Ther is more oil than we need. What we need now is change the adminstration and president who works for corporations and not american people Even without any major discoveries there is oil for several hundred years to go. And there are some other discoveries. Nuclear energy is cheap and green in 10 years oil will be used only for cars and plastic bags. All heating need will be covered by natural gas and electricity form sources other than oil In 20 years oil will be obsolete
Kashirin is maybe too optimistic, but he has a point. The peak oil people think we are approaching the point where we aren't discovering oil fast enoug to replace what we're using up, but we aren't there yet. (Btw Petrochina announced a big new find a couple of weeks ago - it sent their stock up $10 or so). Even when we do get to peak oil, it won't affect the rate at which we can pump it until the big reservoirs start going dry. In the meantime we are madly working on hundreds of new technologies. People also forget how far we have already come: In the 50s, a typical Detroit car was lucky to get 20 mpg; now even SUVs do better than that, and diesels and hybrids are 2-3 times as efficient. Oil for home heating has been on its way out for years, and won't be adopted by emerging economies. In 40-50 years at most, oil-based transportation will be as obsolete as the steam locomotive. Every time there's a bubble, there are people who find ingenious reasons why we've moved into some new zone of economic reality where it becomes sensible to pay $1000 for a tulip bulb or $100 for a barrel of oil. They are always proved wrong: bubbles always burst. The world hasn't changed so much since 2003 that oil was "really" worth $28 then and is "really" worth $66 now. Even $28 is above the long-term trend line. $66 is outasight. When I do a bubblectomy on the data (take out the OPEC years and the last 3 years) and then do an exponential fit on what's left, I get oil at $31 nominal and $26 inflation adjusted in 2012, assuming 3% inflation.
Ok, you may be right about '76. I was only a youngster in the early 80's. Living in Vancouver from 1988 - 1998 we used to regularly cut school to go snowboarding down in Washington state at Mt Baker. They used to take CAD at par during the week days. That is why I was thinking the exchange rates must have been pretty similar. I guess they maybe figured some business was better than none. Kind regards, MK
Very interesting, thank you. As to GBPCAD, I notice this. Two things happened on May 10: the BofE put rates up .25%, and Tony Blair announced the date he would step down. The market hardly noticed the rate change, but Blair's announcement seems to have made GBP nosedive. It means (a) political uncertainty (b) Gordon Brown will become PM, policies unclear but somewhat to the left of Blair, and (c) someone else will become Chancellor, again policies unclear. Also Brown is not a very popular figure, and David Cameron is, so likely a Tory win in the next election, and it's one of the paradoxes of British politics (or anybody's politics) that to grab the centre vote the left has to say rightish things and the right has to say leftish things. So if it's all about political uncertainty and fear of soft policies, we can expect continued downward pressure on GBPCAD, perhaps getting down to last year's lows around 2.02 or below. At any rate, I've shorted a bunch at 2.1520, and we'll see how it goes. I've put a long trailing stop on it (100 pips), which I'll tighten if/as we move into solidly profitable territory. Another thing is that the UK doesn't import oil from Canada (in fact I believe it's still a net oil exporter), but it does import base metals, and those are still going strong. The UK also has a per capita trade deficit about the same size as the US's, and strong growth in a net import economy tends to make the deficit bigger. Hence more downward pressure on GBP. I think the recent rise to 2.34 (and the rise of GBPUSD to over 2.01) was pricing in a series of expected rate increases, and with the changing of the guard, and CPI moderating towards the 2% target all by itself, they may not happen. When inflation is much over target (2.8%, latest) BofE has to explain itself to the Chancellor - and they don't yet know who that is or what he'll want; in any case Brown is now a lame duck, so the bureaucrat's instinct to do nothing is likely to prevail. I still expect a strong rebound in USDCAD, but perhaps not until the effects of the high loonie become visible in the economic data - maybe repeating last year's pattern of staying in the doldrums through May and June, then a short rally in July and a strong comeback in Q4. I think Dodge would be crazy to raise rates at this point: he can let the high loonie do the work of cooling the economy for him. But Bernanke has to stand pat too, so no change there in the foreseeable. Bernanke seems more worried about housing and its possible recessionary effects than about inflation, yet inflation is still too high for a cut to be in the cards. I still expect oil to drop back to historically normal (rather than hysterically abnormal) levels over the next few years. Fact: Oil tends to be pumped in politically unstable areas, so there's always some business in Nigeria or the Middle East or someplace that the oil bulls can seize on, but it's all BS. Check out the effects of the actual Iraq war (as opposed to the faltering peacekeeping/reconstruction effort that people call the "war in Iraq") on oil prices in 2003. Nothing. Nada. Zippo. But people who want to wish prices up seize on non-events like the Israel-Hezbollah war or Iran kidnapping some British sailors or whatever the hell is going on in Nigeria and start buying up oil. It's like expecting global shipping to be disrupted because there was a storm somewhere. Plain silly. Base metals have to pop real soon now.
Dumb. Of course working out crosses is a matter of multiplication, not addition. In other words, a 7-point spread in a currency worth 2 units of something is equivalent to a 3.5 pip spread in a currency worth only 1 unit. So yeah, when I "make my own crosses" in GBPCAD, actually the result is within a pip of the direct price, which of course the arbitrageurs make sure of. I knew that, I was just being lazy. On that basis, the tightest spreads on Idealpro are often in HKD: e.g. EURHKD is nominally a 9-10 pip spread, but that's in the 5th digit, so it's like 0.9 or 1.0 pips in USDCAD. USDHKD is 2 pips out of 7.8, equivalent to about 0.3 pips of a currency trading at par and less than half a pip of EURUSD. By the same token, EURUSD is tighter thatn USDJPY, even though both are nominally usually one pip. BTW, my decision to short GBPCAD is looking good so far. Down we go, at 20 quid a pip. If it does go as low as 2.02, I stand to make 26,000 pounds, not bad for a few days of not much work. Stop at 2.1485 (locking in a small profit); no target. Will move the stop down manually as the situation develops. Why, folks, I made $700 while I was writing this post. Wish me luck.
I have seen news feed refer to USD/CAD as the Loonie Express (or Toonie Express) Based on historical data, we are testing the 70s price level when gold was very expensive, oil prices going to the roof, etc. Unless some market shock happens, it is hard for anyone to jump onto the opposite side against this "express train".