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EconMatters's Blog

EconMatters - Global Economic and Market Analysis That Matters

An Intelligence Network For Supply Chain Energy Commodities Forecasting

April 15, 2011 by EconMatters   Comments (0)

The following article is originally published in the April 2011 edition of ISM™ (Institute for Supply Management™) eDigest: Chemicals Newsletter  Energy Commodities Forecasting Establishing an intelligence network gives you a competitive edge By Dian L. Chu, CPSM, C.P.M. In recent years, there has been a great deal of instability in the price of energy sources and basic feedstocks, including oil and natural gas. This volatility is the result of tight supply resulting from changes in global demand. It has prompted companies to place more emphasis on supply chain...

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High Gasoline Prices Are Costing U.S. Consumers $360 Million More A Day At The Pump (Guest Post)

April 14, 2011 by EconMatters   Comments (0)

By Bob van der Valk This year is an instant replay of 2008 with the average price of regular gasoline in the US expected to reach $4 per gallon in the next month. Californians have already surpassed that mark and are heading for $4.50 per gallon by Memorial Day. On Monday, April 11, Jeffrey Currie, the global head of commodities at Goldman Sachs (GS), told his clients that rising demand from emerging market players earlier this year had been overtaken by a supply shock driven by the MENA (Middle East and North Africa) unrest. He noted: "That has had the effect of introducing more...

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Could HIgh Oil Prices Cause A Global Economic Deflation? (Guest Post)

April 14, 2011 by EconMatters   Comments (0)

By Kurt Cobb As the European Central Bank (ECB) prepares to raise interest rates to prevent inflation, the bank cites rising commodity prices, particularly oil prices, as a sign of that inflation. What the bank and other market participants don't seem to understand is that high commodity prices and, in particular, high oil prices are deflationary. The logic is so simple it's hard to understand why smart people with advanced degrees can't see it. Commodities, particularly oil, pull money away from other sectors of the economy. When people are forced to choose between paying for heat and...

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The Race Is On: Drilling Technology v. Rising Oil Prices (Guest Post)

April 12, 2011 by EconMatters   Comments (0)

By Dr. Mark J. Perry Basic economic theory tells us that one of the predictable consequences of resources becoming more expensive is that higher prices will stimulate discovery, exploration and greater production on the supply side.  And that's exactly what we're seeing now in Texas for oil and gas, according to this WSJ article dated April 8 - "Chevron Rekindles Old Texas Flame: High Oil Prices, New Technologies Once Again Make the Permian Basin a Popular Spot for Drilling." Here's an excerpt: "Climbing oil prices are making the aging oil fields of Texas's...

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Oil Price Inflated, Time to Take Profits From Resource Related Investments in Your Portfolio

April 11, 2011 by EconMatters   Comments (0)

By Dian L. Chu, EconMatters (A Seeking Alpha Exclusive) An April 7 Bloomberg News survey indicated that oil prices may rise on speculation that elections in Nigeria will curb output and the Libyan conflict will halt exports.  Nevertheless, the current market snapshot remains in total contradiction to the oil bull’s assertion that both WTI and Brent (front month for the next 30 days) sitting at 2+ years high…and climbing, are driven by these aforementioned ‘market fundamentals.’  Continue reading FREE at Seeking Alpha .  (Reprint or repost only with permission...

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U.S. Strategic Petroleum Reserve: What’s the Trigger Release?

April 11, 2011 by EconMatters   Comments (0)

By Dian L. Chu, EconMatters In early March, White House Chief of Staff Bill Daley told NBC that the administration was considering releasing oil from the Strategic Petroleum Reserve (SPR) if it deems the high oil prices would threaten the U.S. economic recovery. President Obama, in a press conference on March 11, also reiterated that a plan to tap the SPR was "teed up" and said he would move quickly should ‘conditions’ worsen. However, the President refused to say what price could trigger a release. SPR - How Many Barrels & Where Based on information from the...

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Gold vs. Oil: Underpriced Or Overvalued? (Guest Post)

April 9, 2011 by EconMatters   Comments (0)

By Andrew Butter No one agrees what is the “fundamental” price of gold. What’s indisputable is that the price went up by 400% over the past ten years; thus the “Gold Bugs” are purring like fat-cats full-up with fresh milk. Their indisputable logic is that the price went up, they got it right, and that proves their logic was correct; it’s hard to argue the other side of that debate. One point of common ground is that most people agree that the price of gold ought to have something to do with oil prices. Indeed the general trajectory of the price of gold has pretty much tracked the...

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The QE2 Trade Is Over: Can We Start Dumping Risk Assets Now? (Guest Post)

April 7, 2011 by EconMatters   Comments (0)

By Edward Harrison "The Fed could announce a federal funds target of 3% but the tsunami of excess reserves now out there swamps any conceivable demand, so the Fed funds rate would be guaranteed to remain stuck at zero. The target would be meaningless."  ~ Ryan Avent as quoted in Why the Federal Reserve wants to drain excess reserves, Dec 2009.This is the problem for the US Federal Reserve. And now that people are talking seriously about exit strategies for the Fed, it makes sense to discuss these mechanics. Yes, I know some people are still talking about QE3, but let's deal with...

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An American Syndrome: China, Crude Oil and Debt Bubble (Guest Post)

April 6, 2011 by EconMatters   Comments (0)

By Andrew Butter Along with the emergence of the much heralded “Green Shoots” that must by now be turning into roses (?), has come the sinking realization that (a) just piling debt on debt is not a long-term solution to anything, and that (b) perhaps there might have been more “wrong” under the blanket of mark to market (when markets were in a bubble), and mark to fantasy when they crashed, than can be swept under the carpet forever; like perhaps something structural? Q4-2008 was the first time in the history of America that over 40% of “recorded” imports of “goods” (“recorded” as in...

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Keystone Pipeline: 'Just Say No' Could Mean $7 a Gallon at The Gas Pump (Guest Post)

April 5, 2011 by EconMatters   Comments (0)

By Bob van der Valk Consumer studies by researchers at Harvard’s Belfer Center for Science and International Affairs suggested a year ago that in order for the Obama administration to meet their target to cut greenhouse gas emissions, Americans will soon be spending $7 per gallon. That day may now come sooner than most Americans think. The Opinion page of the Sunday April 3, 2011 edition of the New York Times (NYT) carried an editorial against approving the TransCanada Keystone XL pipeline, which was scheduled to transport crude oil from the Athabasca Oil Sands in northeastern Alberta,...

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