Tag Archives: oil

point to ponder…

point to ponder… In Jan 2001 when George W. Bush took office, crude oil was $23.59 a barrel. Shortly before Bush left office, crude hit a record high of $128.02 per barrel. Gasoline prices hit record highs and people didn’t have any money in their pocket to by anything extra and we were in a recession. Of course Bush and Cheney are oilmen and how better to pad your bank account than to have some control of prices while holding a government office.

At the beginning of Jan 2007, crude prices were $46 per barrel. When the official start of the recession began in December 2007, crude had almost doubled to $85.52 per barrel. In one year, crude prices increased 39% causing gasoline prices to increase.

Combined with the uncontrolled greed of a decade in the banking and insurance industries and lack of oversight on Wall Street along with the political greed, people didn’t have any extra money in their pocket because of the high gasoline prices and with 2/3 of the economy dependent on consumer spending, I think it all came to a head causing the collapse. They say there are some signs the economy may be improving as spending this Christmas is up and the economy hasn’t shed as many jobs so once again this speculation causes oil to increase on the commodities market back to a two year high. We have already seen the increase at the pump and it appears more increase will follow as gasoline prices on the market has increased faster than crude.

I believe that government shouldn’t stick their noses in places it doesn’t belong, however, I feel the government should do something about speculators on the market driving prices. These people buy and sell but do not accept delivery of the product at all. If they buy, they should have to accept delivery of the product before selling. In a sense it would be like them buying up a large number of cars, leaving them on the lot in Detroit never accepting delivery but holding them to drive up the price of them before selling them to a dealer. I don’t understand the concept other than to make money at the expense of the consumer. Manipulation of crude and gasoline on the commodities market is rampant. They can control whether the prices goes up or down, mostly up, just by the release of a government statistic, the threat of a storm that may or may not make landfall or any other world news event. I know our country was founded on freedoms such as free markets but to me, due to its importance in everything, from the making fr plastics to the running of power plants, manufacturing plants and automobiles, it should not be open to the dangers of speculation that is so prevalent on the futures market.

There is little doubt in my mind that gasoline and crude price is one of the main, if not the main, driving force of the recent recession and with prices increasing again, I look for a “double-dip” recession, if not a depression, very soon.

I still do not understand how crude oil prices could remain constant in the teens from 1978 to 1999 ranging from $13 to $19 per barrel and in the low $20s in 2000 but almost quadruple in price under a President who also happens to be an oil man. Something just doesn’t seem right there. Maybe I am way off base but it doesn’t seem fair to those of us who try to eek out a living struggling to make ends meet while the rich get richer and the oil companies continue making record profits at the expense of the little person, the working person, the consumer.

Here we go again…

The Fed needs to raise interest rates to avoid inflation and to make the dollar stronger. If they expect to invigorate the economy, which is two-thirds consumer spending, this is the way to do it. Every time the Fed keeps the interest rate unchanged, the dollar falls against other currencies creating a speculator frenzy on the commodities market causing oil and gasoline prices to increase. These increases are filtered down to the consumer, who is already having it rough in making ends meet. Consumers stop spending because they have to pay higher gasoline prices at the pump. One only has to look back at the beginning of the recession when gasoline first reached $3 per gallon to see consumer spending slowed sharply at that time and then almost stopped at $4 per gallon except for food spending. Once again, the dollar has fallen against the Euro, even with the Greece and Portugal financial crisis. This should send a message to the Fed but they continue to ignore the stress gasoline costs have on taxpayers, the working class.
Consumer spending increased in February and March and Wall Street had a frenzy thinking the economy was indeed on the rebound. Anyone with a little common sense could figure out the increased spending was the tax refunds people were getting and spending on long awaited items. Once again consumer spending has declined and with gasoline and oil prices hitting $2.40 per gallon and $86 plus per barrel on the futures market, it is only a matter of time before the pain hits at the pump. We have heard over and over again how foreign investors put their money in crude when the dollar falls against other currencies. It is simple to understand that by keeping interest rates unchanged, it keeps the dollar weak. The Fed is keeping the interest rates low so it is pretty much free money for banks to borrow from one another, even after the taxpayers bailouts. However, consumers still have to pay higher interest rates on money borrowed from banks, when they actually loan money, thereby allowing the banks to reap huge profits. It is appears the Fed doesn’t care about the economy and is only interested in helping the banking industry in making huge profits at the expense of the consumer. Once again, a good argument to do away with the Federal Reserve. Washington Politicians, Banking and Wall Street executives appear to be in cahoots with one another hell bent on making billions at our expense.
I believe it is time for real change in Washington by getting rid of EVERY Incumbent and trying to put representatives of the people back in Washington instead of the same old politicians. If the American voter would actually vote against every incumbent up for re-election in 2010 and 2012, we may be able to save our nation, otherwise the government earmarks, pork barrel spending and our march toward a crisis such as Greece is currently experiencing is in our future. Every great nation throughout history has fallen with the most remembered being Rome. Is the United States following in the path of those former nations?
If you love your country, then you must vote every incumbent out of office.
Here is a link to view the Futures market including oil and gasoline prices and below is an article well worth reading about some of the points I have mentioned in my rant above.

Stocks turn lower after weaker-than-expected GDP

Stephen Bernard, AP Business Writer, On Friday April 30, 2010, 2:14 pm EDT

NEW YORK (AP) –Disappointment over two economic reports Friday sent stocks falling sharply.

Investors lost some of their optimism about the economy after the government’s weaker-than-expected gross domestic product report and news of a drop in consumer sentiment. Concerns surrounding financial regulation contributed to the selling, which took the Dow Jones industrial average down almost 66 points.

