March 17, 2008

AND, ALL OF A SUDDEN, W WILL SEEM A GENIUS:

OIL: Price Bubble Could Burst in Medium Term (Humberto Márquez, 3/17/08, IPS)

While oil prices recently soared to a record 111 dollars a barrel, fuelled by the weak U.S. dollar, analysts warn that the bubble will not last forever, and may burst in the medium term.

"We are seeing an oil-stock market bubble," Elie Habalián, an expert in petroleum economics, told IPS. "In the last two months, prices have gone from around 90 to 110 dollars a barrel -- a rise that far outstripped the devaluation of the dollar, which in the same period went from 1.46 to 1.56 against the euro."

The bubble "at some point will burst, ushering in a drastic fall in prices in the medium or long term, and if OPEC feeds the bubble, it is creating a knife that could cut its own throat," said Habalián, a former representative of Venezuela at OPEC (Organisation of Petroleum Exporting Countries).

Why? "If you are in a government (in an oil-producing country) and you are cashing billions of dollars every day you may not be able to see beyond your nose. You are very happy with the money you receive each day and don't realise the price you will pay for this will be later on," Saudi Sheikh Ahmed Zaki Yamani, head of the London-based Centre for Global Energy Studies (CGES), said in a recent conference in Madrid.


Shave a buck off the cost of a gallon of gas in a week and even the angst of 9-11 may finally be left behind us.

Posted by Orrin Judd at March 17, 2008 7:27 PM
Comments

If oil (and gas) prices collapse as they did in March/April of 1986, McCain might just win all 50 states.

And what would the media hate-mongers have to say about that? "I can't believe McCain won; I don't know anybody who voted for him"?

They would also be weeping for the sudden change in the fortune of the dollar, the turnaround in the stock market, and the return of the Hummers.

Posted by: ratbert at March 19, 2008 7:38 AM
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