San Diego Housing Bubble News and Analysis

Dude, production has been stagnant for 4 years. Let me put it another way, they can't pump at a higher flow rate. Wake up and smell the peak it's all downhill for here.

http://www.aspo-usa.com/index.php?option...

I now believe that the hypothesis of a near or medium-term peak in the world's oil supply is confirmed beyond any reasonable doubt.

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As I said at the top, this is my official forecast and I will not revise it in the future. I will note for the historical record that in July of 2008 few Americans have come to grips with the implications of a permanent peak in the world's oil supply despite the strong price signal we've seen for several years now. I have done all I could over the last few years to warn everyone about what's coming. My conscience is clear even as my concern remains high.

For me, the time has come to examine measures we might take in the post-peak world.

I commend Rich for going against the grain of financial analysts and calling no bubble.

He went against the grain and was wrong and had all the reasons for why it is going down in front of him.

So, thats 1 for 2 on bubbles... no better than a coin flip.

The point I am trying to make in a round-about and admittedly childish way is that I think the severity of the effects of the housing bubble were truly underestimated by all.

I make it simple. In early 2005 world oil production stalled. China and emerging economies sucked up around 8 million barrels a day more in 2008 than 2005. More demand same supply prices go?

I just wanna say that 2 months does not a bubble pop make. Sure oil has fallen $60 since the peak, no dispute. But that peak was reached when people still thought that the USA would just sorta limp along till 09 then get back to growth, while the rest of the world would keep on going at breakneck pace.
Needless to say this is no longer the consensus viewpoint, and as such the perception of future demand is significantly lower. Lower demand is bringing us lower prices.

Couple this with the realization that the rest of the world isnt immune and the dollar is still the reserve currency of the world, not the Euro, and most of the drop can be explained without anything to do with bubble talk.

ot
http://blownmortgage.com/wp-content/uplo...

this is funny

Oil wasn't and isn't in a bubble.

Rich was and remains correct.

Oil has simply been hit with extreme demand destruction, deflationary pressures due to global economy recession / depression.

If you're smart, you'll stop ripping Rich and you'll focus on spotting the right price to buy oil stocks at fire-sale prices.

I shorted oil and made money. I haven't started buying oil stocks yet, but I will soon.

Oil company stock prices just fell today to about 8X earnings. Russian oil stocks are said to be near 4X earnings.

Besides gold, OIL will be the other sure bet that the bottom of this recession offers us!

If you're smart, you'll stop ripping Rich and you'll focus on spotting the right price to buy oil stocks at fire-sale prices.

Richard Rainwater billionaire energy investor and friend to the administration just put about 300 million back into oil. Note: He exited at $130, he might know something...

Did you read this OP? "Thoughts on the Stock Market, Oil, and the Economy".
The link is in the upper right hand corner of this blog.

From the article.
"One last point on oil. As commodity expert Jim Rogers points out, there have been three oil price corrections of between 40%-50% since the oil bull began earlier this decade. That means that oil could fall to $75 per barrel and it would still be a routine correction as far as the long term bull market is concerned.
We think there will indeed be a very steep correction in the oil price at some point -- but we don't think it will be the end of the oil bull when it happens. That's a misunderstanding we hope to take advantage of when the time comes."

How could he be wrong unless oil goes to $75 and lays flat for a long while? As it stands, he is doing pretty good.

Demand destruction is cranking up big time and oil is getting hit hard. $70 wouldnt surprise me at all. And OPEC always cheats on eachother. So that's probably not gonna work either.
But, we are addicts and when things start to turn around, watch out! It's gonna blast off again. Only question is "when". Could be quite a while...unless the world gets a little conflict going in all the wrong places. Perhaps Rainwater is betting on some unrest? He is pretty close to the shrub family. Come to think of it, probably not a bad idea to follow his lead with a little something/something in the DIG. It is getting low. Maybe buy at the end of tomorrows carnage? I'm liking that.

5 year plan. buy gold and oil.

Demand destruction?! Will you explain and give more facts. Oil price came down from $150 to less than $90 in two months. Do we drive less? I don't think so. I still see lots of cars on the freeway. It was a bubble.

