Will oil price ever come down?

Spanky · 06-25-2005, 07:19 AM

Oil price per barrel is over $60. Will we ever see an end to the increase?
It may be time to beef up your energy stock holdings.

wildcat · 06-25-2005, 07:33 AM

I have no idea where oil is going...wish I did. Everyone has something different to say, even some smart investors are saying it's going higher. I hate to buy anything at the time but earnings should be pretty strong for the sector. Been looking at iShares global energy ETF but haven't taken any action.

ShokWaveRider · 06-25-2005, 08:02 AM

What gets up my nose is, that the price of oil directly affect my spending in more ways than one, Gas, Heating Oil, Electricity, etc. Not to mention the cost of transportation etc. etc.. Well that is not what actually gets up my nose, but the government insisting that inflation is low does.

Have you seen the amount of trucks on the road lately? They seem to be procreating, and what do they run on.... fresh air? What do they deliver? Surely not groceries or durable goods?

And.. what do those big container ships run on that bring all those goodies to the continent? (Canada and USA). I bet it is not pancake syrup? The list goes on.

OK., why does the government not fess up and say inflation is out of control with relationship to Oil products and related services, then make a better effort to curb it. Instead of kidding everyone and the market that all is well and dandy.

BOUNCE............ Off Soap Box.

SWR

charlie · 06-25-2005, 10:32 AM

Eventually the price of oil will influence the price of everything we buy,
eat, make, consume or drive. It takes a little time for the price of energy to percolate through the economy, but it will.

Another sour note was featured in the Dallas Morning News today.
They stated that the restaurant industry is starting to feel the
competition for workers and they are adding more perks to entice
new hires........ that will translate into more wage inflation and
higher prices as well if the trend continues with other industries.

IMHO, higher inflation is on the way but I fear the economy will
be cooling off soon. Maybe these two forces will offset each
other?

Right now I am betting that higher inflation is coming with my
commitment to "floating" rate bonds paying 2+% plus CPI. I
am offsetting this bet somewhat with a 5 year CD ladder at
PenFed.

It's a crapshoot kids. Keep diversified and keep your power dry.

Cheers,

Charlie

OldAgePensioner · 06-25-2005, 10:49 AM

Charlie,
I'm thing of a CD ladder with 1,2,3,4,5 and rolling into fives each year. Are CD's a pain in the butt when redeeming? I bought one in Florida in 1982 (got the actual CD paper) and when I tried to redeem it from overseas, they said I had to go to the branch where I bought it.

When you buy yours will PenFed issue them to you or just set up an account?

wildcat · 06-25-2005, 11:15 AM

Charlie -

I think you are right on with your inflation thinking...I think we know the CPI ain't everything and the Fed's "don't worry be happy" attitude towards inflation is not accurate. High oil prices is never good either.

charlie · 06-25-2005, 11:16 AM

Hi OAP,

I am only on the 3 year rung of a 5 year ladder. *You can set up
the CD to reinvest automatically for the same term, or be
deposited in either a share account or a MM account with
Penfed. *You can also request a check be mailed to you.

You can also request the dividends be either reinvested in the
CD or mailed as a check or deposited in a share account or MM.
I am planning to spend the dividends so they are being deposited
in my MM account (you can write up to 4 checks/mo). *This
reduces the return from 5%APY to 4.88%

I chose to have the principal be invested in a MM account at
maturity. *When the CDs mature I plan to roll each one into
a 5 year maturity to be automatically reinvested for 5 years.

Getting all 5 rungs invested is a relatively long range project.
(1-3 years) depending on when I sell my laundromat and
how fast I choose to liquidate my Wellesley account.

This is taxable money for me. *If you want to rollover to an
IRA account you can put your money in 7 year CDs with the
privilege of canceling with no penalty and reinvesting in
a higher rate CD IF you are 59.5 or older. *What a great deal.
Inflation protection on the upside and 7 year rate protection
on the downside. *I am thinking about transferring some of
my IRA to do just that. *

Cheers,

Charlie

*

cute fuzzy bunny · 06-25-2005, 01:24 PM

Considering oil is essential for things like roadmaking materials, some prescription drugs, and fertilizers...you can bet theres going to be some non obvious price hikes.

Bookm · 06-25-2005, 03:15 PM

Quote:

Originally Posted by Notth

Considering oil is essential for things like roadmaking materials, some prescription drugs, and fertilizers...you can bet theres going to be some non obvious price hikes.

