Is the world economy in such a slump that everyone is selling off there kit car stuff. I see some people are still building existing projects and some building new projects. Me I would like to sell off some old projects to start a few new ones. Anyway I was wondering how y all are doing. hope things are well with everyone.
thanx
Jack
My prediction is OIL prices will begin to fall, when ... who knows... but this I know... the higher prices are at the pump... not only domestically but worldwide that ticks consumer off. So naturally what do people do... they cut back their driving and demand goes down. Also when prices are this high with the threat the could go higher... the consumers start to demand more energy efficient vehicles. Enter... Electric vehicles and more Hybrids.
Aptera (out of Carlsbad, CA) is going into production with their EV in the end of this year with first cars rolling out in 2009... cost expected to be $27k with a 120 mile between charge ability, in latter 2009 they start rolling out the Hybrids... expected 300 Miles per Gallon... WOW. http://www.aptera.com/media.php
Now one may be concerned about the safety of the vehicle... Just last week GM officially announced that they are putting the GM VOLT into production - cost expected to be around $30k - http://gm-volt.com/
This car is more of what we are used to seeing on the roads as far as safety goes but gets $40 miles on a single charge... then the on- board generator kicks in and is expected to get $140 MPG.
The more auto makers that start following suit to bring us this type of mileage... within 10 years or sooner our depednacy on the oil producing nations should go down dramatically and the only thing they would be selling at that time is SAND.
That is why OPEC and the Arabs are pushing for an oil summit... they actually do not want the world to go in that direction with significatly more fuel efficent vehicles.
Just my opinion.
You touch on something that I've wondered myself. Obviously, the price has gone up due to higher demand and lack of supply. So, why not increase the supply? You're right, the higher the cost, the more demand for another option, and the world is now expediting the path to developing alternative fuels. If gas were still a dollar a gallon, Hummers and F150s would still be selling. Seems like the Arabs are shooting themselves in the foot in the long run.
Actually, I think the biggest problem with the economy(at least in the US) is raising the minimum wage. It doesn't take a rocket scientist to figure out that the added labor costs are going to be transferred right back to the consumer. Virtually everything we buy costs more than it did just a year or two ago; not just fuel...
But honestly, I don't see the economy being as bad as they claim it is on news. If it weren't an election year, and people weren't looking for something else to blame on Bush, i think the news reports would look a lot more positive. I think the subprime mortgage bust affected a only a select portion of the economy, and doesn't have as big an impact as you'd expect.
Back on topic though, the global economy isn't hurting me all that much. I did invest in a Spec House that was finished just as the housing market died. When that didn't sell, it put me in quite a bind, and I stand to lose $20k rather than earn the same amount. But I'm selling my kit because I've decided I want something else (though I could use the cash), not out of necessity.
There are simply too many issues to address in this but there are somethings that people need to consider. China and India are growing crude oil customers and now that worldwide demand has driven up the cost of crude but also steel, copper and aluminum as these countries truly come into there own industrial revolution. Yes they have been major producers of market goods but now they are developing a middle class. Another item is that opec has been putting on the market low grade crude oil to help chavez dump his low grade crude on the market. The venez/chavez crude has always been a lower grade than OPEC but now opec has promised chavez they will mix in lower grade to help him market his oil. There is always a market for crude but the lower grades like chavez means more and more costly refining which translates into higher oil cost. The lack of competition among refiners is not helping. The buying out and merging have left us with just a few players and no real competition. Crude oil will correct itself with in the next year or two I think. Housing is correcting its overinflated pricing, automobiles have been correcting before the housing bubble. It is not a true market because of OPEC and other producers manipulating the market. But remember they are as greedy as the rest of the world, when the profits start effecting their way of life, the price will drop to get more people buying.
The real reasons for high oil prices
Stratfor
An oil trader at the New York Mercantile Exchange purchased a barrel of oil at a price above $US100 for the first time ever on January 2. In inflation-indexed terms the all-time record for crude oil was set in 1979 – at approximately $US110 a barrel in today’s dollars.
At Stratfor we have not commented on the high price of oil in some time, mostly because there has been little to say. While we believe that the peak oil theory – the idea that there is a only a finite amount of crude, so eventually production will peak and then fall – is correct, we do not believe such a peak will occur any time soon. Less than one-quarter of the world’s surface has been explored for petroleum to date, and advances in deepwater drilling and exploiting non-conventional crudes, such as oil sands, in just the past decade have been mind-numbing. True, the costs of extracting that crude – and the large capital costs behind cutting edge technologies – may well go up, but even here familiarity and economies of scale argue for the opposite.
We see much of the price increases of recent years as geopolitical in origin – specifically in light of the idea of increased risk. There are few places in the world that produce oil that have not suffered bouts of instability of late. Nigeria has seen massive attacks on its infrastructure; Venezuela has crippled its national energy firm for political reasons; Osama bin Laden has rallied against Saudi Arabia and the other petro-economies of the Persian Gulf; Iraq is enmeshed in a civil war; and Iran has threatened war with the United states – and has been threatened with war in return. Add it together and it is small wonder that oil traders can't see straight, much less function.
But all of this froth in the market is likely to die down in the months ahead.
The disruptions in Nigeria in 2006 and 2007 were all about determining who would become the next president (and thus gain control over the oil). That contest is now over and many of the forces who were disrupting crude flows have succeeded in getting into the new inner circle. No one in Nigeria now has a vested interest in seriously disrupting output.
