Oil Could Be On Brink Of Terrifying Move Higher
November 5th, 2010Warning: This is not a recommendation to buy sell or hold any financial instrument.
A bit over a week ago, I wrote, “Either that USDX support I’ve been mentioning holds, or we could see oil back over $100 in a few weeks.”
That support is, as of now, fully breached to the downside. And you know about the inverse relationship between oil and the dollar: Dollar lower, oil higher.
If it breaks above the horizontal resistance line indicated…
This is the most frightening chart I’ve posted in a couple of years.
West Texas Intermediate Crude Oil, Monthly Interval
Since I’ve been spending about 4 hours a day in car for the past several months, I’ve noticed the creep up – incrementally in the price of gasoline.
The Saudi family will not accept dollars for oil below a certain level, at least that’s my theory. And so when the dollars tanks, goodbye Columbus.
I expect $3 gasoline next week. This is horribly burdensome for the majority of Americans. It was particularly troublesome for my Mother’s caregivers after Hurricane Katrina.
What next for the U.S.?? I figure the TPB are trying to make us eat shit (literaly the foods in boxes are the cheapest); and un-employ us so all that is left is TV and soon lots won’t be able to afford that. Then to make matters worse, food stamps now come in the form of a debit card. The more I see that the world is moving to electronic money the more I WORRY. There is a HUGE nation of people here folks who are relying on funny money for their food payment.
This system is way too vulnerable, of course it may have been designed that way. Oops I went WAYY of topic here.
You seem to be speaking realistically, Eileen. The newspaper had this article touting the increase in Ford F150 and SUV sales as a sign of economic recovery, where they say that gas has remained cheap at $3 (it’s $3.10 in los Angeles). Gas totally adds up for those 14mpg vehicles – $12 for an hour of driving. A neighbor in our triplex never pays our utility bill, and he has to fill up his truck to visit all his business clients for house maintenance. http://www.google.com/hostednews/ap/article/ALeqM5g0NZVSERw353c4CR1ur7TWbxWdmg?docId=c3b653c22033442897cc120b3729ae36
Well, petrol has been well over 5.50 GBP for a couple of years now, and we haven’t ground to a halt. That’s around an average of 8.50 dollars per gallon in USD.
The lesson to learn is that you just end up adjusting to it. You protest, you blockade, you strike but the price doesn’t change – the government graciously decides to delay gouging more fuel tax out of you to imperceptibly soften the blow – and prices keep going up.
Rewind ten years and the UK had fuel prices about half the current level, and we thought that was expensive then (around 4.50 USD) but now we dream about a return to fuel that cheap.
Out here in the countryside, with no other means of motorised transport apart from the car, you have to adjust. You spend less on other things and knuckle down. Fuel costs become a bigger part of your budget, like another mortgage.
So, what am I saying? I’m saying that from one perspective, you’ve still got it good if your fuel prices are still that cheap. Of course it is still outrageous, but I suspect there is far worse to come if our experience in the UK is anything to go by. You’ll all just learn to adjust. And fuel prices won’t go quite so high as here, as your distances in the US are that much greater so relatively speaking a 5.00 USD gallon will hurt you like a 9.00 USD gallon will hurt us.
In the medium term, we’ll carry on but switching to horses. I’ll wager that as we hit very hard times a lot of other folks will do something similar, and the local economies will limp onwards but with ever decreasing spheres of influence as more people try to satisfy all their needs closer to home.
In the long term, the economies will all restructure along those lines – once it becomes too expensive to drive to work, you’ll have to work closer to home etc. Your customers and clients will be busy doing the same. Communities that can provide for theselves will try to survive, and communities that can’t will fall apart and try to find other communities that can.
This is when Kevin’s advice about being a good three days walk away from civilisation becomes important. You don’t want to be overrun by people who didn’t prepare, and who now want to lean on you.
There is still time to make your plans, get out of the system etc. My plans for example are quite radical and secret, my family don’t realise the full extent of it and how far I have prepared for us to disengage. But I’m ready, although to have a few more pieces of the jigsaw in place wouldn’t hurt.
The only thing I can’t predict is what point most people will break at, where will they go, what will they do etc. We’re lucky in that almost nobody will make it into the remote parts that we will retreat to. God knows what people from populated areas will do though, when things get rough.