Just read an article where some states transportation departments are planning on foregoing roadway projects due to the oil costs. Obviously it's not cheap filling those mammoth trucks and earth-moving vehicles, they just sit there and idle all day. And I would guess they use some form of oil-based product in the asphault mix. Not a good sign for areas in need of a remedy from the increased traffic congestion.

Bookm

Spanky · 06-25-2005, 10:12 PM

Quote:

Originally Posted by charlie

IMHO, higher inflation is on the way but I fear the economy will
be cooling off soon. Maybe these two forces will offset each
other?

This is called stagflation -- Inflation combined with a downturn in the economy.

Whakamole · 06-25-2005, 11:30 PM

I posted this is another thread...

http://www.morganstanley.com/GEFdata...50616-thu.html

Oil may be overpriced.

BUM · 06-26-2005, 08:26 AM

I can't see buying oil equities now. I think hope that train has left the station. Natural gas is another story. Its lagging oil a bit and some think that nattie is poised for a 10-15% increase.

http://www.wtrg.com/daily/oilandgasspot.html

Even though its only about 1% of my port. I still like MARPS. Always a buy under $25

ShokWaveRider · 06-26-2005, 10:07 AM

Quote:

Originally Posted by charlie

Hi OAP,

I am only on the 3 year rung of a 5 year ladder. You can set up
the CD to reinvest automatically for the same term, or be
deposited in either a share account or a MM account with
Penfed. You can also request a check be mailed to you.

Getting all 5 rungs invested is a relatively long range project.
(1-3 years) depending on when I sell my laundromat and
how fast I choose to liquidate my Wellesley account.

Cheers,

Charlie

Charlie:

Assuming you have a lot more than $100k in such investments, do you not worry about FDIC insurance. When the Real Estate Bubble finally bursts, there will be a lot of defaults. Some financial/lending institutions will ultimately suffer. Or with such houses like Pen Fed, do you not worry?

SWR

MJ · 06-26-2005, 12:38 PM

Quote:

Originally Posted by ShokWaveRider

Charlie:

Assuming you have a lot more than $100k in such investments, do you not worry about FDIC insurance. When the Real Estate Bubble finally bursts, there will be a lot of defaults. Some financial/lending institutions will ultimately suffer. Or with such houses like Pen Fed, do you not worry?

SWR

I have more than $100k in PFCU. I found out that I can increase my NCUA insurance (the equivalent of FDIC for CUs) by adding 1 or more "Payment on Death" beneficiaries. This means for example, if you have 2 CDs for $75k each, adding POD beneficiary to each CD would limit your exposure to $75k. The additional $75k would be assigned to your POD beneficiaries. If the institution went bust, you would receive the full $150k back. If you died before the CD matured, then your assigned beneficiary would get the money which I am assuming would supercede your will.

06-26-2005, 12:58 PM

Listening to Thomas Friedman the other day, he said the following in so many words.

Bush made a real blunder by focusing the nation on Iraq and now Social Security" - If he would have focused the nation on solving the energy problem (i.e. developing an alternative energy source) - like we did on developing the Atomic Bomb, or landing a man on the moon, we would have created thousands of jobs, he would have the backing of the nation and would be miles ahead of where were are at currently.

This really has to be done and it is a crisis!

riskadverse · 06-26-2005, 01:01 PM

Concerning FDIC insurance, I believe the following is valid way to increase the limits.

$100,000 in your name
$100,000 in your wife's name
$100,000 in a joint account name

unclemick · 06-26-2005, 02:09 PM

I think Friedman got the flat earth part fairly right.

It does not follow - that we need to be energy independant.

Tell me why I should care.

Besides the Chinese will sell us low cost pebble bed reactors made with low cost labor - once they get their design perfected and assembly line up and running.

Seems they import oil also.

windsurf · 06-26-2005, 02:42 PM

Quote:

Originally Posted by Cut-Throat

Bush made a real blunder by focusing the nation on Iraq and now Social Security" - If he would have focused the nation on solving the energy problem (i.e. developing an alternative energy source) -
This really has to be done and it is a crisis!
[/quote

amen!

Whakamole · 06-26-2005, 03:08 PM

Higher energy prices will do more to spur innovation in fuel efficiency and alternative energy sources than any government program.

The reason hybrid cars are selling so well is because of gas prices.
Similarly, the reason that wind energy got a big boost a few years ago was because of high utility prices.

cute fuzzy bunny · 06-26-2005, 03:14 PM

Quote:

Originally Posted by Whakamole

Higher energy prices will do more to spur innovation in fuel efficiency and alternative energy sources than any government program.