“The market may just be a little bit tired,” said Michael Sheldon, chief market strategist at RDM Financial Group in Westport, Conn. “A lot of good news is priced into the market.”

Many analysts have said the stock market was poised for a pullback after it climbed steadily for nearly three months.

In the last trading session of April, the Dow is still set to post its third straight monthly gain. However it looks like it will snap an eight-week winning streak.

Friday’s pullback began after the Commerce Department said the GDP rose at a 3.2 percent annual pace in the January-March period. That was below the 3.4 percent rate economists polled by Thomson Reuters had forecast.

While the GDP was up for the third straight quarter, it was down from the fourth quarter’s 5.6 percent, a rate that was inflated by government stimulus spending and companies restocking their depleted inventories. For the economy to show healthy growth, it would have to grow at a faster pace than it did the first three months of the year. Growth would have to equal 5 percent for all of 2010 just to lower the average jobless rate for the year by 1 percentage point.

The Labor Department will release its April employment report next week. Economists predict the unemployment rate held steady at 9.7 percent.

Analysts were relatively upbeat that the first-quarter growth rate, though slow, probably was good enough to help avoid a “double-dip” recession.

“GDP was slightly lower than expectations, but shows the economic recovery is probably sustainable,” said Peter Cardillo, chief market economist at Avalon Partners Inc. in New York.

Investors were disappointed by a separate report from Reuters and the University of Michigan that showed consumer sentiment rose to 72.2 in April from a preliminary April reading of 69.5. However, it was still lower than March’s 73.6. Economists had forecast a reading of 71.

The consumer sentiment report shows the “consumer isn’t fully recovered,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

Investors want to see data that shows month-over-month improvement, Luschini added.

Financial stocks were pulled down by Goldman Sachs Group Inc., which is now facing a criminal investigation for its dealings in subprime mortgage securities. A Standard & Poor’s equity analyst downgraded Goldman Sachs’s stock to a “sell” rating Friday morning. Its shares dropped more than 7 percent.

In afternoon trading, the Dow fell 65.75, or 0.6 percent, to 11,101.57. The Standard & Poor’s 500 index fell 9.49, or 0.8 percent, to 1,197.30, while the Nasdaq composite index fell 27.43, or 1.1 percent, to 2,484.49.

The Chicago Purchasing Managers Index rose this month, further evidence of a recovery in the manufacturing sector. The index, which reflects economic activity in the Midwest, jumped to 63.8 in April, from 58.8 last month. Economists expected the index to rise to 60.

Signs of an improving domestic economy pushed stocks higher the past two days, after fresh concerns about European debt problems sent shares plummeting on Tuesday. The Dow jumped 122 points Thursday, its biggest jump since March 5, after another batch of strong earnings and a Labor Department report that showed initial claims for jobless benefits fell last week.

Despite the gains the past two days, investors are still keeping an eye on the European debt problems. The biggest concerns are in Greece, where the country faces loan repayments in a couple of weeks. If it is unable to tap a joint European Union and International Monetary Fund bailout package before May 19, the country could default on its debt.

Analysts fear that debt problems will spread across the continent and stunt a global economic recovery.

Greece, Portugal and Spain all saw their debt ratings slashed by Standard & Poor’s earlier this week. Greece’s was cut to junk status. Lower ratings make it more expensive to borrow money, which would only add to debt burdens already facing some European nations.

European markets fell. Britain’s FTSE 100 dropped 1.2 percent, Germany’s DAX index fell 0.2 percent, and France’s CAC-40 fell 0.8 percent.

The euro rose against the dollar, but analysts remain cautious about its long-term future. Some have said that the debt problems could further drive down its value or lead to a split among the 16 countries that share the currency.

Meanwhile, Goldman Sachs is again contending with negative headlines. The big Wall Street bank — which is already facing civil fraud charges for misrepresenting details about subprime mortgage securities — is now also facing a criminal investigation.

“They’re really going after Goldman pretty hard,” said Ryan Detrick, senior technical analyst at Schaeffer’s Investment Research. “That’s got people on edge.”

The Justice Department has opened a criminal investigation against the bank over mortgage securities deals it arranged. Many blame the credit crisis on the collapse of similar securities which were traded by many banks around the world.

Detrick said that after all asset bubbles, regulators and politicians look for companies or executives to blame and Goldman is currently at the top of that list.

Goldman shares tumbled $13.59, or 8.5 percent, to $146.65. Other big banks with trading operations like Morgan Stanley and JPMorgan Chase & Co. fell more than 2 percent.

Earnings again largely topped expectations. Both oil company and Dow component Chevron Corp., homebuilder D.R. Horton Inc. and consumer products maker Newell Rubbermaid Inc. saw shares rise after reporting better-than-expected profit.

Chevron shares were trading in a narrow range however, as the broader energy sector has been hurt on the day by concerns about an oil spill off the Louisiana coast and its potential impact on future exploration and drilling. Chevron rose 7 cents to $82.36.

D.R. Horton shares jumped 68 cents, or 4.8 percent, to $14.92. Newell Rubbermaid jumped 44 cents, or 2.6 percent, to $17.39.

About two stocks fell for every one that rose on the New York Stock Exchange, where volume came to 714.5 million shares, compared with 747.7 million shares traded at the same time Thursday.

Bond prices rose as stocks dipped. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.67 percent from 3.73 percent late Thursday.

Gold and oil prices both rose.

The Russell 2000 index of smaller companies fell 10.00, or 1.4 percent, to 727.74.