www.CostaRicaTicas.com

Yup, that is true from what I understand. You really can't blame the Oil companies for that, nor even the oil producing countries.

It is based on what someone is willing to guarantee the delivery of oil to market on a specific date with the risk premiums built into the cost.

The people that do this make a lot of money if they get it right, they loose a lot of money if they get it wrong. The beauty is, we can all participate if we want. It is an open market and we all have equal access.

Except that is not what it happening. Supply is not being restricted. To the contrary, everyone is drilling hard and fast to get every drop they can get out of the ground because most don't think the prices are going to stay this high.

The price increases are driven by two things, 1) Increased demand and 2) Political instability in Iran, Iraq and Nigeria.

I disagree that the lack of US production in the US is because of a lack of new refineries. Each major oil company and independent oil producer (who counts for more oil and gas production in the US than the majors) is drilling, completing and producing as quickly as fiscally possible.

If it was a good business decision in terms of direct ROI they would build new refineries. The business of turning crude oil into gasoline has rarely been a lucrative business. It has low profit margins compared to exploration and production. Hence, why put your investment capital into a less profitable segment?

The major oil companies are publicly traded companies. If you want in on some unfair profiteering, then call you broker and buy some shares in those companies.

People like to throw rocks at the oil and gas industry because of the robust growth and earnings the past few years. Though, none of the rock throwers want to look back at the very lean years, 1981 to 1987 and on and on.

Average Joe enjoyed a robust economy during the Regan years and then on in to this millennium. Yet the oil field labor worked their collective asses off and often lost their job when their rig stacked or their company merged with another and then downsized. For the first time in a long time the oil business is a little confident about itself.

Oil and gas production is not easy and it is not cheap and it is overflowing with risk; fiscal and physical.

Sorry for my rant, as I most surely have a bias having worked in the oil patch for the past 28 years.

OFT (Oil Field Trash)

_________________
Cigar smoking doesn’t reduce us, it elevates us; It makes us more content to be alone, or it helps us to enjoy our companions. It encourages us to dwell on the simple moments and celebrate the sublime.
_______________________________________
Hung like Einstein and smart as a mule.
_______________________________________
You're not drunk if you can lay on the floor without holding on.

OFT - all of what you said plus I remember Texas fell apart at the seams, because oil was so cheap abroad it did pay enough for anyone to bother pumping in Texas.

I don't really remember, I read about it.

Pac55 - Interest Only and ARMs. A friend of mine has an interest only ARM. He bought a second home after selling his previous second home only 9 months ago. He is not a subprime borrower. The house he bought won't likely increase in value over the next few years, but the interest only allows flexibility in payments. Flexibility: he can choose to pay additional $$$ anytime he wants with his quarterly bonus or with his tax refund. His loan readjusts in 5 years. Life is a risk and given his credit and his income, he has decided that in 5 years the interest rate would have to be in the double digits in order for his payments to be too much for him.

He bought the home for the long term. The loan works for him. Even if the home drops in value, he could care less because he didn't buy it for the short term. He feels that by the time he wants to sell the home, the market will be a whole other story.

Interest Only loans are not a bad thing for the right people, but you are making them out to be a bad thing no matter the circumstances.

It gives him lower payments. He is not forced to pay any principal. It gives him a little more flexibility.


All of the above are bets that borrowers have already been taking for the last few decades (I'm 45 so can't go back too too far). ARMs have been an option for a very long time. The only different between the new interest only ARM is that you aren't forced to pay any principal.


Look at it this way. In 5 years, even if he is forced to pay principal (has a 30yr fixed), he really hasn't put the slightest dent in a 400,000 loan. He really hasn't built much equality. Unless the market is going nuts like before, historically, equality is built over the very very long term. However, just keep in mind that he can still build equality with his interest only loan by paying additional amounts - it is up to him, it is his future, his plan (different motives for different people).