Venezuela has seen its oil output drop by roughly a million barrels per day since Hugo Chavez became president a decade ago. While this decline is not over, it is no longer a surprise, and Venezuela’s relative importance to the global energy picture is now roughly half of what it was ten years ago. There are few surprises that Chavez can throw at energy markets that do not also threaten his hold on power.
While the apex leadership of al Qaeda – the same people who planned the September 11 attacks – are still dangerous people, their operational capabilities are largely sequestered in the Afghan-Pakistan border region. The Arab states of the Persian Gulf are more tightly aligned to the United States than ever, and their security forces are more than capable of preventing small scale attacks by local militants intent on harming oil exports.
Ultimately the Iraq conflict will burn until Washington and Tehran have a meeting of the minds. The November US National Intelligence Estimate, which asserted that Iran lacks a nuclear weapons programme, was a gesture of good faith from the United States to Iran, one that has sparked a series of public talks over the future of Iraq. Such a detente would bleed away – in fact, is bleeding away – much of the violence within Iraq. A calmer Iraq is one that can finally invest in energy infrastructure, and an Iran that is on better terms with the United States is one that is not pumping in the shadow of a war scare.
All in all, this suggests that not only is the January 2 price point about to become viewed as aberrantly high, but that we could soon experience price drops that have not been seen since the days immediately after the September 11 attacks. (Most people forget that the September 11 attacks made people fear that a global recession was imminent – that fear pushed oil prices down, not up.)
A price rationalisation does not equal a price plunge. Stratfor sees no reason for a massive reduction in global demand, simply that geopolitical risks in major oil producers are unwinding, not intensifying. And here too there is an exception. The Russians have every reason to push hard to re-establish supremacy in their near region. Never forget that despite Russia’s problems and weaknesses, they are also the world’s second largest oil producer. If push came to shove, even though they know it could well hurt them as badly as anyone, the Russians have the ability to cause a world of hurt.
If you're not confused, you're not paying attention.
George Soros: rocketing oil price is a bubble
By Edmund Conway, Economics Editor
Last Updated: 1:41am BST 04/06/2008
Speculators are largely responsible for driving crude prices to their peaks in recent weeks and the record oil price now looks like a bubble, George Soros has warned.
The billionaire investor's comments came only days after the oil price soared to a record high of $135 a barrel amid speculation that crude could soon be catapulted towards the $200 mark.
In an interview with The Daily Telegraph, Mr. Soros said that although the weak dollar, ebbing Middle Eastern supply and record Chinese demand could explain some of the increase in energy prices, the crude oil market had been significantly affected by speculation.
"Speculation... is increasingly affecting the price," he said. "The price has this parabolic shape which is characteristic of bubbles," he said.
'We face the most serious recession of our lifetime'
The comments are significant, not only because Mr Soros is the world's most prominent hedge fund investor but also because many experts have claimed speculation is only a minor factor affecting crude prices.
Oil prices stalled on Friday after their biggest one-day jump since the first Gulf War earlier in the week.
At just over $130 a barrel, the price has doubled in around a year, causing misery for motorists and businesses.
However, Mr. Soros warned that the oil bubble would not burst until both the US and Britain were in recession, after which prices could fall dramatically.
"You can also anticipate that [the bubble] will eventually correct but that is unlikely to happen before the recession actually reduces the demand.
"The rise in the price of oil and food is going to weigh and aggravate the recession."
The Bank of England recently warned that soaring energy and food costs would push inflation above its target range for most of the next 18 months, making it more unlikely that it will cut borrowing costs soon.
Mr. Soros, who lays out his thoughts on the current crisis in his new book 'The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What it Means', warns Britain is facing its worst economic storm in living memory, dwarfing those of the 1970s and early 1990s, with a housing slump and serious recession.
He said: "The dislocations will be greater [than in the 1970s] because you also have the implications of the house price decline, which you didn't have in the 1970s."
The warning undermines predictions that Britain will suffer only a brief and relatively painless recession, unlike the precipitous dives of previous years.
Mr. Soros also warned that the Bank's inflation report represents a "Faustian pact", obliging it to keep interest rates high to control inflation, even as the economy is starting to slump.
"You had the nice decade," he said. "Now that is over and you are in a straitjacket.”
If you're not confused, you're not paying attention.
THis may be the begiining of the end for the Oil Speculators: First India, then Malaysia now China... http://www.bloomberg.com/apps/news?p...rT0&refer=news
Most people do not realize how HIGHLY leveraged the Futures market is. For example... in the past few years the Open Interest in Futures contracts has increase by an astounding 400+%... That means many many new investors that have started investing in Commodities (including Oil) have never seen a DOWN market in Futures... Only Up markets in the past few years. In futures if you are LONG the commodity and the market is trending up it's is easy to make $$$$.
However, because of the low margin needed to trade commodities and the fact that the furtures market is highly leveraged... watch out... many of these speculators could and probably will have their heads handed to them.
Did you know that one contact of Oil futures represent 1,000 barrels of oil? Now... with Oil at roughly $132 a barrel one contract represents roughly $132,000. The margin requirement is currently 10%... therefore one only needs to come up with $13,200 to control or "play" with 1,000 barrels of Oil or $132k worth of Oil.
When the oil market bubble does burst and for those "longs" that get caught... they could find themselves with a HEFTY margin call and if they do not "cover" immediatley they will be forced to sell their position and the downward momentum could start to spiral.
We will all ave to sit back and watch.... This could be remminescent of the commodity markets of the '70's.
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