The reason hybrid cars are selling so well is because of gas prices.
Similarly, the reason that wind energy got a big boost a few years ago was because of high utility prices.

Actually, no.

The most improvement in fuel efficiency and alternative energy came about with the CAFE programs run by the government. Alternative energy programs grew from tax grants to the manufacturers. Where no CAFE limits exist (SUVs primarily), there has been very little effort by the manufacturers to improve fuel economy and buyers have lined up in droves to pay for them.

Most people buy hybrids not because gas is expensive but because the buyers want a more environmentally friendly vehicle. Simply because you pay so much more for the vehicle vs a similar gas model that you'd never, ever make up the difference in cheaper gas.

Wind also got its big boost from tax friendly programs.

06-25-2005, 07:19 AM	#1
Spanky Thinks s/he gets paid by the post Join Date: Dec 2004 Location: Minneapolis Posts: 2,784	Will oil price ever come down? Oil price per barrel is over $60. Will we ever see an end to the increase? It may be time to beef up your energy stock holdings. __________________ May we live in peace and harmony and be free from all human sufferings.

06-25-2005, 07:33 AM	#2
wildcat Thinks s/he gets paid by the post Join Date: Feb 2005 Posts: 1,896	Re: Will oil price ever come down? I have no idea where oil is going...wish I did. Everyone has something different to say, even some smart investors are saying it's going higher. I hate to buy anything at the time but earnings should be pretty strong for the sector. Been looking at iShares global energy ETF but haven't taken any action. __________________ "These walls are kind of funny. First you hate 'em, then you get used to 'em. Enough time passes, gets so you depend on them"

06-25-2005, 08:02 AM	#3
ShokWaveRider Full time employment: Posting here. Join Date: Jun 2003 Posts: 583	Re: Will oil price ever come down? What gets up my nose is, that the price of oil directly affect my spending in more ways than one, Gas, Heating Oil, Electricity, etc. Not to mention the cost of transportation etc. etc.. Well that is not what actually gets up my nose, but the government insisting that inflation is low does. Have you seen the amount of trucks on the road lately? They seem to be procreating, and what do they run on.... fresh air? What do they deliver? Surely not groceries or durable goods? And.. what do those big container ships run on that bring all those goodies to the continent? (Canada and USA). I bet it is not pancake syrup? The list goes on. OK., why does the government not fess up and say inflation is out of control with relationship to Oil products and related services, then make a better effort to curb it. Instead of kidding everyone and the market that all is well and dandy. BOUNCE............ Off Soap Box. SWR __________________ Retirement Definition - Not Having To Work, But Not Neccessarily Not Working - SWR 2000

06-25-2005, 10:32 AM	#4
charlie Thinks s/he gets paid by the post Join Date: Mar 2004 Location: Dallas Posts: 1,069	Re: Will oil price ever come down? Eventually the price of oil will influence the price of everything we buy, eat, make, consume or drive. It takes a little time for the price of energy to percolate through the economy, but it will. Another sour note was featured in the Dallas Morning News today. They stated that the restaurant industry is starting to feel the competition for workers and they are adding more perks to entice new hires........ that will translate into more wage inflation and higher prices as well if the trend continues with other industries. IMHO, higher inflation is on the way but I fear the economy will be cooling off soon. Maybe these two forces will offset each other? Right now I am betting that higher inflation is coming with my commitment to "floating" rate bonds paying 2+% plus CPI. I am offsetting this bet somewhat with a 5 year CD ladder at PenFed. It's a crapshoot kids. Keep diversified and keep your power dry. Cheers, Charlie

06-25-2005, 10:49 AM	#5
OldAgePensioner Thinks s/he gets paid by the post Join Date: Jun 2005 Posts: 1,352	Re: Will oil price ever come down? Charlie, I'm thing of a CD ladder with 1,2,3,4,5 and rolling into fives each year. Are CD's a pain in the butt when redeeming? I bought one in Florida in 1982 (got the actual CD paper) and when I tried to redeem it from overseas, they said I had to go to the branch where I bought it. When you buy yours will PenFed issue them to you or just set up an account?

