Whether we like it or not the oprice of a barrel of oil is going up.
Some would have you believe that it is all about supply and demand. This time it is not. This time it is the weakness of the dollar.
In 2008, the increase in oil costs was blamed on "speculators", who bought up oil and held it, which cause an artificial shortage of oil in the market place and drove up prices. That for the most part was what happened. The demand for oil in the US has decreased each year since 2008 and world wide consumption suffered a severe decrease in the 3rd quarter of this year.
OPEC is ready to let the price of oil run wild.From their previous announcements $100 oil is a certainty. Essentially OPEC is losing its ability to control the price of oil because of the devaluation of the dollar and other world currencies. The Establishment will try to hide this from the public for as long as possible. You will see the MSM blame supply and demand. Just check out world consumption and don't believe it.
Since 2007 OPEC has shown concern for the dollar. The war in Iraq and our battle with Libya was necessary to keep them from using the Euro to price their oil. Iran is making the same threats. China and Russia have dropped the dollar for all bilateral trade. OPEC will soon follow as the FED continues to pump money into the economy by directly buying treasury notes.
The devaluation of the dollar will greatly ravage countries that are dependent on exports if their exports are pegged to the dollar, this is especially true of oil producers. Greenspan in 2008 at an investment conference in Saudia Arabia said that OPEC would benefit by dropping the dollar. The switch will take 2 to 3 years.
I decided not to fight this scenario and invested in the following stocks.
PBT 6% dividend;Sjt 6%; BPT 8%; whx 10%. the first two are natural gas trusts the last two are oil trusts and gor good measure added slv a silver investment. Sometimes it is best to go with the flow.
I have very little trust in our government or business today. Obama is a follower not a leader. Like some I am beginning to believe that the speculation that caused the gas spike in 2008 was staged to condition Americans to passively accept the disintegration of the dollar and inflation that we are beginning to see today.