Oil to $60.....by January?

[bart]

Re: Oil to $60.....by January?

...
We can be quite certain the US Fed was inflating its money supply in 1986, and in 1999, but that didn't stop oil prices from falling over a cliff on both those occasions - so I have a wee bit of trouble with those that say that "$50" of the price is just inflation...

You neglect to take into account things like my hard vs. soft assets ultra long term cycle.
Central banks can not control *where* the created money goes and what it inflates, nor how much.
And let me be clear here too - supply and demand *are* factors, especially since about 2006.









"By this means government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft."
-- John Maynard Keynes (the father of 'Keynesian Economics' which our nation now endures) in his book "THE ECONOMIC CONSEQUENCES OF THE PEACE" (1920). (this is in the context of speaking about the ability to control money supply) (emphasis mine)

[Guest]

Re: Oil to $60.....by January?

Bart -

Perhaps it would be a good idea to directly address this?

<< He (GROPPE) said they studied this more closely and were surprised when they concluded that only about 10 million bbls/d of total global consumption of 85 million barrels is "directly effected by the US$" >>

[bart]

Re: Oil to $60.....by January?

Bart -

Perhaps it would be a good idea to directly address this?

<< He (GROPPE) said they studied this more closely and were surprised when they concluded that only about 10 million bbls/d of total global consumption of 85 million barrels is "directly effected by the US$" >>

Why?

It doesn't change Groppe's prediction, doesn't change money supply and credit numbers, doesn't change inflation and Williams adjustments, doesn't affect my hard vs. soft assets chart, and also doesn't change my comment on supply & demand... and that's all I was talking about.

[Guest]

Re: Oil to $60.....by January?

Bart -

I'm not getting on your case here personally, and you know I think your work is superb, without which this community would be missing a very far seeing contributor.

But there does seem to be an issue that's getting swept under the carpet, and i'm calling iTulip out on their silence, and the silence in acknowledging this also, of many people here who were very outspoken to the contrary for many, many months.

Maybe everyone who flatly stated the opposite for so many months now wishes their many emphatic assertions about the all-encompassing role of fiat paper to govern all commodity prices had been forgotten. They haven't. The assertions regarding the supremacy of central banks to govern all commodity prices was being bandied about around here so thick and fast it was like confetti blowing in the wind at some points. It felt to me like an overly artful theory then and it still does. Don't you think in a clear and inquiring ongoing debate al the apostles of this theory should be asked to account for their views in the light of Mr. Groppe's comments?

By not accounting for this "large discrepancy" all the people who have been so outspoken about energy price rises being "all paper money driven" are merely ducking when industry insider statements suggest they've been wrong all along? And what about the editors? If the entire emphasis of the editorial line here on the sources of energy price rises has potentially been wrong for many months now, why not step forward and acknowledge it frankly? Does this community lose credibility by acknowledging a potential mis-estimation?

Your wrote, and this is presumably more or less iTulip's (very sparsely acknowledged) view also:

<< And let me be clear here too - supply and demand *are* factors, especially since about 2006. >>

This is what might be termed "somewhat of an understatement", when you compare it to Mr. Groppe's assertion that << something in the order of 10% of the current petroleum price is actually produced by a devaluing dollar. >>

Please note, for the past couple of years iTulip, and practically everything I've read here has been categorically stating the "predominant" factor (many claimed peremptorily it was the whole factor) in petroleum prices was fiat inflation. Yes? No? Maybe?

Now when we are presented with Mr. Groppe, perhaps the most senior analyst in the petroleum industry stating that what iTulip presumed was the "predominant fiat currency abuse factor" is more in the order of 10% of the price, - surely a serious community would come forward and note the large discrepancy between this community's common assertion (iTulip editors too!), and Mr. Groppe's considerably different observations today? Are we going to just mumble something and sweep it under the carpet as irrelevant?

How about saying, "Mr. Groppe disagrees diametrically to our formerly held view about the drivers of price, and out of deference to his fifty years in the industry and impeccable reputation, there is a remote possibility iTulip's assessment has been wrong"??

How about some frank re-examination here? I'm reading ZERO admission from any quarter that previous assumptions which are being denied by Mr. Groppe, might have been incorrect all along? I mean Bart, let's be frank, insofar as you are acknowledging this even in passing, don't you also note the deafening silence from all quarters around here from all those posters you and I know who boldly insisted for many months in the past that the entire petroleum price rise was fiat paper induced? Why do you not remark as I do now, that there are no comments acknowledging a potentially large misapprehension in many previous discussions? Is it because people can't stand to ever admit they might have been wrong about a pet thesis?

