The Oil Drum

58 comments on I think Katrina and Rita got some folks attention

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BaSE on October 6, 2005 - 2:26am

I am not so sure that they are betting. The front end future contract is likely to be swamped by excess oil with Nato sending aid and Bush opening the reserves. I expect they may even drop below $60 for a time. I think that there is a great pressure to hold off crisis until after the Christmas holidays if possible. ASPO just moved peak oil out 3 years to 2010 based on deepwater extraction numbers, but I think the two hurricanes may have a greater effect and as yet an unknown effect. So much money is being promised for wars and reconstruction both at home and abroad, the IOB this march 2006 is likely to be the focal of most of our foreign policy in the coming months.

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louGrinzo on October 6, 2005 - 11:59am

Of course they're betting--unless they have 100% reliable crystal balls. (The creepy thing is that many of them do think they have a lock on Knowing The Future, but that's a topic for another time.)

I think you're right on the mark about short-term price moves. We're seeing an energy market that's warped beyond description by manipulation (the SPR/IEA flows, political pressure, as you mentioned) and exogenous events (hurricanes, wars). We shouldn't be surprised if the market is even less adept than normal at reflecting the underlying reality of supply and demand in the short run.

Oil in the low $50's for a while seems very likely, although I'm less sure about the outlook for gasoline prices. That's a critical detail, since stable, "high" gasoline prices will do more to promote conservaton and start the long process of reshaping mainstream attitudes and behavior than anything else could, particularly in the US.