Oil Bubble: The New Stupid

---by Micheal

Oil just hit a new high, $138 per barrel. This sudden jump was sparked by anxiety over mideast peace (Israel's statement that it would bomb Iran if its nuke program goes too far). But no one has bombed anyone yet. No supplies have been disrupted yet. This spike in prices is all in the speculative futures market.

Speculation. Not facts. As it said in a New York Times article today: "Prices keep rising despite a lack of shortages in the market, and strong evidence of lower consumption in industrialized countries. But investors seem to be caught in a bullish mood, focusing instead on perceived risks to future oil supplies and continued growth in oil demand from emerging economies that subsidize fuels."

We just experienced (or are still) the effects of a housing speculation bubble that burst. Before we've even had a chance to learn our lessons from that speculation stupidity, we're all getting sucked into another one. Impatient investors are going to plunk down big bucks on potentially expensive future oil -- all assuming that war in the middle east breaks out. There's big bucks to be made quick. Buy oil futures now at $138 on the presumption that it will be $150 in a couple months. Sell quick and reap the profits. Woohoo! Easy money.

But, if no war breaks out, and people (like me) continue to drive less and conserve, there will be an even greater oversupply than demand. Oil might not hit $150. Might even decline. Then we'll have a whole new crop of idiot speculators who will be ruined for lack of windfall. Will I shed a tear for them? No. But, they'll manage to take down a part of our economy with them -- pension funds and people's jobs, etc. that somehow got entangled with them.

Stupid, it seems, knows know bounds -- and learns no lessons