Gulp - oil shoots past $105 a barrel
Photo by ^riza^. Licensed under Creative Commons license 2.0.
Sure, $100 for a barrel of oil was news back in January, but the predictions that even higher prices are on the way was pretty much accepted at the end of 2007. Welcome to the future, a time when a barrel of oil will set you back $105 and change.
Earlier today - thanks to a "surprise drop" in American crude supplies, tension in Latin America and OPEC's decision to not increase output - a new record of $105.10 was reached on the oil market. Adjusted for inflation, the record price of $103.76 (set in 1980) was smashed earlier this week, according to the AP. The trend is upwards folks, as most (but not all) of us know. Something to keep in mind if you're shopping for a vehicle these days.
[Source: AP]
Reader Comments (Page 1 of 1)
MarkR 11:57AM (3/06/2008)
Now thats what it will take for people to get out of larger gas sucking vehicles. Oil inflation to make records and beat nominal inflation. if those prices are sustained we'll see some real changes in the American auto habits.
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Nick 12:24PM (3/06/2008)
Maybe people will finally STOP DRIVING.
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smog 12:30PM (3/06/2008)
bring back the Chevrolet Chevette
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Don A 1:04PM (3/06/2008)
Not to quibble but the record was actually $105.97 hit in early trading.
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paulwesterberg 2:18PM (3/06/2008)
I guess that war for oil is not going so well.
How much oil would 650B buy? Now more borrowing for a stimulus package which will just cause more inflation.
$4 gas? if we are lucky.
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A.Brien 3:07PM (3/06/2008)
Gasoline and diesel are very old technology. They
were been adopted by car manufacturers and oil compagny 100 years ago and ford and gm never taught
after that that i finnally want for today a natural
gas car instead of a gasoline one. It's less polluting and it's full of natural gas in north america. They even use huge quantities of natural gas to make diesel and gasoline in alberta canada.
I want them and car manufacturers and gas retailors
to use directly natural gas instead. We can even make some natural gas at home or in the neighborood with trashs, farm residues,sewage,sh*t, so on.
Cars and trucks on the roads can become a cleaning waste factory and my town can fuel me freely while
im helping to clean the water in my town.
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rgseidl 3:36PM (3/06/2008)
A better headline would be:
Gulp! - US dollar plummets to new lows
The dollar is weak because interest rates have been very low for several years, causing money supply to grow faster than the US economy. This worked for a while because Japan and China continue to buy US Treasury bonds at low yields in a bid to keep their own currencies weak and export volume to the US up.
At some point, the game was up, inflation loomed and the Fed decided to raised rates. Recently, it had to reverse itself to avoid a dangerous credit crunch in the wake of the subprime mortgage mess.
The reason the US had a housing bubble in the first place was that tax cuts combined with high money supply forced banks to prioritize market share over creditworthiness. In other words, poor policy co-ordination combined with poor oversight of lending practices.
Unfortunately, the Fed's latest moves merely buy some time at the expense of letting the dollar slide even further. The root of the problem is that the international banking system no longer trusts the rating agencies' verdict on products containing US mortgages. The agencies' data is of course only as good as that collected by loan officers. In too many cases, loan applications were not scrutinized properly because banks thought they could could get away with endlessly slicing, dicing and repacking bad loans as collateralized debt obligations (CROs). This has now been exposed to be a game of musical chairs.
The upshot is that the dollar will now remain weak for a number of years. Triple digit oil prices will soon be the norm rather than the exception, unless the US recession turns from shallow to deep, depressing demand for oil.
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Bill 7:05PM (3/06/2008)
Not only the dollar devaluation, but commodities are becoming the next bubble market.
With the stock market and real estate crashing, hot money's moved to oil/gold/wheat/etc.
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