Oil Prices Reach An All Time High

by BWK ~ March 5, 2008

Today’s Interveiw…

My location was a satellite pickup site in Pittsburgh. Arrived with plenty of time to spare, got wired up and tested with the FOX producers.

The Business for Breakfast gig went off a couple minutes past 7 am, and the topic was oil & OPEC.

We had a good round robin, with me answering three questions and the other two guys getting two questions each. My Pittsburgh TV guy said that it looked like a good interview, and the sound and picture quality were excellent.

Oil All Time High…

My points were:

Oil prices rose over $100 in the past 10 days because of the Fed telegraphing to the world that it would inflate the dollar. Hence there is a flight to hard assets, incluing oil. So rising oil reflects the falling dollar. This is a Fed-triggered price increase.

There might be a “tradeable event” in the next month or two, where oil pulls back $12 to $15 from its current prices. But long term, the prices for barrels of oil are $150 and beyond. “Get used to it.”

OPEC is limited in its ability to lift oil. The OPEC producers are max’ed out right now. Saudi talks a good game of having spare capacity, but I don’t think so. And any new Saudi capacity will not make up for worldwide depletion over time.

So OPEC falls back on that old excuse of “World oil markets are well-supplied with oil.” Yeah, if you like paying $100 per barrel.

Finally, I noted that the US is using half its grain crop to produce 3% of its transportation fuel. And look what this is doing to the price of food. I noted the irony of energy producers getting more money for each barrel of oil. And food producers getting more oney for each bushel of wheat and corn. The people in the middle are getting squeezed from both ends, energy and food.

No controversy or shouting, per the normal cable TV shows. It was all pretty consistent views from all panelists.

So all in all, I think that things went well.

7 minutes of fame. Or 5 Minutes….

Best, BWK

Byron King is a frequent contributor to the free e-letter Whiskey & Gunpowder. To receive daily insights into energy, oil, commodities and more sign up at http://www.whiskeyandgunpowder.com/Sub/energyandoil.html