T Nation

$25 Dollar Oil

Dec. 4 (Bloomberg) – Crude oil may dip below $25 a barrel next year if the recession that?s slashing fuel demand around the world spreads to China, Merrill Lynch & Co. said.

Global oil demand will contract in 2009 as economic growth slows to its weakest since 1982, Merrill Commodity Strategist Francisco Blanch said in a report today. In October, when oil was around $100 a barrel, the bank predicted that prices may slide to $50. Crude traded at $45.30 in New York today, the lowest since February 2005.

?A temporary drop below $25 a barrel is possible if the global recession extends to China and significant non-OPEC cuts are required,? Blanch said. ?In the short-run, global oil demand growth will likely take a further beating as banks continue to cut credit to consumers and corporations.?

Crude hasn?t fallen below $25 a barrel on the New York Mercantile Exchange since November 2002."

If you’re employed, this is good news.

[quote]Headhunter wrote:

If you’re employed, this is good news.

[/quote]

and if your not, your me.

We were discussing deflation this morning in class, this looks, to some, like the beginning of a deflationary period. I don’t understand all the details, but wages are going to plummet as well as the cost of living. Unfortunately the drop in wages will be much lower than the drop in the cost of living.

After this deflationary period ends, rapid hyperinflation will take hold and obliterate the dollar once and for all. making the great depression look like a nice day at Disneyland.

Of course, this is all speculation. But I think about this semester at school, and how we are covering financial crises while we are in the middle of one, and how everything happens in steps and periods.

It is so weird to witness this, while learning about it in textbooks. Everything that contributes to a total economic meltdown has happened, or is happening, step by step. From the stock market crash, weak currency, debt deflation, to price level decreases… It is just so weird to actually see it all unfold.

My accounting professor tells us that we are living through one of the most historic eras of American history. It will be fascinating to see how it all works out.

Unless you are employed in Houston. We are finally starting to catch the recession. I’ve heard different things about the numbers though.

I’m more interested in the banking and credit side of things. Now is a great time to speculate on stocks and property.

[quote]THE_CLAMP_DOWN wrote:
Headhunter wrote:

If you’re employed, this is good news.

and if your not, your me.
[/quote]

Sorry to hear that. Very few fields will be even offering positions in the next 5 to 10 years. Even teaching (my field) will suffer as states and municipalities declare bankruptcy.

Best bet: join the military. As states and cities go bankrupt, the military will be called upon to do what used to be done by the police. Martial law will rule in many places. And the Feds can always print the money to pay you.

[quote]Headhunter wrote:
THE_CLAMP_DOWN wrote:
Headhunter wrote:

If you’re employed, this is good news.

and if your not, your me.

Sorry to hear that. Very few fields will be even offering positions in the next 5 to 10 years. Even teaching (my field) will suffer as states and municipalities declare bankruptcy.

Best bet: join the military. As states and cities go bankrupt, the military will be called upon to do what used to be done by the police. Martial law will rule in many places. And the Feds can always print the money to pay you.

[/quote]

YUP.
http://news.yahoo.com/s/ap/20081202/ap_on_re_us/meltdown_choosing_war_4

However, I’d join even in prosperous times.

[quote]Headhunter wrote:
THE_CLAMP_DOWN wrote:
Headhunter wrote:

If you’re employed, this is good news.

and if your not, your me.

Sorry to hear that. Very few fields will be even offering positions in the next 5 to 10 years. Even teaching (my field) will suffer as states and municipalities declare bankruptcy.

Best bet: join the military. As states and cities go bankrupt, the military will be called upon to do what used to be done by the police. Martial law will rule in many places. And the Feds can always print the money to pay you.

[/quote]

Ditto sorry to hear that, you can do like a lot of people in the area I live in and steal gold to sell, but from your posts you seem to have more class than that.

What was the cost of gas the last time oil was this low?

[quote]THE_CLAMP_DOWN wrote:
Headhunter wrote:
THE_CLAMP_DOWN wrote:
Headhunter wrote:

If you’re employed, this is good news.

and if your not, your me.

Sorry to hear that. Very few fields will be even offering positions in the next 5 to 10 years. Even teaching (my field) will suffer as states and municipalities declare bankruptcy.

Best bet: join the military. As states and cities go bankrupt, the military will be called upon to do what used to be done by the police. Martial law will rule in many places. And the Feds can always print the money to pay you.

YUP.
http://news.yahoo.com/s/ap/20081202/ap_on_re_us/meltdown_choosing_war_4

However, I’d join even in prosperous times.

[/quote]

Only problem is Obama wants to cut military funding and divert it to his civilian paramilitary.

[quote]apbt55 wrote:

What was the cost of gas the last time oil was this low?

[/quote]

I remember paying 87 cents in PA, 9 yrs. ago.

[quote]apbt55 wrote:
Headhunter wrote:
THE_CLAMP_DOWN wrote:
Headhunter wrote:

If you’re employed, this is good news.

and if your not, your me.

Sorry to hear that. Very few fields will be even offering positions in the next 5 to 10 years. Even teaching (my field) will suffer as states and municipalities declare bankruptcy.

