*Despite conventional wisdom that oil prices are a one-way trade higher, I still believe there is a significant chance that prices will drop $20 or more. Don't ask me when, but Milton Friedman was right 30 years ago. Markets are more powerful than OPEC. Right now production is rising, inventories are high, and consumption is flattening. I think oil is moving to $40 to $50 at some point probably in the next six months."
-- Larry Kudlow
This is not the first time I've heard this. In conversation with some clients, this theme has been mentioned several times, all independent from each other.
How big are your investment cojones, and your sense of timing?
Personally, I don't like commodities. I also don't like the idea of sticking my hand in a meat grinder.
The problem with high prices is that you can't imagine anything but when they're high. Remember tech stocks and Dow 36,000? But now the Dow rarely swings 100 points in a day and it's been flat for five years. Same thing will happen with oil. More supply will come online the longer prices stay high and the crisis will be over. Who knows, politicians may even decrease regulation to aid in increasing supply.
ReplyDelete"Who knows, politicians may even decrease regulation to aid in increasing supply."
ReplyDeleteWith all the nonsense about ANWAR and other opportunities still being spouted by the Luddites?
Here's to hoping and here's to the pressure high prices will bring from voters that wasn't there before.
ReplyDelete"I am glad we are seeing more creative efforts toward alternative fuels, especially for vehicles. If oil prices drop, I wonder if these alternatives will no longer be economic."
ReplyDeleteI don't hear anyone saying an oil price drop would be more than intermediate in nature, 1-3 years perhaps. That may be a positive factor in encouraging alternate fuel progress.
We need to come to some consensus on alt fuel.
Ethanol is probably not the complete answer. I think the technology needed for hydrogen is not very close to being practical, and the infrastructure problems associated are huge.
The more I think about it, the more I think some form of biodeisel is going to end up being attractive than the others.