What's the use of debating anything then if no-one ever has to acknowledge being wrong on a main point?

How about some honesty around here? All the people who have asserted this in the past now fade back into the silent crowd without the smallest acknowledgement? I think that's feeble. If a major thesis that was practically gospel around here for months and months, a thesis which was endlessly employed as the FULCRUM of myriad arguments, has just been called false by the likes of Mr. Groppe, what integrity do all of it's proponents have now by merely remaining silent?

Where did all the high priests of 100% FIAT driven commodity price rises go all of a sudden?

This is what I disapprove of. If we find someone out there of the stature of Mr. Groppe, who makes some casual observation which just happens to turn upside down a good chunk of popular iTulip "percieved truths" about the absolute reach of fiat paper into commodity prices, why does everyone shrink from it, rather than embracing the change of view? Are they afraid of stepping on hallowed or holy toes, so they've become "domesticated pundits" maybe?

To my view, there appears to be a problem with that annoying "integrity thingy". .

[c1ue]

Re: Oil to $60.....by January?

He said they studied this more closely and were surprised when they concluded that only about 10 million bbls/d of total global consumption of 85 million barrels is "directly effected by the US $".

Once again, with the opportunity to push your own agenda, Lukester, you run at the first chance to push your theories.

Groppe's observation may be valid, but it would be much more useful to understand the context of this statement given that the US consumption of oil is over 20mbd (million barrels per day).

Perhaps he means that - out of 85 mbd - that only 10 mpd will shift due to US$ effects.

Or does he mean US oil consumption will drop in half?

This short statement also does not reveal if Groppe's analysis includes foreign use of oil to produce goods for America.

It is certain that the actual footprint of US consumption of oil is greater than the nominal 20.73 mbd; the question is how much?

If total US footprint is, say, 30 mpd with 10 mpd being 'flexible' - another question is what this flexibility means?

Does Groppe mean 10 mpd of demand could evaporate due to dollar effects? If so, a 1/3 reduction in oil consumption by the US and/or the US world oil footprint is a huge demand effect.

I'd like to understand the context more before buying into any theories on the behavior of oil prices for the next few years.

[bart]

Re: Oil to $60.....by January?

Bart -

I'm not getting on your case here personally, and you know I think your work is superb, without which this community would be missing a very far seeing contributor.

But there does seem to be an issue that's getting swept under the carpet, and i'm calling iTulip out on their silence, and the silence in acknowledging this also, of many people here who were very outspoken to the contrary for many, many months.

Thanks Lukester, much appreciated even though I think you overstate my work and contributions.

I do understand about your concerns and opinions about the supply side of the oil price issue vs. money supply and inflation, but I honestly don't think there's much that I can add other than what I've said.

My best guess is that "peak oil" and real supply issues did actually start in early 2006, but the data to prove it is sparse and won't be easily provable for years to come... and I could be wrong too.

I also do think that by far the majority of the price increases before then were actually due to inflation... and of course that we've been in a hard asset cycle since about 2000.

There's also the issue of differences of opinion being a major element that makes markets... and I don't have any skin in the game too. I haven't owned any oil stocks since 2005 and very seldom trade natural gas futures, and have never traded oil futures. I just plain don't have the kind of returns in energy as I do with other commodities like metals or the ag complex.

Bottom line, my best answer is what I gave... and anything else wouldn't be productive.

Where did all the high priests of 100% FIAT driven commodity price rises go all of a sudden?

That at least is easy - EJ's debt deflation concept and the facts that it appears that both credit and money supply growth has peaked are the answers.

I'll go one step further too - there are no guarantees that commodity prices have peaked, especially on the long term. I'm a short term trader too so my opinions aren't terribly useful for other than a short time frame. I am currently long gold, corn, beans and sugar though... and may add some cotton in the near future - as noted on my blog.

[Guest]

Re: Oil to $60.....by January?

http://www.itulip.com/forums/showthr...newpost&t=3103

For iTulip to be right, on the true underpinnings of the current oil price, it would appear Mr. Henry Groppe must be wrong, or vice versa.

[bart]

Re: Oil to $60.....by January?

http://www.itulip.com/forums/showthr...newpost&t=3103

For iTulip to be right, on the true underpinnings of the current oil price, it would appear Mr. Henry Groppe must be wrong, or vice versa.

Time will tell... and do note that I still think that inflation is still the primary factor but only by a little... and I don't have any investments in the sector either.

