Thursday, 26 February 2009

Pouring Oil on the fire

It took only 5 months for the price of oil to plummet from $150 to under $40 in the second part of the year. Meanwhile oil consumption did not even decrease 10%, so what is the real cause of this collapse you may ask?
Hedge funds. Let me explain.

Oil Hedge Funds

During the first part of 2008, Western economies were already slowing down noticeably and hedge funds gradually pulled trillions of dollars out of the market and parked them in energy ETFs. At the time Chindia's insatiable thirst for oil and the "decoupling" of east/west economies had many believe commodities were a "sure thing", a sound enough tangible insurance to protect overinflated assets scavenged from made-up bubbles. On top of that, by using leverage, profits were multiplied as oil went up, not a bad deal in a recession.
But when the banking industry collapsed, hedge funds had to raise cash by "deleveraging", liquidating their leveraged energy ETF positions sending the price of oil tumbling. Anecdotally shorting of banking ETFs was suspended by the US Securities Commission during that time but not shorting of energy prices, and the leverage mania soon found an escape route in utrashort oil ETFs, compounding the speed of this downward spiral. By December 2008 the oil price had collapsed 75% and frankly, who would complain about cheap gas these days?
As we enter 2009 the oil landscape has reversed dramatically from a year ago. The price of oil is lower than production costs and new exploration projects are being cancelled. China flush with cash is currently buying all the oil it can get its hands on to pump into its strategic reserves. Once arrogant OPEC countries are willing to sell oil at any price to fund government programs and prevent political instability.
One constant however is the depletion of major oil fields, worse than predicted at 9.1% year over year as we close 2008. It's a matter of when not if the economy recovers and when it does, expect a strong bounce back in the price of oil.

Current Price $44.65 1 year forecast $51

Steve Austin

So the economy is in freefall, but the price of heating oil, diesel is on the rise. Imagine those scenes again of fuel rationing at the pumps, lorries blocking the motorways etc. The actual rise in crude is marginal, but once you add in the tax that the Government slap on oil/petrol, then slap VAT on top of that.

Once people start getting it through their skulls that the 646 and their bloated State are responsibly for taxing the crap out of us the sooner we can have a smaller state and lower prices and more disposable income.


defender said...

I have had a reply to a petition from Downing St today.

Kippers Dickie said...

"taxing the crap out of us"
Many a true word is spoken in jest.
What they actually do is Tax us to wipe our arses.
15% vat on toilet roll.

Nick von Mises said...

It was called the "equity crack" trade. You go long energy and short financial stocks.

Michael Masters gave a good report to congress on how "index speculators" drove up the price, i.e. that big mutual funds started allocating money to a relatively small energy market.

BTW, on a wider scale, oil was simply the second-last remaining asset class that could be bid up (US Treasuries being the last). All bubbles are the same, everywhere, always.

Harrithebastard said...

Defender . likewise

It was bollocks at the start and bollocks at the end?

it's either banned or compulsory said...

Tulips anyone ? only asking.

Shirking From Home said...

Anyone know whether the various sea ports are still looking for work?

I read something a few months back indicating that nobody was shipping anything much at the moment.

sixtypoundsaweekcleaner said...

They are shedding staff at Southampton docks. It's in the local press.

defender said...

OT, and sorry for the length.
This morning you were freaking out about a troll, check out this report.
Thursday, February 26, 2009

I have been arrested for sending an 'offensive' email

At 7:50 this morning I was awoken by three plain clothes police officers who informed me that I was under arrest. I was handcuffed, my laptop seized and then I was taken on a 75 minute journey to Dagenham Police Station. There I was searched, fingerprinted and photographed before being placed in a cell.

Some time later, around noon, I was taken to the interview room where the full details of my heinous crime - a crime so ghastly I can hardly bring myself to write about it - were put to me.

I can't recall exactly what was said but it went something like this:

Mr Bryant, on December 17th 2008 you did send an email to Cllr Shaun Carroll that was offensive and threatening....

The officer then read me the email. Again, I can't recall exactly what the email said but in it I referred to Cllr Carroll as a 'pervert' and a 'kiddie-fiddler', and stated that I was 'on his case' which he found offensive and threatening. If memory serves, I think the email was prompted by an article in which Carroll expressed his opinion that school children should be indoctrinated with the notion that homosexuality is perfectly normal and that schools should encourage children to explore their homosexual/lesbian sexualities.

During the interview I accepted that the terms 'pervert' and 'kiddie-fiddler' were offensive but added that I didn't know it was a crime and that I didn't accept that it should be a crime. As for the 'threatening' aspect of my crime, I denied that it was intended as a threat and explained that I am a Nationalist blogger (as the police already knew, as we'll see in a moment) and that by 'on his case' I meant that I would be exposing his sick views on my blog ( I never got around to blogging about this because it was so close to Christmas).

I was then returned to my cell while the police considered how to proceed.

