Is this an Oil Bubble?

Question

The Saudis have said all along that there is enough Oil in the market and that the current prices are not supply driven. A good friend of mine who is a top economist said the same thing to me the other day, the oil production/demand numbers don't justify a $137 a barrel price (the price that day) It is all based on speculation. IF the US says it will drill for its own oil the news alone will stop all speculation and crash the prices back to the $70-80 a barrel wich is its true value.

Could this be another GET RICH QUICK AT WHATEVER COST scenario, like the dot com fiasco, or the houseing market.? Are the same greedy SOB's who inflated the stock price of companies who were not worth a 10th of the price of what they were asking, and who were the geniuses behind house prices increasing at 40% anually the guys behind Oil prices sky rocketing? Namely the SOB's in the big investment firms trying to make a buck! buying Oil futures because of the percieved profits it would bring ?

Answer 1

Oil is NOT in a bubble.

Why?

Supply and demand.

When the stocks went ballistic, the supply increased faster than the demand.

The Saudi's are trying to cover their butts.

They are pumping all they possible can.

They cannot pump anymore.

If they could, they would.

We need Light Sweet Crude to refine in the U.S.

The Saudi's pump Sour Crude which is harder to refine.

Bubbles occur when their is plenty of supply and huge demand.

If you really want to know what's going on with oil read Matt Simmons book "Twilight in the Desert"

Answer 2

So, you're comparing a wasting asset like oil to a passing fad or conglomeration of ideas?

Can you believe anything at all from an economist?  That's like saying Jim Cramer can predict the market. You're shaming reality, like oil prices, and basing your beliefs on hocus pokus.

The oil price numbers aren't supply-driven?  Do you mean like China and India don't exist?

Hmm, and it must be those big bad American oil companies, or their lobbyists, driving up oil prices, even though America only controls 10% of world oil. Or maybe it's the traders, who don't control any oil at all, comparitively.

There's oppurtunity everywhere, even in declining prices. Why do we need to know "why" or "the reason" when we could be part of it.

Read the book, "Black Swan", by Nassim Taleb to understand the answers, or to ask a pertinent question.

Answer 3

Buffett says it  is no bubble

Answer 4

sounds like you're on to something there.

i do wonder though if you may be wrong about an announcement that we will 'drill for our own oil' bringing the prices down.  

we already do consume our own oil, after all.  but i agree that we should drill for more.

still, i have to take Stossel's side on this one.  Let the speculators speculate.  We need more freedom, not less.