Vote Mogambo for Fed Chairman in '06

The Daily Reckoning

WARNING: this is very, very long!

Just to show you I'm not COMPLETELY going off subject from peak oil here, below is an exerpt. I probably needn't explain as most of us know how the economy and peak oil can be tied together anyway. Parts of it were entertaining, too. It helps to laugh every now and then even in midst of chaos now, doesn't it?

"Quoted Pearls on Energy" is an essay by Jim Willie CB, editor of the Hat Trick Letter. He writes on the 321energy.com site, "Contract prices for crude oil have risen for the 'out' years, the distant future months. A tectonic shift has occurred since last autumn 2004. Those who mistakenly (very shallow analysis) point to the recent pricing of crude oil above $45 per barrel as a temporary aberration, might want to check the forward pricing of crude oil futures contracts. A $10-12 rise across the distant year spectrum versus last Oct2004 is evident in futures contracts. This should be interpreted as 'crude market recognizes post-peak supply declines' integrated into pricing structures. Couple the reality of finite limited oil supply with steady relentless demand increases, especially in emerging markets. Supply will struggle to meet 84 to 86 million barrels per day demand. Population growth and economic growth foster demand, a reflection of reality."

He also quotes T. Boone Pickens, who has been around oil for a long, long time, as saying "The oil price is going up. We are heading to $60. This is the weakest season of the year, when inventories are built up. From the second quarter and third quarter, we will be coming into demand. The current oil price is legitimately based upon supply & demand. In the short term there is plenty of oil around right now. We will make it to $60 by the third quarter for sure. The typical backwardization [in futures contracts] has changed dramatically."

-A letter from a Norwegian reader to Bill Bonner of DR and his newsletter "The problem is that the politicians here, just as in the U.S., don't have a clue. They are spending the oil and gas revenues on better schools, better homes for seniors, more expensive roads, higher minimum wages, etc. and all of this is driving up prices. Now we are facing a rate (tax) hike, I'd guess."

Tag: economics peak oil