Energy Bubble Will Burn Bulls Just Like Tech Did, Says Top Investor Herro

The Republican legacy in the energy picture is tax breaks for big oil and perfunctory support for alternative energy. I think an intelligent president surrounded by intelligent staffers could come up with a much more comprehensive energy plan than a buffoon of a failed oil-man surrounded by ex-oil execs trying to prop up an industry that doesn't need propping up.

Joushe... If anyone doesn't believe the run-up is due to speculation and money pouring into an asset-your kidding yourself. I think the money poruing in has gone from 20 smeohting billion to almost 300 billion in two years....these assets are being bidding up way beyond fundamentals. Oh...Joushe...and if you call that free market and will adjust-there is not free market in oil-it an inelastic demand product. And on the demand side-there is no power to ajdust demand quickly-you have 300 million consumers-now if they banded together and targeted their demand-maybe the market will be fairier and free-but we know that can't happen.

2009 Toyota Prius will get 90 MPG ! Fully electric car that recharges in 15 minutes on a Lotus chasis Oct 2009 . 0-60 in 4.5 seconds with 350-400 mile range . CFTC allowing 65 % of oil contracts to NOT execute/take delivery and roll forward into future months as many times as they want IS THE PROBLEM ! Plus, 16 " NO ACTION " letters the CFTC issued to foriegn exchanges operating in the US, along with the Goldman Sachs Comodoties Index being allowed to invest your pension and college endowment assets IS THE PROBLEM .And it could end in 5 minutes if the CFTC and the US government wanted it to ! The sad truth , they don't want it to end ! Call your Senators and Congressman and demand the CFTC take immediete action today, and oil and gasoline could drop 25 % overnite , according to the Businessweek articles for June . AND THAT.....IS WHAT IS REALLY GOING ON FOLKS ! PS . Refining was down another 1% in June . Refiners are laying off people to create the appearance of a shortage .

By 2012, the USA will have viable electric cars, more wind, solar, and nuclear reactors. In the short term, we may have to eat high priced oil, but in the long term, oil will drop in price, so speculators sell your oil while it is still high. President Bush warned the Saudis to help bring oil prices down, or suffer the consequences in the future. Whats going to happen to their economy/lifestyle when they have no more oil? Who will be their friend?

Oil shortage? Those of us old enough to think back to 1973 can recall what a REAL shortage looked like. My question: where are the lines at the pump...the signs saying "sorry out of gas", the rationing? No such thing now. In fact, you can buy all the overpriced gas you can haul. Fifty percent of this is gas price is PURE speculation. One major problem we face is an oil speculator, and kissy friend of the Arab princes in the White House. Price bubble? Yes. But the current administration will do everything it possibly can to extend the rip-off including WWIII with Iran and Syria, if need be. The real danger is closer to home, the one charged with protecting us.

I don't think the Saudi's can increase production for long (or very much). The price will drop for the short term... Then rise again. America would have to cut demand by a hugh amount to offset the demand in China and India. The truth is, these so called speculators know that the World is at the apex of Huberts curve!

The fact is the dollar is falling, oil prices are rising due to supply and demand problems. If that were not the case, why are the top industrialized countries begging OPEC to increase production? We will be lucky if OPEC does not demand payment in Euros anytime soon. Then, we will really be screwed! Oil prices will only go higher. Demand has not fallen off as I see these humongous 8 cylinder vehicles in large numbers still zipping and zagging on the freeways cutting people off. Some people still live in Lalaland and continues to waste gas and pollute our environment too. They plain don't care so, the joke as propagated by the politicians continues like their farcical oil hearings grilling the oil executives. Enough of the BS already. It will not lower oil prices but, it used by politicians for political "show". People don't be so dumb as to believe it!

CLOSE the ENRON LOOPHOLE & OIL is $60 -$70 a BARRELL INVESTIGATE the BLACK MARKET TRADES on the Inter-Continental Exchange (NYSE: ICE) being made by GOLDMAN SACHS, MORGAN STANLEY, & JP MORGAN.... Those 3 Banks are Selling America Down the River for Commissions paid by ARAB Interests Why is the largest holder of heating oil for New England residents this coming winter ---- Morgan Stanley ? Electronic Trading of Energy is DESTROYING AMERICA.... we can all thank Ken Lay for this.... May Ken Lay ROT in HELL !

