Thursday, May 22, 2008

667 Reasons Oil is Worth $800.00 Per Barrel

Don't you love those lists filled with some outrageous number of reasons why something is a certain way? I guess people are stupid enough to believe that stuff. It all comes from the idea that more is better.

If I come up with more reasons, it must be better. Hmmm......

Bigger, better, faster, longer, higher, stronger. Whatever.

I thought of 667 reasons for you today.

It's just all a corollary of "the secret." You know. The Secret. The secret Secret.

Of course the secret is that there is no secret. It is just plain greed.

By the way, did you notice that all the people involved with last year's secret book scam are all suing each other? I guess the secret thing didn't work out so well for them. Did they really think you could buy philosophy in a can?

It's sorta like when they say something is free. You know. Free. Free! FREE.

Free bonus. Buy one get one free.

But what if it was true? What if there really were 667 reasons that oil will soon rise to $800.00 per barrel?

That would be impressive. Oil was trading today at $133.64 according to one of my little widgets. So a rise to $800.00 per barrel would be a 498% gain!

I told my clients last year when oil was $65.00 per barrel that it was going up. Way up.

I think it was Steve Forbes and other wall street gurus along with various talking heads in government that insisted that oil was going back down to $30.00 per barrel. We will have to wait to a later blog to discuss the Venezuela factor in all that.

I wonder if any of those wall street wonder boys drink coffee? Not buy coffee. Not commodities or futures trading or options or anything exotic like that. Just coffee. A cup of joe.

Actually I don't drink coffee and I probably would be really out of touch with the whole coffee culture if I didn't agree to meet new clients at coffee shops sometimes.

But I do remember that coffee used to be ten cents a cup. Back in the sixties when I was a little snow skiing devil I would be forced back into the ski lodge by my not so very tough lowlander surfer buddies who couldn't stay out in the cold like I could.

They would order a hot cup of coffee and I would get a nice hot chocolate. And I remember the coffee was cheaper than the hot chocolate. I guess it was the cost of the sugar.

Remember the way things were before the Starbucks orgy? At the very most a cup of really great coffee was about a buck. $1.00. One dollar. Plus tax. Say 6% percent for many municipalities. A dollar six. Not too bad.

So if a cup of coffee is worth one dollar, even if it isn't worth 4 or 5 like today's "gourmet" prices, what about a cup of oil?

You see that's the genius I see every time I listen to Matthew Simmons. Simplicity.

What is a cup of oil worth?

A buck? $1.06? $1.10? How about $1.20? Those pennies don't seem like much but they compound quickly don't they?

Just $1.20 a cup is $800.00 per barrel!

See, there are 667 cups in a barrel of oil.

That is a pretty big multiplier. I think you would agree it is a significant multiplier.

This is just sort of barnyard logic. Informal math. Back of the napkin stuff.

But look how easy it is to get to $800.00 per barrel!

Soon I will take us through a few other similar exercises..... stay tuned and please subscribe

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