Open Thread

Making more progress, starting to get pretty filty, but backyard getting nicer. rf, you are egging me on. I can’t wait to have people in the backyard.

Re oil prices, in the 70’s, OPEC countries got together, basically kicked out Americans and Europeans and took over their own oil. At this time, US oil prices were fixed – markets were regulated. Then 73, OPEC flexed its muscles and cut us off for supporting Israel in the 73 war. This is when they really had the power to price the incremental barrel in the world. They had a lot of excess capacity and could turn the spigots on and off. Then we started deregulating prices here in the US, which encouraged exploration and production. In 1978, we started the first US oil futures market – heating oil.
Then in 1983, the US crude markets were sufficiently deregulated that NYMEX launched the WTI crude oil futures contract. Still OPEC was quite powerful and set target prices, around which the prices seemed to fluctuate and they all had quotas and excess capacity and the tendency in the 80s was for lower prices; we dropped below 10 dollars several times. Then OPEC tried to set the price based on “netbacks” which is the differential between product prices and crude. That didn’t work very well. Then futures became more and more active, more liquid into the late 80s and 90s and gradually OPEC lost the capacity to set prices. And as more oil was discovered around the world, i.e. North Sea, South America, OPEC lost more power in pricing. Now with massive increase in world demand with the growth of China, India etc., OPEC has basically no excess capacity, except for the Saudis who are very close to their max. So OPEC is the biggest block of producers, they have their own internal politics, their power now is to restrict supply basically and they are not motivated to do that.

So it has been a gradual process but OPEC is not the monolithic thug that it once was and follows world markets in pricing. This price transparency was started here in the US with the bad derivatives markets and these markets are the tools of transparency and risk transfer which dictate pricing for global oil trade.

more4less got outbid on the two homes I bid for.. LOL

I don’t think houseprices are done falling though… Unless Bernanke and Obama keep killing the dollar… Still rent and own in JC…

Have you gone to the new Barcade in JC M4LESS?

bxgrl, in case you and the other bimbo are interested, I saw a sign in front of St. Ann and the Holy Trinity Church on Montague Street in the Heights that there will be a craft fair in late May and June. Not sure of the exact dates and such. Tried Googling it for you, but it’s not coming up easily for sure.

I’m sure MM can get the deets, since she always seems to be in the Heights, though never calls me when she’s there.

mmm. I think the hangover is diminished enough for lunch.