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133 comments on DrumBeat: July 5, 2006

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odograph on July 5, 2006 - 9:45am Permalink | Subthread | Comments top
Note to self:  Buy oil futures, launch missle.

July 5 (Bloomberg) -- Oil rose in London after North Korea fired missiles into the Sea of Japan, raising concern that fuel supplies to Asia, the fastest-growing energy consumer, could be disrupted by conflict in the region.

http://www.bloomberg.com/apps/news?pid=20601086&sid=amxMOFKzMVUo&refer=latin_america

... I find the Korea/oil connection kind of strange, actually.

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tommy on July 5, 2006 - 9:55am Permalink | Subthread | Parent | Comments top
You would think that oil prices would go lower if demand from the fastest growing energy consumer would be disrupted!?
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odograph on July 5, 2006 - 10:00am Permalink | Subthread | Parent | Comments top
I think the article drew a tenuous connection, perhaps trying to think of some way to tie the Korean news to higher oil prices.  I mean, is it all reasonable that Korea is about to launch a war on tankers?

Maybe there'd be a higher general fear factor if people thought Korea was going to start any kind of war .. but I haven't heard that either.

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rlaws on July 5, 2006 - 10:31am Permalink | Subthread | Parent | Comments top
1/3 of the world's oil passes through Malacca Straits, so its possible - if the range of their missiles is high enough.

Then again, a lot of 'stuff' passes through that area, so you would expect to see price rises for many security-traded items.

I would stick with the Kuwait explanation.

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Jack Greene on July 5, 2006 - 11:29pm Permalink | Subthread | Parent | Comments top
rlaws,

  The one long range missile failed, and the other six are upgunned SCUDS, so they have little accuracy. A scare tactic.

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AlanfromBigEasy on July 5, 2006 - 11:27am Permalink | Subthread | Parent | Comments top
You would think that oil prices would go lower if demand from the fastest growing energy consumer would be disrupted!?

Yes.

More oil for the rest of us.

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Don Sailorman on July 5, 2006 - 11:46am Permalink | Subthread | Parent | Comments top
Alan,
The way oil (or any other futures) market works has little to do with fundamentals of supply and demand. As John Maynard Keynes pointed out back in 1936, speculative markets depend on what speculators think other speculators will do. He has a very amusing passage on this topic, and BTW was a highly successful speculator himself.

When and if I speculate, I dump all my econonic knowledge in the garbage and tap deep into what I know of social psychology (of panics, mob behavior, mass hysteria, delusions, feverish overheating of tulip markets, etc.).

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Prodigal Son on July 5, 2006 - 1:45pm Permalink | Subthread | Parent | Comments top
Whenever folks talk about 'rational markets' I think Tulips and sockpuppets.com.
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step back on July 5, 2006 - 4:44pm Permalink | Subthread | Parent | Comments top
Aha, at long last, a good rational analysis on the rationality of "the market".

We can probably compile a long list of irrationally exuberant moves by "the market" to contradict those who believe that the market acts rationally. Yes, the 2001 dot.com bust and Tulip fever are part of that list as well as the build up of stock values during the roaring 1920's, but numbers one, two on my list are:

  1. Continuing to invest scarce resources and time (also a scarce resource) into the building up of our oil-based infrastructure (suburbia, superhighways to nowhere, SUV factories, etc.) when we know that this is a mad drive towards the cliffs.
  2. Continuing to pump more and more CO2 into our atmosphere when we know the Inconveniant Truth about that tactic.
  3.  Not building a de-centralized DC electric grid.
  4. Not building up intelligence and knowledge in our populations (the dumbing down of the sheeple)
  5. What's on your list???
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tstreet on July 5, 2006 - 6:13pm Permalink | Subthread | Parent | Comments top
Did you hear that Atlanta plans to expand one of its freeways to 23 lanes?  Hello?  No doubt they plan to run all those cars on peanut oil.

Frankly, I think we should be shrinking our current road system, not expanding it.  Let's convert part of those 12+ lane freeways to bus only lanes that actually get you through the whole city, not half way through, like they had in Denver when I used to take a bus to work there.  

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The Interloafer on July 5, 2006 - 10:28pm Permalink | Subthread | Parent | Comments top
Did you hear that Atlanta plans to expand one of its freeways to 23 lanes?
Is that in one direction or two?
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Todd on July 5, 2006 - 7:52pm Permalink | Subthread | Parent | Comments top
Not building up intelligence and knowledge in our populations (the dumbing down of the sheeple)

Actually, it is worse than that.  The education system is teaching the wrong skills and knowledge for a post peak world while, at the same time, using information appropriate to children, i.e., dumbing down the little, meaningless crap that is taught.  At some point, people will look back (well, at least old farts like me hope they will look back) and realize that "shop" and "home economics" were far more important than diversity training.

I would also include living on credit (both personal and agency/government) on the list list.

Todd

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Euan Mearns on July 5, 2006 - 10:08am Permalink | Subthread | Parent | Comments top
Maybe they meant to say "oil prices rise as Kuwait considers a 50% cut in production".
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Euan Mearns on July 5, 2006 - 11:03am Permalink | Subthread | Parent | Comments top
I forgot to add that oil prices actually fell in London this morning.
4 July, 9 am Brent August contract was $73.49
5 July, 9 am Brent August contract was $72.97
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Darwinian on July 5, 2006 - 11:19am Permalink | Subthread | Parent | Comments top
Because they do have an elected parliament they can demand the truth, as opposed to Saudi Arabia who is not the least bit concerned with the truth.

But if the truth ever is revealed by Kuwait, this will hopefully, cast a shadow of doubt about the rest of Middle East reserves. Then, then, then perhaps a little common sense will seep through the thick skulls of all those cornucopians who see no peak in sight.

The controversy led veteran Kuwaiti lawmaker Ahmad Al Saadun to demand that the government reveal what he calls "the truth" about the emirate's oil reserves. "This raises justified and legitimate concerns that these reserves could be depleted in a very short duration on the basis of current production figures," Al Saadun, a three-time former speaker, said in a question sent to the energy minister in March.
"We must know the full truth on the proven and non-proven reserves and other data regarding the oil wealth," Al Saadun said. The MP has not yet received an answer.

http://www.itp.net/business/news/details.php?id=21237&category=
(Same link as above)

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westexas on July 5, 2006 - 5:34pm Permalink | Subthread | Parent | Comments top
In regard to the Kuwaiti story, note that the lower estimate of remaining recoverable reserves is a close fit to Stuart's HL estimate.
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LevinK on July 5, 2006 - 10:10am Permalink | Subthread | Parent | Comments top
After Bernanke hinted about ending the interest rate hikes, all commodities are on the rise again. In this environment we will hear all kinds of excuses for a certain price rise. People need to have some explanation, whether logical or not...
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Jack Greene on July 5, 2006 - 11:26pm Permalink | Subthread | Parent | Comments top
odograph,

Correct, N. Korea and his fat leader have nothing to do directly with oil, but not too many TOD readers are from either Japan or S. Korea. They are not happy, hence the increase in the price of oil.

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133 comments on DrumBeat: July 5, 2006

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