.
Posted May 24, 2008. Almost exclusively, energy was the topic of the day.
.
Here are some excepts from Bill Flanagan's opening monologue:
.
“It was quite a week on Wall Street – good heavens -- never a dull moment – a correction, it’s been called. I don’t know why they call it a correction when the market goes down. Don’t we all expect and hope that the market will go up and therefore when it goes down, it’s an aberration – not a correction? That’s not the right direction – down, but that’s the word. As the correction of a few months ago’s (sic) upward movement dragged the markets back down to, uh, let me see now, we’ll take a quick look at the numbers.
.
The Dow Jones stood at 12,479.63 at the end of the week – off over 500 points since Monday. So for the year, the Dow Jones is off 5.92%. The S&P 500, which dropped 3 ½% this week, is off a total of 6.29% for the year. The Wilshire 5000 is off 5.85% for the year. And the Russell 2000 is off 5.47% thus far this year.
.
We know the reasons of course -- the credit crisis, the home building and home selling inevitable results and cause of some of the credit crisis. Median value of a previously owned home was $202,300 in April. That’s down 8% from a year ago. So people have not only seen their portfolios shrink, they’ve all seen the value of their homes go down, and of course, the price of oil going up to a record $132.19 a barrel –rose nearly $6.00 a barrel last week. Oil is up nearly $20 a barrel in May.
.
Why? Well, oh, speculation……..that’s what you hear in the wind, and of course, it’s inevitable when you have everybody hopping on the same band wagon at the same time, there is bound to be speculative bubbles, and there’s no doubt speculation in this one. Not necessarily a bad thing – speculation, it’s a reality. But the underlying reasons for the rapid increases are strictly of course supply and demand.
.
And if there’s a silver lining to what’s been happening lately…….maybe it will finally get the U.S., the Congress and business, and politicians other than Congressmen, and of course you and me and other folks who have the desire to get everything without sacrificing anything – NIMBY folks – not in my back yard -- they don’t want anything built that might put shade on their SUV.
.
But we’ve got to get out of this incredibly terrible, debilitating, economically ruinous cycle of handing all our money over to people that might really not be our best friends. The billions and billions of dollars that we are giving to Venezuela, to the Arab world for oil – it’s insane. They have so much money; they literally don’t know what to do with it. They’re building cities in weeks over there, it seems.
.
It’s almost like the old joke about the guy in Manhattan who said, what’s that building over there, showing off to his friends – I don’t know, it wasn’t there this morning. Whole cities being built, and of course what’s the business that they’re in, finance! They have all the money. They don’t have to put it in the hands of New York guys like, Citigroup – let’s just buy Citigroup. Or just set up a competitor that will eat its lunch right in its own back yard. We are literally exporting our wealth for oil, and it has to stop.......it has to be slowed down. And folks, maybe it takes the price of gasoline being over $4 a gallon for them to really get serious about it.
.
And politician……..they are the people that just get me so annoyed at this. We’ve been through this before, at least twice before. And the same people say the same things………blah, blah, blah and what happens – nothing happens -- because politicians don’t want to upset the NIMBY folks. The enviros have great political clout. They practically own certain parts of certain states and they would have you believe a lot of nonsense, which a lot of people are now becoming aware is nonsense. Hey, go fill up on ethanol. Hmmm -- Oh, don’t let them drink milk, let them drink ethanol. People are starving around the world now as a result of ethanol. And congress is giving subsidies to the farmers not to grow food – to grow ethanol – to make ethanol out of what is food. That’s a solution to the problem? That’s what Al Gore likes, bio-fuels – oh Al, please, looks like you loaded up eating first before you decided that was the way to go.
.
In congress at least, it should be clear as day that we need to drastically reduce oil and gas imports. We don’t import that much gas, although that’s on the agenda. We have to, and there are three ways to do it. One is to develop more oil and gas right here in the United States and in coastal waters. There’s a lot of oil out there……..but people don’t want their view impinged or whatever, I have no idea.
.
But for example, there is no drilling off the east or west coast of Florida. That being such a powerful swing state, they can get away with anything with these congressmen and congresswomen. So we leave that all alone. God knows how much oil is there. Actually the oil companies have some pretty good ideas, but they have to be very hush-hush about it because they can’t say. They were told not to investigate anymore what might be down there. That was brilliant! We have to open up a lot of these areas that have been cut off for drilling. We’ve got to stop these bans on drilling – not every one tomorrow morning, but it’s insane to have all this oil underneath us and to pay $billions and $billions and $billions of dollars every day to Arab countries and elsewhere, when this stuff is just sitting there……….
