This decision may have been the result of learning to drive in a clunky old Volvo with exhaustingly heavy steering; on the other hand, perhaps it was because the only places I could think of to drive to were pubs, and I was damned if I was going to become the designated driver now that I’d finally stopped being ID-ed.
Yep, I quit learning to drive, in favour of laziness, inebriation, and apathy. For some reason, namely being a teenager, this didn’t at all seem an irrational and blinkered course of action; and despite my father’s best efforts, there was no persuading me otherwise – “You might regret this in future,” he told me, along with plenty of reasons why.
And he was quite right, of course, I might regret this in the future. As yet, though: nope, not at all. Quite the reverse, in fact: as I approach thirty, a carefree car-free attitude to personal mobility seems to me, instead, eminently sensible; even life-enhancing.
Granted, anyone who has ever used British public transport may find this statement, at best, barely credible, and at worst grounds for being sectioned, but so what? Haven’t they got something more important to be doing than reading this? Like changing some oil, for instance? Or renewing their car insurance? Puzzling over some strange rattling noise? Or fiddling with a gasket?
Yep, I thought so. Now be off with you.
And that’s my point, not once have I ever had to think about any of those things. Can you imagine how much easier you’d sleep at night if you never again had to think about MOTs, beaded seat covers, or AA membership? Wouldn’t life be so much nicer without sat-navs luring you onto railway tracks, overcharging mechanics secretly laughing at you, or Jeremy Clarkson? Oh, and the price of oil hit another record high today (5 per barrel), by the way. Most worrying. Slightly less so if you don’t have a car, of course.
Sorry, did that sound smug?
Well, imagine how much smugger it would have sounded if I’d had Jeremy Clarkson as a role model – I’m a mere amateur next to him. The insufferable, tight-jeaned, climate bothering, fluffy-headed perma-smirk…
Anyway, besides never having to knowingly watch Top Gear again, there remains one final deeply compelling reason for going car-less: directions bores. Your quickest journey between Catthorpe and Carlisle? So what. The fine details of avoiding that bottleneck by Tesco’s? Go lick a sparkplug. Every train delay I’ve ever experienced will have been worth it, if I never again have to listen to one of you tedious little men (never women, for some reason). And at least with a train delay, you can get a book out.
Still not convinced of the joys of non-driving? Well, fair enough. But perhaps it might be worth reconsidering – a 0 barrel of oil by the end of the year, anyone?
About the Author
David John Martin. To save money as car costs raise you could start with your car insurance, try http://www.confused.com for insurance and finance.
Oil is falling slightly Thursday morning as OPEC cut back its forecast for global demand from member countries as production outside the group rises. Meanwhile, a weekly increase in US crude supply as reported Wednesday by the US Department of Energy is likely to keep a lid on any significant gains in oil prices. Brent crude is down 0.1% at .08 a barrel, light sweet crude is up 0.4% at .93 a barrel, and natural gas is up 0.1% at .08 a million British thermal units. Headlines this morning…The 12 member nations of the Organization of Petroleum Exporting Countries accounts for about 40% of global supply, and the Vienna-based agency sees world demand for oil reaching 28.8 million barrels a day in 2011, about 100000 barrels less than previously expected. Korea National Oil Corp (KOILC) is seen to be closer to clinching its hostile takeover bid for Dana Petroleum plc (DNX) as investors accept that KNOC will not increase its offer for the company. Dana’s shareholders have until Sept. 23 to accept the offer. JSC Gazprom Neft (SIBN) has closed a five year pre-export finance facility for .5 billion. The oil unit of Gazprom OAO(GAZP) said the facility will pay a margin of 2.1% over Libor after it lowered the margin on its initial billion loan from 2.4% over Libor. The day after releasing results from its internal investigation into the Gulf of Mexico oil spill which had placed blame not only on itself, but also on Halliburton Co (HAL) and Transocean Ltd (RIG) as well …
Okay, it’s my turn to vent and rant about what going on in our economy. Earlier this month, I posted a new download for everyone to take a read to titled “The Worldwide Effects of the United States Oil Crisis”. Now yes, this essay contained a strong opinionated view on the direction of the crude oil inflation and out government, and I wanted to touch on this topic a bit more.
This month, we’ve seen oil reach as high as 6 per barrel as of May 12, 2008 (and continuously rising). And honestly, I don’t see it stopping. Why is it continuously rising? Is it the fault of OPEC? Nope, not at all. Let’s take a look at some facts.