I learned my fate at approximately 2pm when I was informed by the Custody Sargent that I was not going to be charged and instead I received an 'Adult Caution'. I was then promptly released.

Relieved to a free man once again, and confident that the police had not examined my computer ( it was still in the sealed evidence bag it was put in when I arrived at the station) I was a bit shaken when the officer escorting me out of the station diverted me into a small room where two other officers were sitting. It was explained to me that these officers were from Scotland Yard and wanted to talk to me about my blog. Thinking that I was about to be re-arrested for something I'd posted on my blog, my first reaction was to say nothing and demand a solicitor be present. However, they quickly assured me that I was not under arrest, they just wanted to know why I started a BNP supporting blog and that I could leave at any time.

The strangest question they asked me was whether I knew the Green Arrow personally! I find this strange because the first thing I do on my computer every morning is to visit the BNP website followed by the Green Arrow blog. Have the police been spying on my surfing habits!!!!

I find it very disturbing indeed that my computer has been behaving erratically in the weeks building up to my arrest. Why did they arrest me 2 months after the complaint was registered? Were they spying on me hoping I would do something truely illegal, like download instructions for making a bomb?

And is it just a coincidence that Shaun Carroll is Labour Councillor for Dagenham and Barking, where the BNP are the official opposition with 11 seats?

I am now quite certain that the police have been spying on me, probably since the complaint against me was registered by Cllr Carroll. Here are the symptoms to look out for:

Painfully slow connection speed, much slower than dial-up.

Internet keeps disconnecting, to re-connect you have to restart your machine three or four times, sometimes more. Some days a connection cannot be established at all until the early hours.

BNP website takes ages to open and sometimes won't open at all.


Want link, just ask

Anonymous said...

Here's an interesting take on the current oil situation. Today actually. 26 February 2009.

Delphius1 said...

The problem is we now have a substantially weaker pound than 12 months ago and a government in the process of printing excess money thereby devaluing it further.

Once everyone in the world sees sense and drops Sterling and we have the printing presses at full tilt, You'll need NORAD to track the trajectory of UK inflation. Ol' Mervyn is gonna have a heart attack trying to keep pace with it.

Pavlov's Cat said...

At least one energy company got a kicking yesterday, I'm surprised the MSM and blogsville , has not picked this up, this lady should be chaired through the streets for showing up their venal disregard for their customers

In the words of the Judge.

"It is one of the glories of this country that every now and then one of its citizens is prepared to take a stand against the big battalions of government or industry. Such a person is Lisa Ferguson," he said. "Because she funds the claim out of her personal resources, she does so at considerable risk: were she ultimately to lose she would probably have to pay British Gas's considerable costs."

Funambulist said...

The internet 'problems' described in Defender's post are exactly what I've experienced in recent weeks, though my internet is running faster at the moment. Still getting frequent connection breaks which I never used to and just today had probs opening both OH and Guido.

Another symptom I've noticed is when I type online my typing (which is not at all fast) often runs ahead of the characters appearing. That never used to happen either.

Anything else to watch out for?

Old Holborn said...

"Still getting frequent connection breaks which I never used to and just today had probs opening both OH and Guido."

Yup. I've noticed this as well via Google. I've also had some very weird IP's visiting.

The OH site is moving from Blogger to somewhere much safer very soon.

bofl said...

the 'ramping' (ie pushing it higher)
of the oil price was easy because the story was the time.....
then of course the fundamemtals kicked in ie all economies even china slowing down therefore the price collapsed.........

our oil is running out.....
our banks are bust....
our industry has been decimated..

in less than 10 years time this island will be like zimbabwe..
in 10 years time

Old Holborn said...


Are you sure?

Who developed Nuclear Power?

Who developed the internal combustion engine?

Who developed finance?

Where did the industrial revolution take place?

If anyone is going to save the world, it won't be a father of 12 children, a husband to 3 wives, who spends his days sitting under a tree chewing quat and cuddling an AK47

Wolfie said...

That was actually a very good assessment of the energy market, I was impressed.

I reckon we will get about two years of cheapish oil before the climb starts. In a bear economy it will be harsh.

bofl said...


finance? err?

that was the italians. i seem to remember monte de paschi di sienna being the oldest bank in the world...

we may have invented things in the past.but we always give them away......

where will the money come from to invest in development/ideas?

certainly not from the banks.....
and not from govt. as they are broke.........

every govt since 1945 has pissed our money the cupboard is bare.

Anonymous said...

"every govt since 1945 has pissed our money away....."

Except one. I take it you weren't watching BBC2 last night...

Anonymous said...

If you guys are worried about internet security try using a VPN (blacklogic or something). Also use the highest level of security you have on your wirless (not wep!) and change your password regularly using a WPA key generator...
If they are on your case might as well make the job harder....

Ratings and Recommendations by outbrain


Related Posts with Thumbnails