I agree that the run-up in Oil prices is a bubble. When the prices start dropping and panic sets in crude prices will drop fast and far. It is anybody's guess when it will occur and how high it will go before bursting. Trick is to hold on as long as possible, yet not too long.
Crude prices will crash. Not because of Vespas, they will crash because the current levels are speculative.
Note: I have actually heard about the ECON101 supply and demand theory before. I have also heard about China and India. That is is old, old, old news. Much older than this spike in oil.
I wonder if the world believed there was no bubble in coal as they were buying coal related stocks throughout the 1920s before 1929 crash?
Could it be that a liquid fuel called oil displaced the use of coal at break neck speed during the 1920s as it became more available due to discoveries in Texas and Oklahoma? I wonder if that could happen again, but this time oil would be the loser? Could hydrogen from seawater, or oil from coal, or some other technology or combination of technologies have the same effect on oil markets? Hmmmm. I wonder.
Sorry guys, but I don't buy this "oil will go up forever" view. Personally, at $4.29 gas, I've reduced my driving by 50% (amazing how much gas you can save if you try), traded in my SUV for a ULEV and started walking and biking whenever feasible. Gasoline in Europe is twice or more the US price and they earn a lot less over there (and have better access to public transportation). Can even the growing Chinese middle class, still not as well off as we are, afford to buy gas at market prices (I know some countries subsidize gas for its citizens, but that can last only so long when prices soar as they have.) Can the price go up until the Dow drops below 1000 and the world reenters the Dark Ages? I don't think so.
I noticed that gold and oil have taken an unusual divergence over the past 3 months. They normally trade closely together, but while oil has shot up 35% in that time period, gold is essentially even. So, if the earlier trend continues, gold needs to go up 35% or oil needs to drop back to $100 a barrel. Which will it be?
OK, I may be wrong, but my instinct tells me that we're near or at a peak in the price of oil this year.
Oil today is trading about even after being up this morning. Perhaps the correction is starting - hard to know exactly when it will occur. I read that US demand just fell something like 4%. When traders realize that oil's hit a peak for now, they'll all be heading for the exit at the same time. Price of BP and BPT today may also indicate this. Stock market will likely soar when this happens - I've been a buyer of a variety of quality stock beaten down over the last few days. We'll see.
Gold trend has outlast the dollars--it is unthinkable that gold will outlast oil. As you know, gold can not be dissappear as it is not consumable--but oil is consumable. Consumable, I mean, technology driven on the consume of oil/gas.
Congress tries to probe into oil prices inflation saying it is fix--so what? It is like denying the rise of steel and gold. This 800 pound gorilla stock is moving up, and the government with all their weapons will not stop it. The only way is to feed/satisfy the gorilla.
So, place your bet appropriately since I am predicting this stock will soar to 80+.