The demand for oil is steadily increasing.Oil is becoming harder to find – I work for Schlumberger and while I do not want to put out too much of the business that goes on around here, there are heavy talks for the constant search for new oil.U.S. Dollar is steadily deflating – If you think all of these interest cuts is helping us, in actuality it’s not.Inflation is rising - Speaking of inflation, when it occurs, the general level of prices increases, this includes oil & natural gas.So who is at at fault? Mr. David Gross of Newsweek quoted OPEC president Chakib Khelil in his article “Mismanagement 101″:
“…the crude’s remarkable run had nothing to do with the reluctance of Persian Gulf nations to pump oil, and everything to do with the ‘mismanagement of the U.S. Economy’.”
Here’s the thing. When it comes to being an investor, I love when the Federal Reserve cut interest rates. Stocks go up, investors are happy and buy, loans go down, and a lot of people make money. I, too, have benefited from some pretty nice gains due to rates being consistently deducted. But there’s so much more to the lowering of interest rates rather than for some quick gains and cheaper loans. After all, where ever there’s a good, somewhere there’s a bad.
What are the consequences of lowered interest rates? That leads me to my economist side of thinking. Lowering of interest rates is like putting a BandAid on a gunshot wound. Sure investors get some quick gains. Yes, loans are cheaper. But all of this also means more money to the money supply. Sounds good? It’s not. Take a look at “Money As Debt”, this documentary goes deep into the process of how more money is created out of thin air every single time we take out a loan. As more money flood the market, USD is decreased and price level rises. In other words, a deflating dollar and continuous inflation. With such occurrences, what else do we expect to happen when we visit the gas station and see per gallon?
Yes, demand plays a significant part in the price level of crude oil and natural gas, but inflation is the main front runner of the success of oil stocks lately. You can even consider as to why oil is rising, but gold is falling.
Here’s something else that I feel strongly about. While we are experiencing tough times, a bear market, and all of these other struggles due to inflation (and deflation in some matters), I feel that this is going to last even more long-term than some would like to think. Let’s hypothetically imagine everyone bowing on their knees and praising Ben Bernanke & George Bush for their remarkable efforts on rebuilding the economy thanks to seriously deflation of interest rates. Well, do you think those rates are going to stay that way forever? One day, I don’t know when but I will guess and say when everything looks to be subsiding, interest rates will rise again. It will not stay at 2% forever. And as the Feds begin to rise from 2% to 2.25% to 2.5% and on and on, investors will not be happy. Businesses will not be happy. Banks will not be happy. And in turn, the people will not be happy. Investors will take out money from the market causing stocks and businesses will suffer from this withdrawal. Banks will not be able to profit as much causing higher loans which will affect the people looking to purchase homes, cars, and other investments. I feel once this bear market is over, we’ll have a nice short bull market, then another bear market will follow. And I feel it may happen once Bernanke’s term ends and another unfortunate soul has to take his place and attempts to correct the wrong that is being done.
Back in the 1930’s, Theodore Roosevelt felt it was best to involve the government in the management of our economy and with a series of programs he successfully brought the American people out of the Great Depression.
Lately, it seems as if the government is slowly edging us back to the same position we were in back in the 1930s. Now I’m not a conspiracy theorist and saying the world is coming to an end, but here is one fact that I do know and everyone can relate to. Before the stimulus package was proposed and when the Federal Reserve was lowering interest rates in an attempt to help the American people and businesses. President Bush, in a press conference, apparently had absolutely no idea on the state of our economy in relation to the oil commodity. I don’t know about you, but I’m glad his term is about to end, because I do not want a President running a country who is completely clueless on the state of an economy he is supposedly involved in.
So that begs the question. Should the government limit its involvement in the management of our economy? Or should it expand their involvement? Honestly, I’m tied between the two. I feel they should expand and gain more control of the Federal Reserve. As I’ve said as an investor, I like the cutting of interest rates because of the gains, but as an economist I despise it because of the consequences that come with it. And I would rather deter the consequences over gaining an extra few bucks. I know the government can’t interfere with the business of the Federal Reserve, but something needs to be done because it is the American people that are suffering such affects. At the same time, I feel that the government should limit its involvement, because honestly, I don’t know what more can be done. When the government first got involved back in the 1930s, they opened up more governmental jobs, created welfare, and did all they could to help the people and in turn help the economy. That is what this stimulus package is supposed to do. What new programs can be made? What new routes can be taken?
Okay, I had a lot to get off of my chest on that. I re-read my essay, then I read David Gross’s article and it just brought up a LOT of questions and opinions in my head. Now please remember, these are my own opinions and insights. If it happens, then I want for everyone to treat me as every other economist out there that make obvious predications but are still somehow praised by the media. If it doesn’t happen, then the best I can say is at least I provided some facts to support my opinion. That’s more than I can say for some of these people making their assumptions.
About the Author
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There seems to be a surplus of crude oil at the moment. For all of OPEC’s calls for production cuts there is precious little evidence that these calls will translate into serious action.