[c1ue]

Re: Oil to $60.....by January?

It ain't about iTulip or Henry Groppe being right or wrong, its about the truth.

iTulip has clearly documented its position, it reasoning, and data.

Agree or disagree, there is much to consider.

Henry Groppe has some interesting ideas, but these ideas have not been presented with neither the same level of detail in reasoning nor the data.

This is not Henry Groppe's fault as he is not the one posting here, but it is a lack of which detracts from any possible learning from Mr. Groppe.

An interview might be a way to get around this problem, but in the meantime my objections to taking Mr. Groppe's statements as gospel stand.

[bart]

Re: Oil to $60.....by January?

Henry Groppe has some interesting ideas, but these ideas have not been presented with neither the same level of detail in reasoning nor the data.

This is not Henry Groppe's fault as he is not the one posting here, but it is a lack of which detracts from any possible learning from Mr. Groppe.

An interview might be a way to get around this problem, but in the meantime my objections to taking Mr. Groppe's statements as gospel stand.

There is a long and successful track history on Groppe, and his opinions can be found with searches, etc... and anyone who wants more data can find it. As you note though, the biggest value are the concepts and opinions and facts overall.

No one's statements should ever be taken as gospel, including my own (and my "one chart to rule them all" ;) ) and (*gasp*) Finster's too.

[FRED]

Re: Oil to $60.....by January?

There is a long and successful track history on Groppe, and his opinions can be found with searches, etc... and anyone who wants more data can find it. As you note though, the biggest value are the concepts and opinions and facts overall.

No one's statements should ever be taken as gospel, including my own (and my "one chart to rule them all" ;) ) and (*gasp*) Finster's too.

That's the iTulip credo. There is no gospel. We strive to get at the truth knowing the truth is a journey that never ends, a place that you are either getting closer to or farther from but never arrive at. Fortunately, for investment purposes, close is good enough.

[Guest]

Re: Oil to $60.....by January?

That sounds downright philosophical Fred.

[bart]

Re: Oil to $60.....by January?

That's the iTulip credo. There is no gospel. We strive to get at the truth knowing the truth is a journey that never ends, a place that you are either getting closer to or farther from but never arrive at. Fortunately, for investment purposes, close is good enough.

Maybe there ought to be an official iTulip horseshoes game, to help with that close is good enough? :eek: ;)

On mani padme hum... ;) ... thou speaketh sooth.

[Gordo]

Re: Oil to $60.....by January?

Signs that U.S. fuel demand is starting to buckle under recessionary pressures countered expectations that oil cartel OPEC would decide at its meeting Friday to keep crude oil output restrictions in place.

Oil falls on economy worries, US stockbuild

OPEC refusing to increase production because the recession will lower the demand for oil anyway is like the food producer who will not alleviate a famine because, once the famine has thinned the population, there will be less demand for food.

[Gordo]

Re: Oil to $60.....by January?

OPEC refusing to increase production because the recession will lower the demand for oil anyway is like the food producer who will not alleviate a famine because, once the famine has thinned the population, there will be less demand for food.

February is gone, to paraphrase the words ("Doug is gone") of a famous mountaineer,Rob Hall, high on Mt. Everest, when his climbing partner fell off the mountain. My March 70 oil puts are going to fall off the mountain, also.

I have thought of starting a new thread, how about "Oil to $60.... by June?", or maybe "Are Groppe and Littell past their peak (oil)?" or "How soon should OPEC be broken up?" but, like the tourist in Egypt after seeing his umpteenth temple who said he was "all templed out", I am all threaded out.

My hat is off to the Gold Bugs who have been right on about gold.

As for the Peaksters, who truly believe that OPEC has no more oil to produce, I am reminded of the hillbilly preacher who was convicted of some crime and sentenced to a Southern prison farm, with 10,000 acres of cotton.

His first day at the prison farm, the prison warden gave the preacher a sack and told him to go pick 50 pounds of cotton. The preacher said, "If the Lord is willing, I will get it." He came back with only 20 pounds of cotton and was beaten severely.

The second day, the warden gave the preacher a sack and told the him to pick 100 pounds of cotton and the preacher said, again, "If the Lord is willing, I will get it." He came back with only 50 pounds of cotton and was beaten even more severely.

The third day, the warden gave the preacher a sack and told him to pick 200 pounds of cotton and the preacher said, "If the sh_its out there, I'll get it."

A little more of the warden's attitude and less pusillanimous whining and begging, could do wonders for OPEC's production of oil.

In the meantime, I'm going to get behind my June 70 oil puts.