Wednesday, January 2, 2008

“It don't take a genius to spot a goat in a flock of sheep” – Old Country Saying

$100! Oil, that is, traded at or above $100 today after surging nearly $4 on for no particular reason (other than the fact that our collective oil problem is sinking in through the shield of denial).

Well, trumpets did not blare, the wheels did not come off the economy, and the world didn’t come to an end. $100, $98, $96… there just isn’t enough difference between these prices to make today anything special or enough pain at these prices to retard demand. Here’s the deal: OPEC and the U.S. are no longer in charge of oil demand, distribution, or price. The U.S. will consume EVERY DROP it can get its hands on, irrespective of price, and that price will be set in a very competitive world market. U.S. crude and refined product imports declined 2% in 2007 from 2006, and that trend is going to continue in the short term and then accelerate. Also it is worth mentioning that while total availability of oil fell, the total usage rose slightly. This was possible by drawing down our inventories. These inventories muffled what would have been a true explosion in oil prices, and that explosion has only been delayed, not permanently denied.

Now, let us use our capacity for abstract thought…
What other commodities are likely to surge in price (in dollar terms) in reaction to oil? You can make a lot of money if you pay attention here - or you could lose your life savings if you listen to the droning bullshit coming from cheese-doodles-for-brains Financial Planners, Advisors, Money Managers or whatever the f&%@#!$ these jerks are calling themselves these days.

Oil is going higher. The U.S. imports Oil. The U.S. runs a massive trade deficit. The U.S. has no choice but to continue to run this deficit for as long as the sellers of oil will take their phony IOU’s. This means the U.S. $ is DOOMED. Any questions?

Sorry… that got away from me. You are still going to need U.S. Dollars (if you live in the U.S.) to pay taxes and to pay your bills. Let me restate by saying that the U.S. $’s purchasing power is going to decline fairly dramatically over the next several years. You will know what I mean when milk is $10 per gallon, gasoline is $8 per gallon, bread is $6 per loaf and a dozen eggs is 9 buckaroos. That is my measure of doomed.

If you want to hold the value of your life’s work in a doomed currency I want to wish you the best of luck with your vow of poverty (and chastity; everything has its price – no tickie no laundry)

Yours for a better $100 plus per barrel of oil world,

Mentatt (at) yahoo (d0t) com

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