doc... I'm not surprised at all. Thanks for the links you provided, I did not read the entirety of them... I don't need to.
I have had this notion about oil manipulation for quite some time now. I am suspect that most all markets(bond, currency, equity, commodity) and even real estate markets can be and are manipulated(as they were through interest rate and loan pricing during the early 2000's). There is simply too much money to be gained in all these markets not to be manipulated.
Previously I believed in markets being driven by supply and demand. I also believed in peak oil... not anymore. In theory, supply and demand should work very well, and still does for things like employment, were hedge funds and banks don't have a means of having it their way.
I have come to the conclusion and now believe that the IMF and World Bank are the primary forces behind oil price manipulation. Names like Morgan Stanley and GS, and hedge fund players and smaller speculators simply add fuel for the fire to help push the markets up or down. I think commodity markets are one of the easiest to be manipulated. The oil market is the largest of the commodity markets.... unless you consider currencies commodities... I don't. In my view currencies are another asset class. Anyway, the amount of money traded in oil every day is large... about 7.5 billion a day. However, the currency markets are in the trillions a day.
The current state of the equity markets are another example of manipulation, no way should the US major market indicies be at current levels, yet they will likely go higher before lower. I'm very cautious for 2011.
Musk, to answer you question. Yes, if oil tanks, all of the sectors you mentioned should see lower pricing levels... including oil service. The exception that you mentioned is Refining. If oil tanks then VLO, TSO WNR, and even some of the Major integrated companies with large refining sectors like COP will do just fine. The pure Refiners will take off to the upside. From here, $50 oil would benefit the refining sector like silver stocks did when silver went from $20 to $30.
RG: You say: *no way should the US major market indicies be at current levels*
Why not? Because you say so? Because of some great manipulation in all asset classes, all over the world, all at the same time? Because the liquidity that was lost in the real estate melt-down has been partially replaced by the federal government? Don*t be silly...
The global economy is in fairly good shape. Globally, assets are appreciating in the expectation of CONTINUED growth. Millions are being lifted out of poverty and into patterns of consumption which promote demand for everything. This creates rising prices and rising corporate profits.
Domestically, the US indices are well withing normal valuations, interest rates are low and growth is expected to be 3-3.5% which is normal, if a tad low. With some luck we should see unemployment fall next year.
And, yes, some of this is due to government intervention which was undertaken at a time of crisis and has proven to be net positive, even if not perfect. Some is also due to growth in emerging economies, as mentioned above.
This discussion of the international conspiracy to manipulate markets sounds increasingly paranoid*. A simpler explanation for the phenomena discussed is the economic cycle... accelerating after a prolonged and severe recession. Supply is tightening, prices are up and so are inflationary expectations.
The new normal is normal. Instead of decrying an evil conspiracy which does not exist, why don*t we figure out how to make a buck?
*BTW: I, personally, do not believe in free markets... they are always and everywhere manipulated to disproportionately benefit the more powerful participants. Every economy, like every eco-system, has its predators and its prey. This is not to say there is a conspiracy... Predators do what they do naturally. A conspiracy is not required for the powerful to benefit disproportionately from any particular system. In the current context, The Fed has saved all our azzes, and the rich/powerful wstand to benefit most of all.