**********

Also, about "conventional" loans. My understanding without wiki is that a conventional loan is any loan amount less than 417,000 and nonconventional loans are loans that exceed 417,000. An interest only loan can be conventional or nonconventional, it just depends on the loan amount.

Pacifica ...... thanks for engaging. Nice to talk about something different than how many chicas I am going to bang this week.


We all know that the political instability is linked to mistakes in the conduct of our foreign policy and the infinite wisdom of our political leadership. I am not going to see me supporting the way our political leaders have conducted American foreign policy.

But I take issue with the notion that it is linked to the functioning of the commodity markets. Political Instability is only part of the reason for the rise in oil. It does not change the fact that virtually all commodities are on the same upward track to increased demand. Sooner or later we were going to see these prices even without the political factors. Besides, like Bush or hate Bush, the Middle East has been a powder keg long before Georgy Boy came along. Who is to say that it wouldn't be all phucked up there if Bush had taken a wiser course?

IMHO the only way to solve the problems in the Middle East is to make Oil Obsolete. When oil energy is obsolete we can get the hell out of there. Let them go back to riding camels and fighting among their tribes (tong and check). Higher Oil Prices expedites that process. Energy Companies are making huge profits and that opens the doors for innovation and new technologies. IMHO it is going to be Energy Companies and our Education System that is going to solve our energy problem. If we are waiting for a solution from our government it is going to be a long wait.

Hey, if you think the Oil Companies are making too much money, then be an owner and buy their stock!!!! Why not, if that is what you believe?



Well that is not the point, the point is that the opportunity is there for all. It is more accessible than buying a house. The fact that any given individual is not able to take advantage of the opportunity is not the fault of the market or the system.

I've benefited from the devaluation. I sell stuff in Costa Rica, so my prices have not risen, yet my profits have. My price is the same in colones, but I get more in $$$$

I'm holding onto 100,000 colones from my last trip last summer, so I've gained.

_________________
Gremlin, no resemblance to the AMC product

Man oh man, so glad I sold out of stocks in mid October!

Dollars hasn't dropped too too much lately, which is a bit of a surprise. Gold has jumped, but I'm surprised it has jumped larger than life in the last week. One would think that when the DOW drops (instability) 300 points that gold would be up, but it is down 2 bucks right now.

WOW... how low will the DOW go? In mid October I was thinking 12700 was possible and here we are at 12350.

It seems to me it is really a question of how much more in bad loans the major financial institutions have to write off of their books. Once that is done, that should be about the end of it. The indications seem to be that we are getting close to the end. There should be another week or so of bad news from the banks. After that, it is time to reevaluate the landscape.

There is a lot of great news in the economy that is not being told. Unemployment numbers just came out and there were 50,000 fewer jobless claims than last month. That is a big deal, it means more people are working and more $$$$ are being pumped into the economy.

Productivity of US workers continues to accelerate, if fact our productivity gains are far out stripping the rest of the world. This is very positive for long term growth.

The weaker dollar is making US exports even more competitive and the export economy is booming. IBM reported yesterday that 30% of its business is international now, and they are expecting 20% annual growth moving forward for international business. That is extrodinary.

There is no consensus that we are in a recession. In fact there is debate still weather we will even have one. However, historically recessions have been a very good time to invest in the stock market.

I have cash on the sidelines that I will be putting to work once this shakes out a little more.

Very tough to predict of course but it is impossible to be in a recession as by definition I believe it is two consecutive quarters with negative growth. I do agree its a good time to buy real estate or stocks assuming you buy well. Likely a good time to short Home Depot and Lowes though.

It's not just subprime mortgages that are the problem. Check the following link for lots of other credit related problems that have yet to be accounted for.

http://articles.moneycentral.msn.com/In ... spx?page=2

In my opinion, it is NOT a good time to buy real estate or stocks. The bottom is a long way off.

_________________
"The only normal people are those you don't know very well." Joe Ancis