Thursday, November 01, 2007
$96 Oil And Going Higher
Oil hit more than $96 a barrel in overnight trading and Bloomberg News says traders are betting it's going to go as high as $100 or $125 a barrel before the end of the year:
The Fed says don't worry energy inflation isn't really inflation.
But when you look at the price of oil, don't you think it's going to cost a lot more to heat homes and businesses this winter?
Won't businesses be passing on the higher energy costs to consumers, as Procter & Gamble and some other companies promised they would this week?
Isn't that inflation?
The Fed says no.
Apparently to the Fed, only higher wage costs count as inflation.
No wonder they keep saying we've been in a low inflationary period - most people haven't seen real wage growth since Georgie and Dick overthrew the Gore administration back in January '01.
Nov. 1 (Bloomberg) -- Oil traders increased bets that December futures will reach $125 a barrel because of possible disruptions to Middle East supplies and rising demand.
Traders held call options to buy 2,526 contracts, each representing the right to buy 1,000 barrels, of December oil at $125 in New York as of Oct. 29, from 1 lot on June 29, New York Mercantile Exchange data show. Bets on $100 oil are also surging: Traders held options to buy 49.7 million barrels of December oil at that price on Oct. 30, up from 30 million barrels on Jan. 2.
Crude oil for December delivery rose to a record $96.24 a barrel in New York today, the highest since the futures began trading in 1983. Prices have soared 19 percent the past month as demand pared inventories, a weaker dollar spurred investors to switch into commodities, and political tension in Iran and Iraq attracted speculative buying.
``A few years ago, when triple-digit oil was talked about, it was tempered by negative responses,'' said Anthony Nunan, deputy general manager of risk management at Mitsubishi Corp. in Tokyo. ``Slowly, it's becoming a reality. It's not crazy anymore, it's a reasonable target.''
The Fed says don't worry energy inflation isn't really inflation.
But when you look at the price of oil, don't you think it's going to cost a lot more to heat homes and businesses this winter?
Won't businesses be passing on the higher energy costs to consumers, as Procter & Gamble and some other companies promised they would this week?
Isn't that inflation?
The Fed says no.
Apparently to the Fed, only higher wage costs count as inflation.
No wonder they keep saying we've been in a low inflationary period - most people haven't seen real wage growth since Georgie and Dick overthrew the Gore administration back in January '01.
