an tSionna {03.07.11} Oil
"The decline in crude oil prices that began in mid-2008 was historic -- plunging over $90 per barrel in just eight months. Over the past two years, however, crude oil prices have increased by over $60 per barrel. Today's chart provides some perspective on the historic decline and recent spike with a long-term view of inflation-adjusted West Texas Intermediate Crude. Today's chart illustrates that most oil price spikes were a result of Middle East crises and often preceded or coincided with a US recession. It is also interesting to note that the recent spike in oil prices has brought the price of oil back to a historically high level -- a level that was surpassed only briefly during the tail-end of the major price spikes of 1980 and 2008."
Comment: I said in the past that I believe that oil is headed higher over the next few years. Think about this. During the long economic boom of the 1980's and 1990's oil traded in a roughly 20 dollar range between $25 and $45. At one point oil even dipped below $20. During the mostly flattish economic growth 2000's {at least in the US} oil prices shot through the sky. This was largely due to increased world demand as economies over seas did much better than we did here. Thad demand, while having slackened during the current economic downturn, has not gone away.
During one of the worst worldwide recessions we've seen since the Great Depression the price of oil only briefly went below $40 a barrell, has traded most of the time above $60 and has averaged at a higher rate than it ever saw during the 1990's long boom. So as the world gets back on its economic track it stands to reason that it has to move higher.
My take is that oil becomes a political problem here when it cracks the $5.00 a gallon level. My guess is that we don't see that this year but could get there in a couple of summers.
As for me instead of buying a third car last year {too many drivers around here now} I bought this instead for most of my shorter trips. It gets almost 70 miles to the gallon.
*Long energy ETFs in certain client accounts. Long leveraged oil ETFs in certain client accounts.
Link: Chart of the Day: Oil
During one of the worst worldwide recessions we've seen since the Great Depression the price of oil only briefly went below $40 a barrell, has traded most of the time above $60 and has averaged at a higher rate than it ever saw during the 1990's long boom. So as the world gets back on its economic track it stands to reason that it has to move higher.
My take is that oil becomes a political problem here when it cracks the $5.00 a gallon level. My guess is that we don't see that this year but could get there in a couple of summers.
As for me instead of buying a third car last year {too many drivers around here now} I bought this instead for most of my shorter trips. It gets almost 70 miles to the gallon.
*Long energy ETFs in certain client accounts. Long leveraged oil ETFs in certain client accounts.
Link: Chart of the Day: Oil
posted by CR English at 8:10 AM
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