06-25-2005, 11:15 AM	#6
wildcat Thinks s/he gets paid by the post Join Date: Feb 2005 Posts: 1,896	Re: Will oil price ever come down? Charlie - I think you are right on with your inflation thinking...I think we know the CPI ain't everything and the Fed's "don't worry be happy" attitude towards inflation is not accurate. High oil prices is never good either. __________________ "These walls are kind of funny. First you hate 'em, then you get used to 'em. Enough time passes, gets so you depend on them"

06-25-2005, 11:16 AM	#7
charlie Thinks s/he gets paid by the post Join Date: Mar 2004 Location: Dallas Posts: 1,069	Re: Will oil price ever come down? Hi OAP, I am only on the 3 year rung of a 5 year ladder. You can set up the CD to reinvest automatically for the same term, or be deposited in either a share account or a MM account with Penfed. You can also request a check be mailed to you. You can also request the dividends be either reinvested in the CD or mailed as a check or deposited in a share account or MM. I am planning to spend the dividends so they are being deposited in my MM account (you can write up to 4 checks/mo). This reduces the return from 5%APY to 4.88% I chose to have the principal be invested in a MM account at maturity. When the CDs mature I plan to roll each one into a 5 year maturity to be automatically reinvested for 5 years. Getting all 5 rungs invested is a relatively long range project. (1-3 years) depending on when I sell my laundromat and how fast I choose to liquidate my Wellesley account. This is taxable money for me. If you want to rollover to an IRA account you can put your money in 7 year CDs with the privilege of canceling with no penalty and reinvesting in a higher rate CD IF you are 59.5 or older. What a great deal. Inflation protection on the upside and 7 year rate protection on the downside. I am thinking about transferring some of my IRA to do just that. Cheers, Charlie *

06-25-2005, 01:24 PM	#8
cute fuzzy bunny Give me a museum and I'll fill it. (Picasso) Give me a forum ... Join Date: Dec 2003 Location: Losing my whump Posts: 22,527	Re: Will oil price ever come down? Considering oil is essential for things like roadmaking materials, some prescription drugs, and fertilizers...you can bet theres going to be some non obvious price hikes. __________________ Many an optimist has become rich by buying out a pessimist

06-25-2005, 11:30 PM	#11
Whakamole Recycles dryer sheets Join Date: Sep 2002 Posts: 252	Re: Will oil price ever come down? I posted this is another thread... http://www.morganstanley.com/GEFdata...50616-thu.html Oil may be overpriced.

06-26-2005, 08:26 AM	#12
BUM Thinks s/he gets paid by the post Join Date: Feb 2004 Posts: 1,549	Re: Will oil price ever come down? I can't see buying oil equities now. I think hope that train has left the station. Natural gas is another story. Its lagging oil a bit and some think that nattie is poised for a 10-15% increase. http://www.wtrg.com/daily/oilandgasspot.html Even though its only about 1% of my port. I still like MARPS. Always a buy under $25 __________________ In a panamax down by the river.

06-26-2005, 12:58 PM	#15
Cut-Throat Guest Posts: n/a	Re: Will oil price ever come down? Listening to Thomas Friedman the other day, he said the following in so many words. Bush made a real blunder by focusing the nation on Iraq and now Social Security" - If he would have focused the nation on solving the energy problem (i.e. developing an alternative energy source) - like we did on developing the Atomic Bomb, or landing a man on the moon, we would have created thousands of jobs, he would have the backing of the nation and would be miles ahead of where were are at currently. This really has to be done and it is a crisis!

06-26-2005, 01:01 PM	#16
riskadverse Full time employment: Posting here. Join Date: Oct 2002 Posts: 652	Re: Will oil price ever come down? Concerning FDIC insurance, I believe the following is valid way to increase the limits. $100,000 in your name $100,000 in your wife's name $100,000 in a joint account name __________________ San Diego . . . Hell on Earth!

06-26-2005, 02:09 PM	#17
unclemick Give me a museum and I'll fill it. (Picasso) Give me a forum ... Join Date: Jul 2003 Location: north of Kansas City Posts: 5,554	Re: Will oil price ever come down? I think Friedman got the flat earth part fairly right. It does not follow - that we need to be energy independant. Tell me why I should care. Besides the Chinese will sell us low cost pebble bed reactors made with low cost labor - once they get their design perfected and assembly line up and running. Seems they import oil also.

06-26-2005, 03:08 PM	#19
Whakamole Recycles dryer sheets Join Date: Sep 2002 Posts: 252	Re: Will oil price ever come down? Higher energy prices will do more to spur innovation in fuel efficiency and alternative energy sources than any government program. The reason hybrid cars are selling so well is because of gas prices. Similarly, the reason that wind energy got a big boost a few years ago was because of high utility prices.