[Rob Hood]

http://www.autoextremist.com/current/2008/7/8/rants-453.html

Was listening to some newsradio today - many analysts are painting a bleak picture. Heard that Hummer and Saab were going to be let go, maybe more. I've already seen where Chevy is not sponsoring several NASCAR races next year.

Rick Wagoner is supposed to deliver an announcement tomorrow morning at 0830 EST. Should be worth listening to.

This post has been edited by Rob Hood: Jul 15 2008, 05:59 AM

[00 Trans Ram]

One problem (certainly not the only, and maybe not the main) is in Washington. Now, I work in politics, so I'm not saying "Washington" as a bad thing. But, the culture in Washington is that my side is right, and your side is wrong. Republicans want to drill more - Democrats want alternative sources. The problem is that both sides label the other as wrong.

Each side is right. Oil prices are driven by speculators. Yes, the weak dollar plays a role, but look at the volatility of the price of a barrel of oil during a single 8-hour trading session - it can vary by over $20! These are human beings who hear some good news (OPEC is producing more!) and start selling, thereby lowering prices. Then, they hear some bad news (Israel invades Iran), so they start buying, thereby raising prices. This all happens in a single day. It's not like either the supply of demand changes that rapidly. So, they're humans who make human decisions and react with some emotions.

Now, we get back to my point of both sides being right. If Congress were to lift the moratorium on OCS (Outer Coastal Shelf) drilling, then that would signify that there will be an increase in supply in the future. Because the speculators are trading on futures, then they will be inclined to start selling (before the price drops). Thsi selloff will lower prices on its own - long before supply hits. Will it be over night? Nope - but it will happen in the next few years, long before the physical oil hits markets.

However, we all know that oil will become scarce, no matter where we drill. So, we must invest in alternative sources. Again, Congress must mandate these investments, as a capitalistic market will not do so if they see oil prices going down. This is the long-term (25+ year) solution.

So, when you combine the Democrat and Republican answers, you get a solution that both works in the short and long term! Unfortunately, the two sides cannot hardly agree on anything. And, this being an election year, they won't agree until 2009.