Exactly. It's not like oil went to $147, "crashed" to $80 (a number considered obscenely high just 18 months ago), and everyone lived happily ever after driving their SUV's 50 miles to and from their overvalued McMansions.

Oil went too high and the global economy entered a state of severe malfunction. I've often taken issue with some of my fellow Peak Oilsters who believe that it is to the moon with the price of oil. The spot price of WTI is just a silly little (almost insignificant) number. At some price point, the economy breaks. Voluntarily or not, the citizens of the world accept an adjustment to their standard of living, oil recovers, rinse and repeat.

Well that was just brilliant in depth analysis. Sounds more like a faith based diagnosis. Please get familiar with the elasticity of oil. In July china decreased consumption by 10%.

There are very strong fundamental reasons for the movements in price. Though no doubt investment mechanism played a role in some amplification of prices but really the trend is important.

I'd even argue that our market has absolutely no way to put a price on the life blood of industrial civilization but that is another discussion all together.

I agree we hit a ceiling. I'd venture to guess even a healthy, and we are far from, globalized economy would start breaking down around $250 or so. The food riots that popped up all over the world a few months back are a good example of the kind of chaos high oil prices can bring.

After following the converging crises of peak oil and the credit bubble over the past few years. It looks like the implosion of our economy took care of high oil prices. I just find it interesting that the American consumer the main culprit in sucking up all the oil got shot dead in it's tracks just has peak took hold. TPTB hit reset.

Hedge funds make a bubble in anything they all get attracted to. But I hear they're starting fall apart. So maybe we'll get less bubble activity in 2009? Sure looks that way now. Ouch.

http://postcarbon.org/end_growth

Several of us who have been watching the world oil production and depletion picture closely for the last few years are now concluding that the world has now seen the highest rate of production ever. Matt Simmons agrees: It’s all downhill from here.

The worldwide financial crisis, and the decline in available energy, mean that we may also have seen the final year of aggregate world economic growth.

This is a breathtaking statement. I found myself uttering it yesterday at a strategy meeting of some environmental and economic justice organizations organized by the International Forum on Globalization; I surprised even myself, and immediately began wondering whether what I had said could possibly by true.

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But imagine yourself talking to someone who has just lost her job. You tell this person, “You need to voluntarily further reduce your income and standard of living.” How’s that likely to go over?

Effective strategy demands recognition of the opportunities and limits of the unique historical moment. It seems that we have just moved from one historic moment to a very different one. In this situation, it’s more helpful to tell people (including policy makers) how to effectively deal with their immediate problems in a way that is consistent with long-term sustainability. Anything else will be irrelevant at best, extremely unwelcome at worst.

Growth is dead. Let’s make the most of it. A crisis is a terrible thing to waste.

You are right, 2 months doesnt a bubble pop make, but a 45% drop in price does.

Ok lets take off the dunce cap. Most oil experts put elasticity at around 10-20%. Now for extra credit tell me how much the supply/demand balance has to change to get a 45% drop. For extra extra credit tell me how much the balance has shifted over the past 6 months.

I'm sure that a lot of money was spent on your education. I'm not sure that you got value for it.

Given that the definition of 'bubble' is itself fuzzy this debate can never have a winner.

Of course anything with the label environmental is instantly communist, right, . People that follow the sort of thing just don't understand eCONomics which is obviously guided the world to such a state of bliss.

I wonder who these "oil experts" are? I believe they are somewhat related to the oil industry. Anyway, oil industry always has their stupid excuses to jack up the price. A while ago they always use refineries need to be maintained. Then the newer excuse is they are maxing out their production. That is their trick to inflate the price. Nothing more than that. A good example is if a builder wants to sell the houses they built fast and profitable, they always release news that most of the units are sold and only a few left during the bubble time. And there are flocks of ppl go buy the houses. They share a lot of similarities.

Arraya: "Dude, production has been stagnant for 4 years. Let me put it another way, they can't pump at a higher flow rate. Wake up and smell the peak it's all downhill for here."

Of course they don't want to pump at any higher flow rate because they want to exchange their dark gold with our real gold. This is called market manipulation or price fixing. Do you really listen to them?