Street Speculator

1. It would take over 10 years for any drilling company to realize a profit

Translation: No oil company is willing to wait that long

2. Oil is a publicly traded commodity, which is how the price is set

Translation: If oil is trading at $130/barrel, Neither EXXON, Chevron or anyone else will sell to the U.S. consumers at the $90/barrel price

3. Supply and Demand

Translation: If China, Japan, Pakistan wants to purchase U.S. oil, EXXON will sell it to them 1st if the profit margin is higher than selling to U.S. consumers

4. People will re-start chasing TAD (The American Dream) if oil prices drop

Translation: People will revert back to buying things they neither need nor can afford, like cars.

5. A terrorist attack in an OPEC country will bring back the SPECULATORS

Translation: Any attacks, or threat of attacks will cause the Oil Speculators back into the futures market and drive up the price of oil based on a perception of a cut in global oil supply.

COMMENT if you have additional analysis.

High Gas Prices: Blame EXXON

Gas Station Shutdowns: Blame EXXON

People stealing gas from pumps: Blame EXXON

Outrageous CEO Pay Packages: Blame EXXON

War in the Middle East: Blame EXXON

Oil Speculators driving up the price of oil on the NYMEX: Blame EXXON

The EXXON Corporation (Symbol: XOM), one of the largest corporations in the world has been the perennial whipping boy since Hurricane Katrina hit (Which coincidentally is the same time oil prices started to rise) including Congress and at times Wall Street, yes Wall Street.

This past week EXXON reported quarterly earnings. For the 2nd quarter of ‘08, EXXON generated over $100 billion in revenue of which $11.68 billion was in profits, or $90,000/minute (WOW!!!!!!!!!!!). This is currently the largest ever corporate profit generated in U.S. history.

However I expect within the next month or so gloves will come off again and EXXON will be the target. Your fellow Congressman (When they return from vacation) will conduct another hearing on oil prices and request the presence in D.C. of CEO’s from the major oil companies. WHY, to justify their respective profits in relation to oil prices. This will have been the 3rd/4th time(or more..) Congress has done such. But you and I both know this is only a dog & pony show.

NEXT, there will be another call for a windfall profits tax. This will come from the Congressional DINOSAURS. Anything to create an impression to the American public that they are somehow trying to control oil prices (Which is something no politician can do with oil, or any other publicly traded commodity).

WALL STREET more than anyone really surprised me this week. On the date EXXON reporting earnings, the STREET had a sell-off of EXXON shares. I believe XOM dropped by $4 + dollars. This is in retrospect to the high earnings. I believe the STREET estimated more. Does not make sense to me, but I like you is still trying to analyze the STREET and how it thinks.

I would definitely purchase EXXON as a long term investment. Look at them as an investment and not some “pariah” as people portray them to be. They generate a large amount of cash flow and have consistent earnings.

ALSO, remember that EXXON is an “Oil Company” and not an alternative fuel company. So do not wait or expect them to invest in alternative energy because they are not in that business. They do not price gouge (Over 5 congressional hearings to investigate, no one has been charged with a crime).

Go EXXON!!!!!!!!!!!!!!!

As you are well aware, President Bush lifted a previous ban on offshore drilling. The purpose behind such action, I imagine is to reduce U.S. gas prices by using more domestically produced oil.    

Ask yourself these question as we are all potential economists here:

Will this really help drive down oil prices? (Before answering remember, that oil is a publicly traded commodity)

If China, India, and Taiwan ask Exxon is they could purchase their DOMESTICALLY PRODUCED OIL, will Exxon say “no” because they are saving it all for safety and welfare of the U.S. citizens?

If on the public markets oil trades at $135/barrel consistently, will Conoco, Exxon, Shell, etc… sell the product to U.S. citizens for a cheaper price, because they feel our pain at the pump?

The answer is NO!!!!!!!!!

Don’t be fooled by the political pandering. Any publicly traded commodity, whether oil, cocoa, gold, natural gas, wheat, will sell at a price determined by the “investor speculators” in these products.

The media has attempted to make these guys the scapegoats for the high oil prices–

But, these speculators are no different than the speculators (You Included) who invest their money in Mutual Funds, Stocks, Real Estate, and even Education. You go in with the attitude that you will receive some return on the investment. If such is the mindset, YOU MY FRIEND ARE A SPECULATOR!!!!!
& there is nothing wrong with that.

The Speculators did it again.

After the Jedah Summit on yesterday, oil prices rose again today on the open markets. As stated on yesterday, there was nothing to come out of this meeting other than pandering to the masses. Watch for the price of oil to increase in the future as well.

This discussion will continue. However, the Speculators on this site will attempt to help you CAPITALIZE as the price of oil increases. It does not have to be GLOOM and DOOM for everyone!!

This weekend, an emergency meeting was convened in Saudi Arabia to discuss the increasing rise in oil prices. The participants include OPEC member nations and even major oil companies. The alleged purpose of this meeting is to give the world the impression, especially US consumers, that some solution will originate to reduce the price of oil.

There is no solution!!! Oil is a publicly traded commodity, just like stocks traded on the NYSE and the NASDAQ. As long as you have more buyers than sellers, the price will increase. If there is a threat of lower supply to the market (Threats to bomb IRAN, sabotage of oil pipelines in Africa) the price will increase (Look at how flooding in the Midwest increased the price of corn). BASIC ARITHMETIC.

The JEDAH SUMMIT is a publicity stunt created by national governments, including the United States. This summit is another pacifier to soothe the anxiety of its citizens. These same citizens who think and believe that investments in alternative energy, removal of offshore drilling bans, and WINDFALL PROFITS TAXES, will somehow lower the price of oil.

If this was the case and answer, it would have been done long ago. Don’t forget, we are in an election year.

The price of oil is going nowhere but up, period. The Saudis can pump an additional 500,000 barrels/day. PEOPLE WILL STILL BUY THE OIL, unless cars, planes, and buses start to run on water.

Get use to high oil prices. Speculators will keep buying and politicians will continue lying.

By the end of the year, look for $7 or more at the pump.

Just Speculating…… oh, Ken Lewis of Bank of America will be the next CEO to get fired due to the sub-prime housing market meltdown.