United States Oil Message Board

  • extreme4reality extreme4reality Sep 17, 2012 10:45 AM Flag

    Oil heading to $70s, one way or another

    If oil prices don't soon ease on down to $70's, then the ensuing recession will cause an oil crash that could drop oil to the $30s

    We have an oil(fossil fuel) based economy. We use oil VERY frivolously and our frivolous use of oil keeps our economy humming. This is all made possible by cheap oil (cheap fossil fuel) prices. But when oil prices get too expensive, we EASILY cut our frivolous usage of oil, and that cuts jobs in frivolous industries, and that causes a chain reaction that sends our economy nose-diving into recession.

    Recession = far less use of oil(and other commodities) = crashing demand = MUCH LOWER COMMODITY PRICES.

    Probably 80% of our oil/fossil fuel usage is frivolous and is EASILY cut (with painful outcomes). You may think that driving to work isn't a very frivolous use of oil, but look how many folks have jobs in frivolous industries (or jobs that support those frivolous industries):

    Golf course employees
    Fitness club employees
    Movie Business
    Television business
    Generating power for frivolous use
    The entire city of Las Vegas
    The Airline Industry
    The toy industry
    The fashion industry
    The vacation industry
    The ski/boarding industry
    The Junk food industry
    The hotel industry (most of it)
    The restaurant industry (most of it)
    The entire state of Hawaii
    The sports industry
    The motor boating industry

    All of those things are nice frivolities that can be easily reduced/cut when oil prices rise. We could cut our oil/fossil fuel usage by a HUGE percentage and still keep ourselves minimally fed, clothed, and housed. Our current economy can't afford oil above about $60-$70. If speculators don't bring prices down the easy way, then the coming recession will bring prices down the hard way (via recession)... and that could result in oil prices hitting $30, just like they did 4 years ago in the last recession (that also sank gold to $700 and silver to $8.xx)

    Yes, we could have a temporary (crisis-caused) spike in oil prices, but that spike would last about 2 weeks before we'd see the economy crash and see demand PLUMMET, and see HUGE JOB LOSSES. Oil prices above $100 are NOT sustainable even in the best of times. Currently, oil prices above about $70 are NOT sustainable. But a recession will likely cause us to overshoot to the downside with oil hitting $40-$55. If it gets really bad, we could see oil drop to $20-$30 (That would push the US dollar MUCH higher and send gold and silver prices plunging).

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    • Oil prices set to crash... We'll drop to the $70's and then lower depending on the depth of the global slowdown.

    • $70's coming

    • lower we go

    • $70s here we come

    • Extreme4reality:

      The reality is that central bankers of the world think the S&P price-to-earnings ratio at 14.5compared with an average income multiple of 16.4 over the last five decades, is undervalued.

      The frivolous companies you listed above are tied to the S&P valuation . Therefore, Ben thinks your list is undervalued, too.

      Earnings can fall by half and they'll print twice as much to keep the valuations rich (so that frivolous workers don't feel pain paying $5 gal). The printing is Ben's way of muddling through the crisis.

      Now, this game CAN'T go forever " El-Erian: Central Bank Can't Inflate Markets Forever cnbc today" But, who said forever? a century or two, will do...until the planet mandates 1 child per family and robots take over drilling and efficient commuting. We'll have plenty of oil by then. A tulip for an ounce of gold before the year 2500 ac. Oil at $30.

      btw. Foxconn has jobs for Greece and Spain. Behind the riots is a youth that have come to the realization that their parents lived in "prestige" Europe while them in "emerging market" Europe. That's no Armageddon . That's just more work for a cup of rice.

    • Oil prices above $100 are NOT sustainable even in the best of times. Currently, oil prices above about $70 are NOT sustainable. But a recession will likely cause us to overshoot to the downside with oil hitting $40-$55. If it gets really bad, we could see oil drop to $20-$30 (That would push the US dollar MUCH higher and send gold and silver prices plunging).

    • If oil prices don't soon ease on down to $70's, then the ensuing recession will cause an oil crash that could drop oil to the $30s

    • Oil heading to $70's one way or another

    • If speculators don't bring prices down the easy way, then the coming recession will bring prices down the hard way (via recession)... and that could result in oil prices hitting $30, just like they did 4 years ago in the last recession (that also sank gold to $700 and silver to $8.xx)

    • If speculators don't bring prices down the easy way, then the coming recession will bring prices down the hard way (via recession)... and that could result in oil prices hitting $30, just like they did 4 years ago in the last recession (that also sank gold to $700 and silver to $8.xx)

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