Yikes! Remember in early 2009 when it got down to $27 bucks or so? That was when many were actually stockpiling thousands of barrels on container ships since it was cheaper to wait until there was a price recovery than the bring the barrels to market.
Watch out. There is something afoot. Political unrest in Egypt and then Libya is just the beginning. Check out the "protests" in Saudi Arabia. Staged or not...they could be a catalyst for some real outrage as most of those in that country are NOT rich with oil money. In fact they have a 40% unemployment rate. This is potentially a volatile situation. If the regime is overthrown there...the "replacements" may not be too favorable. Remember that to push people into purchasing technologies that "conserve" we need to have ridiculously high gas prices. What would it take to push us into choosing to buy a Prius? Gas at $6 a Gallon? $9 a Gallon? Hmm, you decide. The short term could see massive run-up in oil prices as the fear of supply issues escalates. Tomorrow is the "Day of Rage" organized for Saudi protesters. Yikes.
See more on the Saudi Issue and watch a clip on the "Day of Rage" here:
Bond Markets are on the rise with the fear of unrest. Today's bond Auction garnered an A+ rating and the FNMA 4.0% bond is UP 50 bps on the day. This could be good for rates in the short term, but higher gas prices would be devastating for our economy. Remember that many of our goods require transport and therefore GASOLINE. If the price of delivery and production for some of our goods increases by 40% AND the Dollar ERODES as we are expecting it to over the next 18 months: we are in a world of HURT.
Stock up now. If the dollar is eroded severely and the pain is exacerbated with higher production cost due to energy cost: we could not only see $6-$8 gasoline but $20 cans of TUNA.
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Chad Schauers
Montana Mortgage Lender, Bozeman, Montana
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Chad Schauers
Montana Mortgage Lender, Bozeman, Montana
