Wednesday, October 25, 2006

Oops! Oil Prices Climbing Two Weeks Early

It looks like whoever was helping Bush on oil prices just two months before the midterm elections couldn't quite hold the line. Oil prices jumped two dollars a barrel today.

Now I'm convinced oil is going to be volatile for the next few years but generally, in the long term, prices will be climbing significantly over the next ten years relative to inflation. Here's Bloomberg on today's price jump:
Oil futures rose after the U.S. government reported that supplies had their biggest one-week decline since July, contradicting analysts' forecasts that stockpiles would increase.

U.S. crude inventories dropped 3.21 million barrels last week to 332.3 million after imports tumbled 6.9 percent from the average of the past four weeks, the Energy Department reported. Stockpiles had been forecast to rise 3 million barrels, the median estimate of 15 responses in a Bloomberg survey. Supplies of gasoline and distillate fuel also fell last week.

``It's clearly very bullish,'' said Peter Linder, an energy analyst and senior adviser with DeltaOne Capital Partners in Calgary. ``We've already seen the beginning of winter and we'll start to see OPEC cuts next week. I'm convinced we've seen the low prices for the year.''

President Bush has no energy policy worthy of the name. In the meantime, Republicans in Congress have perfected the art of sucking their thumbs while sticking their heads in the sand while thrashing arms and legs to show how hawkish and patriotic they are while covering up how little they're doing for America. Okay, that's an absurd image, but is it too far from the truth?

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