Global decoupling? Then answer this conundrum

[touchring]

Re: Decoupling a sucker play from the start.

Come now. You don't really believe this "US consumer addict as victim, with no free will" stuff, do you

The addict might not necessarily sees itself as a victim. Which consumer doesn't want credit? Or better still, free money.

In the meantime, the consumer is more unhappy over high oil prices - a ransom.

Why the Saudis aren't lifting a finger to ease oil prices
http://www.csmonitor.com/2008/0206/p09s01-coop.html

[GRG55]

Re: Decoupling a sucker play from the start.

The addict might not necessarily sees itself as a victim. Which consumer doesn't want credit? Or better still, free money.

In the meantime, the consumer is more unhappy over high oil prices - a ransom.

Why the Saudis aren't lifting a finger to ease oil prices
http://www.csmonitor.com/2008/0206/p09s01-coop.html

Some on this site probably think I am an apologist for OPEC. But if one is going to risk any of ones money going long or short the black stuff, one has to get past the idiot political rhetoric and try to see what might really be going on. "...Saudi aren't lifting a finger..." makes for a great headline, and caters to the baser instincts of clueless politicians in Washington, but hardly reflects what is really going on.

Some excerpts from a previous post (highlights mine):
http://www.itulip.com/forums/newrepl...wreply&p=24220

There's little in the current situation that is "black and white" (certainties) and much that is "gray" (probabilities)...

...In addition to the falling US $, there's one other dynamic that appears to be emerging. Global production of crude oil has been "flat" for more than 2 years (total liquids, which includes gas condensates and liquified petroleum gas - LPG, continues to rise). Saudi exports fell more than 3% 2005 to 2006, and will likely fall again when the final 2007 numbers are released. This despite the fact that Aramco is running 149 drilling rigs, with a drilling budget of $6.2 Billion in 2007 (which they overspent by 10% - requiring a supplement of $650 million; more than most oil explorers spend on everything in a year)...

...In my mind Saudi continues to hold the key to supply for the rest of the world. Discussions I have had in recent months lead me to believe that Saudi restricted oil exports during 2007 to avoid being in a position where it had no surplus light, sweet production capability. Saudi won't put itself in a position where it's "against the wall" as the inability to respond to a material supply disruption from any other source would spell the death-knell for OPEC. Saudi appears to desire, and is managing its supply such that it forces consumers to start adjusting to a limited rate-of-supply-increase scenario before it may become absolutely necessary. The short-term response has been a steady drawdown of OECD inventories, but this is not sustainable.

There's a reasonable probability that, even in the event of a moderate US recession, oil price decreases may not be of the magnitude and duration that many expect based on historical post-WWII patterns. Part of this will depend on how aggresively OECD inventories begin to be rebuilt at the end of this winter.

[touchring]

Re: Decoupling a sucker play from the start.

I admit to be a novice in energy business, but seeing the sharp increase in vehicle population the past 3 years, and BRIC especially, if crude production is flat, how can it be possible that supply matches demand, and this is regardless of the price? I assume that gasoline demand is price inelastic -> increase in price does not lead to much reduction in demand.

OPEC is reaping huge sums of money (hundreds of billions of dollars in gross profit every year) which they are using to buy real estate, stocks, and companies in Asia and the EU to some extent. This is at the expense of other economies.

Can status quo continue? Surely a trade deficit combined with net capital outflow is unsustainable? If not, how will it end?


http://www.mfgdigital.com/World%E2%8...lion_1191.aspx

World’s motor vehicle population: 789.8 million

Source: ExecDigital July News

Date :24/07/2007 09:41:25

If all the world’s motor vehicles were lined up bumper to bumper, the line of traffic would circle the globe 120 times, according to World Motor Vehicle Market Report.
According to the 2007-2008 World Motor Vehicle Market Report, the world’s motor vehicle population reached 789.8 million units in 2005 – which would create the globe-encompassing traffic jam mentioned above.

This growth in total number of vehicles reflects an increase of 52.6 million, or 7.1 percent, from the 737.2 million vehicles in use in 2004. The world’s population in 2005 was estimated at 6.4 billion, which equates to approximately 8 persons for every vehicle in the world.

Now in its 76th edition, the 2007-2008 World Motor Vehicle Market Report illustrates the continued expansion of the global economy through the increasing motor vehicle population. It is one of the industry’s oldest and most respected global statistical analyses.

In addition to world vehicle markets, the 2007-2008 Report features in-depth analysis and coverage of vehicle production and assembly, vehicle census summary, U.S. motor vehicle parts trade worldwide and world trade in new vehicles.

[GRG55]

Re: Decoupling a sucker play from the start.

I admit to be a novice in energy business, but seeing the sharp increase in vehicle population the past 3 years, and BRIC especially, if crude production is flat, how can it be possible that supply matches demand, and this is regardless of the price? I assume that gasoline demand is price inelastic -> increase in price does not lead to much reduction in demand.

OPEC is reaping huge sums of money (hundreds of billions of dollars in gross profit every year) which they are using to buy real estate, stocks, and companies in Asia and the EU to some extent. This is at the expense of other economies.

Can status quo continue? Surely a trade deficit combined with net capital outflow is unsustainable? If not, how will it end?


http://www.mfgdigital.com/World%E2%8...lion_1191.aspx

Gasoline demand is not completely price inelastic. As noted in other posts by EJ, FRED and others, OECD oil consumption has been falling slowly for 3+ years. It's in the OECD that the full price increase. including various government taxes on fuel, is felt.

"Demand" continues to outstrip supply, but price is allocating that supply (imperfectly since there are numerous governments that subsidize local consumption) to force consumption to match available supply. If you cannot afford to buy the stuff, you don't use it any more - ask any number of sub-Saharans who no longer have as much electricity [oil-fired] as they used to.

A recession should cause demand and consumption to fall faster, and start to depress the price. But if today is any example, prices may not fall as far, or stay down as long, as would normally be expected.

[touchring]

Re: Decoupling a sucker play from the start.

A recession should cause demand and consumption to fall faster, and start to depress the price. But if today is any example, prices may not fall as far, or stay down as long, as would normally be expected.

Towards year end, there should be a respite for commodities, which will dampen emerging market growth for oil, sometime after the Beijing Olympics. For now, the whole of China is like a construction site.

[touchring]

Re: Global decoupling? Then answer this conundrum

Japan's Export Growth Unexpectedly Quickens to 7.7% (Update2)

Feb. 21 (Bloomberg) -- Japan's export growth unexpectedly quickened for the first time in three months, as shipments to Asia and Europe made up for declining U.S. sales.
Exports, which contributed almost half of the economy's expansion last quarter, rose 7.7 percent in January from a year earlier after increasing 6.9 percent in December, the Finance Ministry said today in Tokyo. The median estimate of 18 economists surveyed by Bloomberg News was for a 6.6 percent gain.

http://www.bloomberg.com/apps/news?p...cqQ&refer=home


From the last 2 months results, it looks like a mild US recession will not lead to much decoupling.