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08-21-2011, 06:05 PM   #1
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AFTER QADDAFI: Oil Prices Will Tank, Stock Prices Will Soar

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News reports continue to show the progressive demise of the Qaddafi regime in Libya.
Rebel forces have apparently taken more of the country’s oil refining (Zawiya) and processing infrastructure (Brega). Most observers give the Qaddafi regime limited time before a full regime change takes place in Libya.
Watch what happens to oil prices if and when the Qaddafis lose and leave.
In short order, Libyan oil production will ramp up. As it does, oil prices in world markets will fall and oil futures markets will reflect the expected increase in production of oil from Libya. The key prices to watch are those trading in Europe, like Brent. US oil prices (WTI) are no longer the leading indicator of world prices intersecting with world supply/demand. Excess inventory at Cushing, OK is complicating the pricing structure.
We expect oil prices to fall when highly desirable, sweet Libyan crude production is fully resumed and enters the pipeline. Maybe, they are going to fall by a lot. This will come as a much-needed boost to the US economy and to others in the world.
Remember: the oil price acts like a sales tax on consumption. To clarify this relationship we convert crude oil prices to gasoline prices and then estimate what a change in gas price will mean for the American consumer. Roughly, a penny drop in the gas price per gallon gives Americans 1.4 billion more dollars a year to spend on other than gasoline. That is a huge stimulant to the economy. The ratio is different in Europe because the gas taxes are so much higher there. Nevertheless, it is still significant.

AFTER QADDAFI: Oil Prices Will Tank, Stock Prices Will Soar

08-23-2011, 08:07 AM   #2
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Woohoo.
08-23-2011, 08:34 AM   #3
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Oil prices dropping is all well and good, but here in North America we have a shortage of refining capacity, so as far as gasoline is concerned, it will still be supply over demand setting the prices.
You don't think the oil companies are going to start giving this stuff away do you?
08-23-2011, 08:36 AM   #4
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It's all part of Ms. Bachmanns master plan for $2 a gallon gas.

08-23-2011, 08:39 AM   #5
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QuoteOriginally posted by jogiba Quote
AFTER QADDAFI: Oil Prices Will Tank, Stock Prices Will Soar
Keep dreaming.
08-23-2011, 08:57 AM   #6
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After catching this afternoon's Al Jazeera broadcast about the Rebel's success in Tripoli, I duly went out and bought some petrol.

Down to a buck thirty-one, which I haven't seen it at in ages.
08-23-2011, 09:19 AM   #7
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Dropping oil prices (and more importanly natural gas prices) are not good for all of us. Any effect we are feeling from the recent recession other than the much lower value of RRSPs is from the slow down of the oil patch.
08-23-2011, 09:42 AM   #8
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I don't see the unrest in Libya as truly being much of an impact on the world economy. Even if gas was a dollar and 31 cents a gallon, Greece and Portugal and italy would all have economies that were on the rocks. It is that fear of some type of EU collapse and the ripple effects that is really stunting the world economy. No easy fix for that either, I am afraid, more a question of who is going to suffer as a result.

08-23-2011, 11:36 AM   #9
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Well, the rebels took the compound: Gaddafi to fight to end as rebels seize HQ | Reuters
08-23-2011, 01:29 PM   #10
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08-23-2011, 05:08 PM   #11
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QuoteOriginally posted by redrockcoulee Quote
Dropping oil prices (and more importanly natural gas prices) are not good for all of us. Any effect we are feeling from the recent recession other than the much lower value of RRSPs is from the slow down of the oil patch.
It hopefully ought to have a decent effect on food prices, though, those have actually been getting pretty scary just when I really don't need that.
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