Tuesday, May 27, 2008
This is what the beginning of the FINAL energy crisis would look like
According to the U.S. Department of Transportation, total Vehicle Miles Traveled ("VMT") declined 4.3% in March 2008 from March 2007.
Unfortunately, the U.S. Department of Energy says that year over year commercial petroleum inventories for February 2007 to February 2008 fell from 976,899,000 to 963,073,000.
Well, folks if your total miles travel fell by 4.3% and the oil left over in the system after uses was down 1%, and the price of oil DOUBLED... what else would the beginning of the FINAL energy crisis look like? It would look just like this. (For those lacking an uncanny grasp of the obvious...)
General Motor's stock price hit a 27 year low today, Ford Motor Company is cutting back production, American Airlines is cutting back flights... These events have NOTHING to do with the PRICE of oil, and everything to do with the AVAILABILITY of oil. Price is just a symptom of the decline in availability. Total VMT = total vehicles x average gas milage x aggregate fuel availability. Simple as that.
This data does not support a bottom in residential real estate any time soon. Nor does it support the Federal Reserve's and the Department of Treasury's position that the economy continues to experience REAL (as opposed to nominal (read inflation)) growth.
I must warn you: The Markets are not as dumb as our political representatives. They are going to pick up on this, and they are going to react. If you take a "wait and see" approach, or should I say a "lay and pray" strategy, which will wind up with you in the "plead and bleed" position. (That is - holding your losers and praying for a come back. Professional traders, including yours truly, know this one well. It is to be avoided at all costs.) Don't do this to yourself.
Time is of the essence...
Mentatt (at) yahoo (d0t) com
Posted by The Short Story Man at 5:59 PM