Oil will drop to $80/barrel when demand is cut by 50%. OPEC is already rationing it's finite supply of the black stuff and why not? When it's gone, they are screwed. All the easy finds of oil & gas are gone. It's like land development between DC and New York City or on the California coast. All the easy land his gone. What's left is small infill parcels and environmentally sensitive larger tracts. That's why a house is so friggin expensive. those areas. Buy solar stocks.

lobbied for by Enron, a generous contributor to Gramm—that exempted energy trading from regulatory oversight, allowing Enron to run rampant, wreck the California electricity market, and cost consumers billions before it collapsed. (For Gramm, Enron was a family affair. Eight years earlier, his wife, Wendy Gramm, as cftc chairwoman, had pushed through a rule excluding Enron's energy futures contracts from government oversight. Wendy later joined the Houston-based company's board, and in the following years her Enron salary and stock income brought between $915,000 and $1.8 million into the Gramm household.) But the Enron loophole was small potatoes compared to the devastation that unregulated swaps would unleash. Credit default swaps are essentially insurance policies covering the losses on securities in the event of a default. Financial institutions buy them to protect themselves if an investment they hold goes south. It's like bookies trading bets, with banks and hedge funds gambling on whether an investment (say, a pile of subprime mortgages bundled into a security) will succeed or fail. Because of the swap-related provisions of Gramm's bill—which were supported by Fed chairman Alan Greenspan and Treasury secretary Larry Summers—a $62 trillion market (nearly four times the size of the entire US stock market) remained utterly unregulated, meaning no one made sure the banks and hedge funds had the assets to cover the losses they guaranteed. In essence, Wall Street's biggest players (which, thanks to Gramm's earlier banking deregulation efforts, now incorporated everything from your checking account to your pension fund) ran a secret casino. "Tens of trillions of dollars of transactions were done in the dark," says University of San Diego law professor Frank Partnoy, an expert on financial markets and derivatives. "No one had a picture of where the risks were flowing." Betting on the risk of any given transaction became more important—and more lucrative—than the transactions themselves, Partnoy notes: "So there was more betting on the riskiest subprime mortgages than there were actual mortgages." Banks and hedge funds, notes Michael Greenberger, who directed the cftc's division of trading and markets in the late 1990s, "were betting the subprimes would pay off and they would not need the capital to support their bets."

Way to go Dave, your making more sense than the people that are guessing oil will go $5 to $6 bucks a gallon.

I think we need to remove the traditional supply-demand model of economics from this "energy bubble." Think of housing... why did housing prices increase 15-20% per year for 5-6 years? Population growth, income growth, a historic shift in demographics? No, none of these... it happened due to unprecedented demand facilitated by lax underwriting standards, low interest rates, and save haven investing in real estate. What really drove up prices was speculation. That's right, speculators who boosted "artificial" demand on the demand side of everyone's beloved supply-demand model. In oil, speculators have flooded the commodity markets betting on increased prices. Right now its momentum investing and speculation, that's it. There isn't one single asset class that is appealing to invest in... stocks, bonds, money market funds... they are shifting demand to the commodity markets, just as happened with the real estate boom. Prices are going to fall and fall hard.

The dollar is at a three month high and projected to go higher but the price of oil has jumped in the last three months. That's the opposite of what the blame the dollar crowd says. The dollar has gone down about 15% against the euro in the last year but the price of oil has more than doubled.

Would love to know what price of gas would be unaffordable for those living in the US? I am an American currently in Japan, and pay over $7.50 for a gallon of gas. Not to mention that if I want to use the freeway I have to pay for that also. However, as the price gets higher, the technology that car manufactors put into cars increases, so perhaps its is only a matter of time for gas to be $10 a gallon, but equally so you "car of the future" will get a 100 miles per gallon. It is coming I believe.

Perhaps someone can explain to me how this can be a bubble. If there is speculative demand for oil, this assumes that oil "buyers" don't really need the oil, but rather, are simply holding a long position for expected appreciation. But this will lead to an excess of oil contracts without underlying demand, which, in turn, will lead to an increase in oil inventories. We aren't there, yet. It seems that the most likely scenario for a decrease in prices is that oil producers, motivated by high prices, will find ways to increase output. Oil consumers will find ways to use less oil, much like we did in the 1970's. Oil supplies will increase and prices will fall (by how much, I have no idea). In sum: prices will fall in the long term, but I see no evidence that this is a speculative bubble.

$100 per brl would be more realistic....There is no doubt a bubble is in the making.

stocksage49 u are posting a comment... Herro is running a fund now.......who is the idiot?

It seems to me that Mr. Herro is making a category mistake. While there is certainly no drying up of ideas in the human mind like those that drove the tech hype, in energy we are dealing with the drying up of oil wells. A completely different thing. Apples are still no oranges in 2008.

I'm amazed that yahoo allows people to express their opinion on various issues. Anyway, oil is riding high because their is very little competition. It could be a bubble, but only if alternatives start showing up in quantity. A few points. Land haulers, trucks that are essential to transport goods, need to diversify into LNG. Airports should stay the same size. Turboprops could come back. People in Me need to migrate south for the winter. And of course, those darn SUV's need to be melted down. If everyone was limited to driving 3000 lbs. on a public highway, then the weight advantage in an accident would be socialized.

Tech was a free market? Housing was a free market? Stop reading all the BS in the papers. Oil will come down just like Herro says!!