Time to buy a Hybrid?

[stephendare]

http://livingoffdividends.com/2008/04/16/oil-break-115-per-barrel/

April 16th, 2008 Living Off Dividends  Posted in Canroys, Commodities, Global Economy, Oil and Gas |

Oil just broke through $115 per barrel today. While this may come as a shock to many , I’ve been preparing for it for the past 2 years. All the signs of an oil shortage have been visible in the media, but most people have either been ignoring it, been in denial or been too focused on what Paris Hilton or Brittany Spears have been up to!

China and India together have  a third of the world’s 6.66 billion people. If 10% of these 2.2 Billion people start buying cars, that’s 220 million new cars on the planet ready to start guzzling more gasoline. I think thats the current number of cars in the US, so effectively the demand on oil is set to double over the next few years. And along with Tata Motors new $2,500 car, you can be sure that eventually atleast 20% or more of India’s and China’s population will be driving cars instead of cycles or mopeds that give 247 miles/gallon. That 247 number is  not an exaggeration. Owners of Suburbans should refrain from crying right now.

Based on the growing prosperity in just these two countries, the demand for the world’s resources is growing at a furious pace. Unfortunately, oil is a key component of prosperity and the global supply of it is somewhat stagnant. Despite a few  new oil fields being found here and there, new reserves are not keeping up with the depletion. According to one report, all the oil in Alaska would last the US for only 6 months.

If you think that gas prices are high at over $3.50 per gallon (I just paid $3.95 for mid-grade for my wife’s Acura TSX), wait until summer. There are reports that the refineries are absorbing the cost of high oil prices right now (and some of them have hedging contracts in place to mitigate this high price), but within a few months they’ll be passing this burden on to the consumers. Oil prices at the pump could very well hit $5 and if this trend continues, it could hit $8/gallon.

In the UK, petrol (that’s what the rest of the world calls gas) costs about 1 pound per litre, which equates to $7.50-8.00 per gallon. Now you Suburban owners can cry now if you like. Or you can start investing in oil related investments like Canroys and oil drilling programs.

[downtownparks]

Time to buy a bike is more like it.

[gatorback]

stephendare:  I told you 130 was the new 120.  Charge that electric bike you have come on dude.  Look, I know you have a Chevy Sprite.  I've been rolling wth you for years is it a 2 or 3 cylendar, plus I've NEVER seen you put gas in that thing.  What does it get 40, 50 MPG? LOL

[Driven1]

no, there will not be $8 gas within a year.  $4.25/gallon by December?  sure...but no $8 gas (european prices) within 12 months.

[gatorback]

Driven:  Deisel  is $4.96 already in Austin.

[Driven1]

diesel is not gasoline.  and diesel (which sometimes trends LOWER than gas and gets its pricing mechanisms slightly differently) won't be $8 within 12 months either.

[Ocklawaha]

Gee, where is that Cookie-Monster now?

Trolleys/transit/rail/skyway anyone?

Ocklawaha

[gatorback]

Hey Ocklawaha, Red Line is testing a lot.  I've been trying to get the illusive picture and I almost got it but it was just moving to quickly. 

[Driven1]

my prognostications on commodities...

I would say Oil is due for a major correction...at least back down to $95/barrel levels (a 20% decrease).  I could also agree with platinum, nickel and zinc.  Corn - nope...not until the biofuel policy goes achanging.  Wheat - nope...not until the food riots stop and the biofuel (see corn) policies change.  I would 100% completely agree with the natural gass boom going to continue...though, I doubt that their is as much money to be made in LNG.  Fertilizers - nope - gonna continue through 2008 at least.

Btw...I have found to look more to Barrons than Kiplingers for the best info.  IMO, Kiplingers is kind of like "Money" magazine or "SmartMoney" - just a tad better.

Damn!!  that boy can write!!    i'm going to go chuckle now and then go to sleep.

[Driven1]

indeedie.  i stand by every word.  of course, i can't be right about everything like SOME PEOPLE.    but, still...feeling pretty confident on these relatively insignificant items.

[Driven1]

Wall Street predictions are wrong about half the time, so take them all with a grain of salt.

exactly.

[vicupstate]

Time to buy a bike is more like it.

Last night I saw someone on a bike getting free 'power' by holding one hand onto a truck as it rode down the street.   Pretty smart, get there just as fast as an auto, with no gas expense.   

