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  • Forbes warns of oil bubble

    Forbes warns of oil bubble
    James McCullough and Mandi Zonneveldt
    31aug05

    PUBLISHING billionaire Steve Forbes has predicted that soaring oil prices will lead to a crash that could make the hi-tech bust of 2000 "look like a picnic".

    Mr Forbes, publisher of Forbes magazine, said the price of oil, which peaked at more than $US70 a barrel on Monday as Hurricane Katrina headed for the US Gulf Coast, was unsustainable.
    He said factors such as inflation and increased demand for oil from China and India accounted for only a small part of the price hike from $US25-30 a barrel three years ago.

    "The rest of it is sheer bubble speculation," he said.

    Mr Forbes, who was speaking at the opening of the Forbes Global CEO Conference in Sydney yesterday, said the higher the oil price rose, the harder it would eventually crash, creating more pain for hedge fund managers and their clients.

    "I don't think it's going to go to $US100 but if it does the crash is going to be even more spectacular," he said.

    "It will make the hi-tech bubble look like a picnic -- this thing is not going to last."

    He predicted that oil would fall to $US30-35 a barrel within a year.

    Mr Forbes's comments came as the price of oil eased following US Government comments that it could release some of its Strategic Petroleum Reserve.

    The 700 million barrel stockpile is set aside for emergency use and could be used to counter oil shortages caused by Katrina's impact on the Gulf of Mexico, which accounts for about a quarter of US output.

    After leaping nearly $US5 a barrel to $US70.70 on Monday, US oil futures retreated more than $US1 a barrel yesterday.

    On the physical market, Texas Intermediate was trading at $US67.40 while London Brent Crude was up $US1.88 a barrel at $US66.75.

    Katrina crossed the United States coast yesterday after closing the Louisiana Offshore Oil Port, the biggest US oil import terminal, and halting 92 per cent of normal Gulf output.

    The market was nervously awaiting news of the impact of the hurricane last night.

    Royal Dutch Shell reported that its production platforms in the Gulf of Mexico may have been damaged.

    BHP Billiton's operations were expected to remain suspended for the next few days, company spokeswoman Emma Meade said.

    She said the impact of the storm would not be known for several days.

    Petsec Energy said its two offshore platforms were not in Katrina's direct path.

    In Australian trade yesterday shares in BHP Billiton bounced back 44 to $20.47. Petsec finished 4 higher at $1.60.

    Oil heavyweights retreated on profit-taking and after Opec indicated it would increase production to deal with any supply shortages.

    http://heraldsun.news.com.au/printpa...441087,00.html

  • #2
    Re: Forbes warns of oil bubble

    I don't see that many getting hurt except the speculators. There would be lower oil prices.

    But, any of you with dishwashing detergent in your house, I'm warning you of a soap bubble.

    Last edited by N1095A; 09-05-2005, 05:45 PM.

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    • #3
      Re: Forbes warns of oil bubble

      Groan.....

      I hope the bubble pops. This is putting a cramp on some of us. My wife and I only work 6 miles away from home, that in itself is a blessing. Both our cars get 20mpg or better. Mine is AWD so I'm hovering around 20-21mpg. My wife's car gets around 25mpg (neon). I'm going to change a few things on it next weekend, and see if we can't improve that a bit. As for my car, and AWD Subaru is only going to get what they say, even if I don't run the a/c.
      My dad is stuck with a huge 4wd Tahoe. Well, nobody pushed him to buy it years ago. But I notice he's home more since this gas went out of control. I'm also watching the gas level on my streetrod (it's at his house). LOL

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      • #4
        Re: Forbes warns of oil bubble

        Originally posted by gregstien
        I'm also watching the gas level on my streetrod (it's at his house). LOL
        Do you think he's going to drive it or syphon the gas??? hahaha!

        Comment


        • #5
          Re: Forbes warns of oil bubble

          Originally posted by gregstien
          Groan.....

          I hope the bubble pops.
          I agree brother. That may seem an unexpected comment since I work in the oil industry, but this bubble is NOT helping a wide spectrum of people and the bursting of it will NOT hurt a very wide spectrum. IMHO

          A housing bubble is a different animal because EVERYBODY requires housing, many people are purchasers and have money tied up in housing in one form or another.

          On the other hand, this surge in prices is not (at least not to my knowlege) causing large populations to buy energy stocks. Energy stock prices don't seem to be soaring with the price of gasoline. That would make a bursting bubble more harmful to more people. Only the product price seems to be soaring and the people who are buying futures are the ones who stand to get burned in the event of a burst. They are now profiting at the expense of everybody, so I have no sympathy for them if they get stuck holding $60 futures in a $30 market. The only large funds involved would be funds that deal in commodities, and the people who buy into those funds know going in that it's a volatile market.

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          • #6
            Re: Forbes warns of oil bubble

            It is kind of nice to report some good news once in awhile,unless of course you own stock in oil.I have noticed lately a slight rise in food costs,hopefully
            this will reverse soon. I do not know if its fuel or hurricanes,but I am tired of paying up to $1 a grapefruit! kennygg

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            • #7
              Re: Forbes warns of oil bubble

              I do not know if its fuel or hurricanes,but I am tired of paying up to $1 a grapefruit! kennygg


              LOL! Especially the ones that are as light as a feather.

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