Most of the nation states outside of the Middle East, and many of those within it, desperately need the revenue flows to balance Public Sector books.
In the recent past, action from local administrators in countries like Venezuela and Russia has meant that there is almost no outside financial help to be had when times get tough.
If dealers drive oil even lower, and it remains there, then the consequences could be quite severe.
Economists make much of the fact that the emerging markets will take up any slack in western demand. However with fuel efficiencies getting ever greater the increased demand from economic growth must be considerable just to keep up with reducing requirements.
It looks to many investors that the price will continue to go down. If so, those spread betting on Crude Oil to decrease further will be the ones profiting from the fall.
Of course, if there is a concerted effort to decrease supply then the risk of a price bounce or permanent return to higher levels could catch out the speculators.
OPEC recently inspired such a rally when it announced a production cut. However that rally was both muted and short lived.
Whilst many fear the cartel and its potential power, the world has seen past evidence of poor attempts by OPEC to rein in production. According to Financial Spreads it looks like the traders see no reason to expect that this time will be any different. If the price remains at the current levels for some time the temptation to ‘pump just a little more’ will become extreme as State coffers begin to dwindle.
Crude Oil is now around the mark but there does appear to be some support at just below this price. Especially if the OPEC partners can actually implement the output cuts rather than just agree to them.
Easier said than done. And the failure of any such implementation is what many of the speculators are really betting on.
Countries such as Venezuela and Russia are massively exposed to a falling oil price. Their economies are geared to the higher revenue flows. Sustained periods below might make for political upheaval with extreme shifts to the left or right possible.
Personally, I have to say that on current output levels, – would appear to be the stable level. However that is vulnerable to wild swings as momentum and fear drives prices to extremes.
Mexico recently announced that they had hedged .5bn worth of oil at -0 per barrel to protect themselves from falls. Whether other countries have hedged to similar levels remains to be seen.
Other nations have built spending plans on the price of oil staying above . Going forward, one expects plenty of posturing and talk of restricting supply to force up the price.
Unfortunately for the Oil producing nations none of them really trust each other when it comes to production levels.
The talk of consensus will always go hand-in-hand with the suspicion that one or more of them is exporting out the ‘back door’ ie gaining the higher prices without suffering the lower output income.
Time for a short term bet on the prices to fall further?
Spread bets carry a high level of risk to your money and may not suit all forms of investor. You can lose more than your initial investment so make sure you only speculate with capital that you can afford to lose. Likewise make sure you understand the risks involved and seek independent financial advice where necessary.
About the Author
A leading financial author and seasoned commentator on the UK financial markets including the commodities spread betting and futures markets
Countries across the world rely heavily on oil and its byproducts to create much of the energy that their citizens consume. The availability of gasoline to power vehicles, boats and aircraft in the United States of America is dependent largely upon oil that is imported from other nations, and particularly from members of the Organization of Petroleum Exporting Countries (OPEC).
OPEC, founded in 1960, is a conglomerate of major oil producing and exporting nations that are estimated to produce 40 percent of the world’s oil and to possess about two thirds of the world’s known oil reserves. OPEC monitors the worldwide oil market and establishes pricing for oil which affects people throughout the world. According to http://www.OPEC.org, OPEC’s mission is “to coordinate & unify the petroleum policies of Member Countries & ensure the stabilization of oil prices in order to secure an efficient, economic & regular supply of petroleum to consumers, a steady income to producers & a fair return on capital to those investing in the petroleum industry.” The organization also sets production quotas for most of its members.
The Associated Press reports that the president of OPEC, Mohamed Al Hamli, has asserted that policies aimed at reducing world dependence on oil could lead to reduced availability in the future. Such declaration is cause for concern since history and the principles of economics demonstrate that reduced supply of a high demand product leads to higher prices. Al Hamli reasoned that the exporting countries have minimal resources and that hefty investments in production when demand is uncertain would be financially wasteful.
The United States and other industrialized nations rely heavily on fossil fuels for energy to fuel vehicles, heat homes and to produce and transport a multitude of other oil dependent consumer products. Nonetheless, concerns about the limited nature of oil, unrest about the environmental impact of oil and a long held dependence on imports of foreign oil have contributed to a substantial movement to reduce dependence on oil for energy.
The emergence of alternative forms of energy, such as wind energy and bio fuel is threatening to weaken world reliance on fossil fuels for energy in the long term. However, the tremendous extent of the world’s reliance on oil and natural gas suggest that any changes impacting the demand for oil that do take place will do so gradually.
About the Author
About the Author: Bob Jent is the CEO of Western Pipeline Corporation. Western Pipeline Corp specializes in identifying, acquiring and developing existing, producing reserves on behalf of its individual clients.