Macro Economic oil/energy question

Discussion in 'Economics' started by Emini_Elvis, Mar 15, 2008.

  1. Anyone have any thoughts on the price of oil.

    Very generalized questing...

    What price will light crude oil need to be at for reasonable GDP expansion?
  2. Daal


    it would help to see $50 oil. I dont think that will happen ever again though. i think oil comes down it will be 20-25% at most, then it will go back once fed funds go to the 1 handle and economy rebounds
  3. oil is never gonna see double digits again
  4. Once the FED stops lowering rates and the dollar rebounds, oil will be well into double digits. Most oil industry econ types say the dollar related/speculator premium is a good $30 or more.

    A good global recession would hammer the price as well.
  5. A different theory:

    There are two trends that are part of the same phenomenon right now: Intrinsically valuable assets (like oil and most commodities), and short-term treasuries.

    In each case, the run in prices is quite simply about asset allocation in the unlikely event of a credit system failure.

    If push comes to shove, the only value in a systemic financial breakdown is 'things and stuff'. Agreements, and records, and pieces of paper that promise value are only as good as the system that backs them up. But commodities have value, period.

    And the US treasury, despite its maladies of late, will still be the place where the world turns if a global financial panic escalates.

    I don't think we've ever seen this combination, but global exposure correlation is a different story now than in previous times. And so is the level of uncharted uncertainty about how counterparty relationships will play out if the viability of synthetic assets falls past the tipping point.