.
……………. Exxon Mobil, much in the news these days. The Chief Executive, Rex Tillison…….congress brought him in and gave him a tongue lashing – that’s the cause of high fuel prices – it’s Exxon Mobil. What morons!
.
So there goes Bush asking Saudi Arabia to boost its production. He goes off to Saudi Arabia, but he does nothing to increase production at home – especially in the United States off the coast of Florida and California where there is known to be significant amounts of oil that we could drill and not pay anybody else for. Will it bring down the price of oil? No of course not, but it bring down the amount of money that we are exporting.
.
There are significant resources available and they are mapped out and a lot of them are known underground in the U.S. – certainly the Alaskan possibilities are well known. I don’t know if you’ve ever been to that part of the world – way, way, way up in Alaska – not many people have, but this notion that there are a few caribou running around and there’s kind of an arctic idol that might be threatened by drilling some oil wells is so far from the truth, it’s absurd.
.
There are thousands and thousands and thousands of square miles of nothingness, some of it mountainous, frozen tundra, permafrost -- there’s nothing there folks. It’s unfit for man nor beast. Furthermore, because of things like permafrost, you really can’t leave anything there. And you can’t even drill into the ground the way you normally would. Of course, you can wells, but permanent structures, they have to all be put on pilings because of the permafrost. Net result is, when the oil gives out, it’s not very difficult to pick the stuff up and go.
.
People are starting to realize that now. Even some environmental groups in California for example, off the coast of Santa Barbara, the oil companies are being allowed to drill in exchange for some concessions, including a promise to cease production in 2023………. Now that’s putting their heads together…..We need to do these things. We cannot expect miracles to happen by themselves. We’ve got to drill. We’ve got to conserve. We’ve got to forget this bio-fuels nonsense – it can do a little bit, but it’s not going to do much. And trust me, look at the effect it’s already had on food supplies around the world.
.
We’ve got to do something with coal. We’ve got to clean up coal. You can’t tell me that technologically we can’t come up with better ways of burning coal to get more efficiency and less pollution. I know it’s possible. I……… know it can be done, if any effort were placed behind it. We don’t want to have to rely on coal, but boy, do we have an awful lot of it, and we can get through this period until, yes, Valhalla happens folks. …………
.
………..Nuclear power, it’s as plain as the nose on your face, this is the long term answer to our energy problems………but we have people who are petrified by just the word nuclear……….Technologically, I think that all things considered, we can build a lot more nuclear plants around this country without endangering anybody, anymore than we are right now. We have some formidable problems to solve, including hey, what do you do with the waste, but nuclear is the way we are going to have to go. ___This is Bill Flanagan…….”
.
Kirk Lindstrom posted the following Market Correction Statistics:
.
"Correction Statistics for 05/23/08
.
S&P 500 Chart (Using Intraday prices): http://home.netcom.com/~kirklindstrom/Charts/SnP500.html
Last Market High 10/11/07 at 1,576.09
Last Market low 03/17/08 at 1,256.98
Current S&P500 Price 1,375.93
Decline in Pts 200.16
Decline in % 12.7%
Max Decline 20.2%
This means the correction from intraday high to intraday low is 20.2% and we are currently 12.7% off the peak.
The decline from the high to the low on a closing basis is 18.6%
.
DJIA Chart (Using Intraday prices): http://home.netcom.com/~kirklindstrom/Charts/DJIA.html
Last Market High 10/11/07 at 14,279.96
Last Market Low 01/22/08 at 11,508.74
Current DJIA Price 12,479.63
Decline in Pts 1800.33
Decline in % 12.6%
Max Decline 19.4%
This means the correction from high to low has been 19.4% and we are currently 12.6% off the peak.
The decline off the high on a closing basis has been 17.1%
.
NASDAQ Chart (Using Intraday prices):
http://home.netcom.com/~kirklindstrom/Charts/NASDAQ.html
Last Market High 10/31/07 at 2,861.51
Last Market Low 03/17/08 at 2,155.42
Current NASDAQ Price 2,444.67
Decline in Pts 416.84
Decline in % 14.6%
Max Decline 24.7%
This means the correction from high to low has been 24.7% and we are currently 14.6% off the peak.
The decline off the high on a closing basis has been 24.1%
.
Honeybee here: This is a view of the beautiful Santa Cruz Mountains from my deck:
.
.