Best bet: join the military. As states and cities go bankrupt, the military will be called upon to do what used to be done by the police. Martial law will rule in many places. And the Feds can always print the money to pay you.

Ditto sorry to hear that, you can do like a lot of people in the area I live in and steal gold to sell, but from your posts you seem to have more class than that.

What was the cost of gas the last time oil was this low?

[/quote]
Lower. But the oil hitting the market today was bought on contract a while back, sent down the line through refineries and multiple companies and is now making it the market. Refined oil product prices are on a lag.

Its realized that it can be hard to tell Benito Mussolini and Barrack Obama apart, but the man photographed with his civilian paramilitary (‘blackshirts’) is actually Mussolini :wink:

Gotta love the fucking experts. Back in July, I was calling for a free fall in oil prices. Remember Lixy?

I don’t know if I said it here, but I was convinced we would see $50 oil. The experts were saying oil would hit $200/barrel and more.

Now the “experts” are calling for prices 1/10th of what they were saying they would be just 6 months ago.

Maybe you should take the opposite advice of the experts. They evidently aren’t putting their money where their mouths are.

[quote]rainjack wrote:
Gotta love the fucking experts. Back in July, I was calling for a free fall in oil prices. Remember Lixy?

I don’t know if I said it here, but I was convinced we would see $50 oil. The experts were saying oil would hit $200/barrel and more.

Now the “experts” are calling for prices 1/10th of what they were saying they would be just 6 months ago.

Maybe you should take the opposite advice of the experts. They evidently aren’t putting their money where their mouths are. [/quote]

Some experts predicted $200. Others predicted much lower levels. Most said the market was too volatile to accurately make a prediction. The news channels took the most sensational possibility and ran with it. Most investors were not calling for $200 oil.

Many investors lost tons of money misreading the market though, so they did put their money where their mouths were and ate it.

[quote]FormerlyTexasGuy wrote:
rainjack wrote:
Gotta love the fucking experts. Back in July, I was calling for a free fall in oil prices. Remember Lixy?

I don’t know if I said it here, but I was convinced we would see $50 oil. The experts were saying oil would hit $200/barrel and more.

Now the “experts” are calling for prices 1/10th of what they were saying they would be just 6 months ago.

Maybe you should take the opposite advice of the experts. They evidently aren’t putting their money where their mouths are.

Some experts predicted $200. Others predicted much lower levels. Most said the market was too volatile to accurately make a prediction. The news channels took the most sensational possibility and ran with it. Most investors were not calling for $200 oil. [/quote]

Go find any article predicting even $80 oil before July. If you find one, you will have to sort through 100 calling for $200 oil.

Hell, even Boone Pickens was calling for this “correction” to be short term, and that the price would shoot back up.

Of course, there’s a special place in hell reserved for that sorry sack of shit, though.

My guess is that China’s economy will slow down to it’s 8% minimum quota, helped by a fiscal stimulus package and a bunch of domestic infrastructure projects.

Oil will take a hit, but it won’t go down to it’s 1990 levels, I think.

I somehow doubt we’ll see widespread devaluation of the dollar either. There’s too much global trade pegged to it.

[quote]myjennycdb wrote:
apbt55 wrote:

What was the cost of gas the last time oil was this low?

I remember paying 87 cents in PA, 9 yrs. ago.[/quote]

Yeah when you could scour your car for change and get half a tank.

[quote]rainjack wrote:
FormerlyTexasGuy wrote:
rainjack wrote:
Gotta love the fucking experts. Back in July, I was calling for a free fall in oil prices. Remember Lixy?

I don’t know if I said it here, but I was convinced we would see $50 oil. The experts were saying oil would hit $200/barrel and more.

Now the “experts” are calling for prices 1/10th of what they were saying they would be just 6 months ago.

Maybe you should take the opposite advice of the experts. They evidently aren’t putting their money where their mouths are.

Some experts predicted $200. Others predicted much lower levels. Most said the market was too volatile to accurately make a prediction. The news channels took the most sensational possibility and ran with it. Most investors were not calling for $200 oil.

Go find any article predicting even $80 oil before July. If you find one, you will have to sort through 100 calling for $200 oil.

Hell, even Boone Pickens was calling for this “correction” to be short term, and that the price would shoot back up.

Of course, there’s a special place in hell reserved for that sorry sack of shit, though.

[/quote]

I don’t think anyone predicted the economy was going to plummet like it has, but eventually gas prices are going to go up. There simply isn’t any way around it other then renewable energy. Once the economy begins to rise cars being bought and fuel being used are going to rise in not just America, but in China, India, Russia, Japan, and many other countries. Unless cars are run by something other then oil there is no way to keep the price down. Demand is going to increase and there is only so much oil to go around.

A good way to gauge when the bubble is close to bursting is when mainstream folks start talking about how high something can go. When $200 oil was being discusses, and $2000 gold, when a market of 15000 on the Dow was seriously considered, its usually a good time to bet the other way.

Now, how LOW can oil go? ;>

Low oil prices, perfect to bankrupt the saudis…

States get a lot of tax dollars from gas. With so many states/counties/city desperate for $ this is only going to make things worse.