[Driven1]

indeedie.  i stand by every word.  of course, i can't be right about everything like SOME PEOPLE.    but, still...feeling pretty confident on these relatively insignificant items. 

hmmm...the dummy "experts" seem to be siding with me stephendare...this is from today's WSJ...now, how much the opinion of "experts" is worth,  we are all left to ponder, but i dare say slightly weighter than yours.

the ability to look past the present day's news & the "financial pornography" of CNBC (not all of it is, but most of it) and see the larger picture is valuable.

RiversideGator...take note of what economists think are driving inflation...it is not the "investors".

Bubble Isn't Big Factor in Inflation
Economists Blame
Food, Fuel Run-Ups
On Fundamentals
By PHIL IZZO
May 9, 2008; Page A2

The global surge in food and energy prices is being driven primarily by fundamental market conditions, rather than an investment bubble, say the majority of economists in the latest Wall Street Journal forecasting survey.

Fifty-one percent of the respondents said demand from China and India was the prime factor in soaring energy prices, and 41% said the demand was the chief contributor to rising food costs. Constraint in supply was cited second most often; 20% blamed supply problems for higher food prices, and 15% for increasing energy prices.

"It's a combination of demand and supply issues," said Joseph Carson of AllianceBernstein LP.

Although most of the analysts attributed the food and energy costs to fundamental trends, 11% of the economists see a potential bubble driven by speculation. "Commodity markets have become a strange safe haven, with prices well out of line with underlying market fundamentals," said Diane Swonk of Mesirow Financial Holdings Inc. "I am dumbfounded that a report like [the May 2] employment report triggered a rally in oil prices. ... Just plain ridiculous."

The Labor Department's report showed a slight drop in the unemployment rate to 5%, and a smaller-than-expected decline of 20,000 in payrolls. Crude prices rose 3.4%.



Economists still see tepid growth this year, but things may have stabilized a bit, according to the results of the latest Wall Street Journal Economist Survey.

The survey, conducted May 2-6, showed that the 53 respondents, on average, expect the price of crude to fall to about $105 by the end of next month and to about $93 by the end of the year. (Crude settled at $123.69 Thursday on the New York Mercantile Exchange.) Their expectations for overall inflation continue to rise. They expect the consumer-price index, which rose 4% year-to-year in March, to increase 3.6% in June from a year earlier.

Gasoline prices are expected to stay high -- an average price of $3.45 a gallon over the next 12 months. The average price was $3.46 a gallon last month.

Despite concerns about rising prices, the majority of respondents -- 60% -- said the Federal Reserve is showing enough concern about inflation, and that its focus on the risks to growth is the right priority. The Fed has cut its key interest rate by 3.25 percentage points since last fall but recently signaled that it intends to pause.

"Worry about inflation after we're sure this isn't a depression," said David Wyss of Standard & Poor's Corp. Thirty-six percent of the economists think the credit crisis is over or mostly over, while 62% say it is about half-finished.

However, a sizable minority -- 40% -- said the Fed isn't concerned enough about inflation. Some of the analysts aren't convinced that a slowdown will tame inflation. "The U.S. isn't nearly as big a part of demand for oil and food as it was years ago," said Allen Sinai of Decision Economics Inc. "We'd need to see a global downturn to tame inflation."

On average, the economists expect the Fed's federal-funds rate, the rate at which banks lend one another money overnight, to remain at 2% for the rest of this year.

Write to Phil Izzo at philip.izzo@wsj.com

[gatorback]

Time to buy a bike is more like it.

Last night I saw someone on a bike getting free 'power' by holding one hand onto a truck as it rode down the street.   Pretty smart, get there just as fast as an auto, with no gas expense.   

ZERO EMISSION NO NOISE
ZENN
enlightened mobility(C)

www.ZENNCars.com

Seems the French offer a 2 cyl. deisel 55 mph version of this Electric go mobile; however, in the US, they're restricted to NEVs.  BUT, and here's the kicker, there's an "after market chip" that brings that puppy upto 45MPH and you never need a drop of gas even.  Expect 27 miles w/full charge.

[Driven1]

WSJ had article last weekend that says all major car producers are working on vehicles that will run the first 30-40 miles on electricity and then kick in the gas engine... up to 70mph.  should be on the market within 4-5 years.  electric utility companies are happy/sad about it...don't know if it will make them money.  it will if they cars are charged at night (when electricity trades at its cheapest).