Oil, Retail, and the Dollar

This article makes me turn philosophical about the entire situation. I am going to go way out on a limb, and say that I don’t believe Oil will hit $100/barrel, Now or any time in the near future. This runs against the greatest majority of Thought on the matter, but there are real reasons I could base my suspicion upon: early Christmas Shopping numbers could easily be very low, Air traffic snarls and high Gas prices could reduce Christmas travel by a potential 8-10 million, any Recessionary conditions will generate new Jobs closer to the Home environment, and foreign consumption of Oil will decrease equally or faster than American domestic consumption. This is followed by the fact that any new Congress will pass a Carbon tax of some type; economic studies have indicated such taxation impacts the Supplier more than the Consumer, and with a Carbon tax, higher Prices can translate into actual lower Profits. The impulse towards higher Prices has been expended in this market cycle, and the future trend is Downward.

Here is another example of why it might be a bad Christmas season for both Shoppers and Business. Advertising areas are too large, Discounted Product are too few in numbers and with insufficient supply of Product, and Consumer resistence to paying normal Market margins. Consumers do not have the funds to adopt normal Purchase patterns, and Businesses lag in conversion to a large-volume, low Profit margin environment. The later event is especially sad, as a large volume sell-off would have secured much relief throughout the Production chain.

Here is access to Economists’ views on the weakening Dollar for all those dedicated Readers, who are not watching the Nebr./Colorado game like myself as I write. I agree with Tyler, by the way, on the undervalued Dollar. The major underlying component for my belief comes from the still necessary American markets for foreign Manufacturers; a weaker Dollar generates insufficient Profits for them, and alternate market Sales have not yet been devised. I think I will leave it there. lgl