. Don't think they are screaing bloody murder?

TXL



Hence this reason:

China buys Canadian firm

Chinas bid for Unocal

Link Posted: 9/5/2005 9:30:12 AM EDT

Originally Posted By TxLewis:

Originally Posted By ARDOC:
What people are forgeting is that the other countries hurt much more then us with the high prices. It damages their economy more then ours and thats part of the reason we have not acted to bring them down.




Look at the chinese paying $4.00/ gallon. And what they make on a daily basis, compared to the U.S. Don't think they are screaing bloody murder?

TXL



What percentage of chinese people own a vehicle other then a moped? How much oil does a chinese person use?

They are not in a capitalistic/free system, so do not personally use much oil or even have the ability to complain about oil prices. I would guess that the vast majority of oil used by China is used by the chinese government in an effort to produce items for export through their businesses and for their military. Just so long as they are making a profit they are happy, and looking at the trade imbalance between China and the USA they are very, very happy. They would probably make a good profit paying twice as much or more for oil due to their workers making low wages and the amount of exports that makes them rich. Buy more chinese products at Walmart/KMart/Sears/Etc. and support China in buying oil.
Link Posted: 9/5/2005 9:33:29 AM EDT
Link Posted: 9/5/2005 10:56:28 AM EDT
Brain fart, I must have meant the demand for oil is always greater than what is produced and rises every year despite the lack of increased production to match. Hence price goes up because demand is up.
Link Posted: 9/5/2005 11:08:13 AM EDT
Can't say that I'd cry for anyone who contributed through speculation to oil's current price.
Link Posted: 9/5/2005 11:25:34 AM EDT
Price will crash when people start developing the fields in the Western US and Canada. Nobody's bothered yet because it's not as easy to get at as what's in Saudi Arabia, the Gulf, etc (but there is a lot more of it), and the enivornmentalists will pitch a shit fit.

Once producting and refining starts out there, and once "alternative" vehicles, etc. become popular (which is being driven by high prices, people want other choices rather than $4.00 a gallon), the price will crash.
Link Posted: 9/5/2005 11:30:05 AM EDT

Originally Posted By callgood:

Originally Posted By HoustonHusker:
I hope Steve's right, but it's hard to see how oil dotcoms housing prices could go down to where it was they were after being so high....

HH



The tipoff is when you hear, "It's different this time."



I agree completely, greed always follows the same model. It's 1929 all over again in this country, we just don't see it till the market collapses.
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