Archive for July 4th, 2008

Smoke ‘em if you got ‘em …

OK, I’m determined to try out this ‘very short’ blog post thing, so I want to wish everyone (which according to my blog stats means basically no one except for my girlfriend … hi babyyy!!) a Happy Fourth!

Holidays almost always make me nostalgic, and the Fourth of July is no exception. Growing up in a St. Louis suburb, my parents always took me and my brother to some local firework show, usually along with another neighborhood family or two. The displays must have paled in comparison to the technical extravaganza I see now every year in NYC, but man, did they seem like the shiz-nit at the time. I felt like I was so close to the action, where you could smell the smoke and the explosions reverberated in your tummy. i would ooh and aah, and squeal and shiver, and snuggle close to my mom, the fireworks provoking equal measures of fear, awe, delight.

But perhaps the thing I most associate with the Fourth of July growing up were these tiny candy cigarettes that for some reason my parents always had for me on that day and not at any other time. Small tasty little chalk-white sticks with a little red spot on their tips, packaged in some miniature branded cigarette pack, they served as the perfect marketing for an industry looking to entice the next generation of addicts.  My parents never smoked, hated smoking, and still apparently had no problems giving me these candy cigarettes and watching me pretend to smoke before eating them. Given how far American society has turned against smoking, it’s almost impossible now to even imagine those things ever existing in my lifetime. They’re like the anachronistic equivalent of that one 70s game show in which a man’s wife and his secretary compete to see which one knows him best.

Imagine my surprise when I googled candy cigarettes and found out the damn things still existed, and are even sold in some U.S. stores. The nostalgic part of me is kind of glad to hear it and even tempted to get some; the rest of me marvels at the hypocrisy.

Anyway, Happy Fourth!

Bubbling Black … Pop Goes the Diesel

OK, I know nothing about the oil market, but considering I distinctly remembering the then-CEO of Exxon-Mobil saying on CNBC that oil was way overpriced based on the fundamentals some 2-plus years and $100/barrel ago, I don’t see why my lack of knowledge on the subject should keep me from commenting.

Plus, being involved in the tech blowup earlier this decade, I do know something about market bubbles, and I believe we are getting close to at least a short-term top in the price of oil. Wall Street brokers are calling for oil prices reaching as high as $500/barrel in the coming months and years (reminiscent of a $1000 target price set by one analyst for the now-bankrupt CommerceOne Internet software company); speculators as well as regular Joes and Janes are pouring money into oil and gas investments (not a surprise given it’s the only thing on the Street that’s working); and perhaps most tellingly, CNBC just aired a one-hour special ‘America’s Oil Crisis’ replete with the necessary disturbing intro music and computer graphic (U.S. map drowning in oil).

Timing the exact end of a speculative blowoff move higher is always tricky, but darn it if the similarities between the oil price chart and the Nasdaq circa March 2000 don’t look rather compelling. The dot-com party lasted far longer than many people imagined, so there’s likely to be another run higher, and if so, it’s gonna be explosive, but the end is near.

What’s the news event that triggers the sell-off? Maybe it’s a new law that supports offshore drilling, or limits speculation. More likely, and more distressing, the fall could just come as high oil prices bring the world’s economies – and thus rising oil consumption – to a screeching halt.

Even if oil sells off, I do not think we’re going back to $50 a barrel anytime soon. I’m not sure I buy the ‘peak oil’ theory, but we are talking about a limited and much-needed resource, after all, not dot-com stock that can be issued until the funny dog handpuppets come home.

High oil prices will present problems for a lot of people and economies, but in the end, those prices will cause their own demise as good-old human ingenuity provides the technological means to sever our dependence on oil … giving the Earth a much-needed break and hopefully making it less likely American troops are sent into harm’s way to sate our energy addiction.

So, here’s my fearless prediction: We top out in oil sometime within the next month and we hit double-digit oil sometime by this time next year. Of course, if Israel attacks Iran, all bets are off ;-)

P.S. For another (mostly balanced, well-reasoned) take on why oil is as high is it is, read this article.

P.P.S. (Man, I gotta work on this ‘very short’ blog post thing!)


 

July 2008
M T W T F S S
« Jun   Aug »
 123456
78910111213
14151617181920
21222324252627
28293031  

Enter your email address to follow this blog and receive notifications of new posts by email.


Follow

Get every new post delivered to your Inbox.