Cricket and cheap oil

Don’t get your hopes up either way

Unless you’re an American or you’ve been hiding under a very big rock you won’t have missed the unseemly glee with which various cricketing nations have greeted the demise of Australia’s perennial world champions at the hands of South Africa. The Proteas have beaten the Aussies for their first time ever in a test series in Australia. If they win the final test they’ll knock the Aussies off the world #1 pedestal where they’ve been since the old king died.

All this on top of the stunned Australian nation watching the victorious Kiwis thump the Kangaroos in the Rugby League World Cup final. It’s enough to make a dinkum Aussie swear off Fosters and take up chamomile tea. If you’re not an Aussie, enjoy the feeling while you can. The sporting world is littered with the festering corpses of sports folk who underestimated the Australian will to win.

The legendary Australian Book of Etiquette may be somewhat short but so too is the list of Aussie chokers. I predict with some confidence that their run of defeats won’t last long.

Just like oil at $40 a barrel

When oil was pushing $150 a barrel a few months ago I recall reading that the pundits’ predictions for the medium term ranged from $80 to $200 a barrel. Nobody predicted that the economic downturn would lead to it going below $50.

Not even your trusted blogger. I got it right about the economic meltdown, I even expected Helen Clarke’s relinqushment of the NZ Labour leadership. I did not expect to see oil south of $80 again.

Interesting to speculate upon why OPEC have allowed it to happen.

  • A big chunk of the peak was a result of speculation. That bubble has well and truly burst. Some investing biters have been bitten. Historically speaking, $40 a barrel is still not cheap, nevertheless if I had a million or two to spare I’d be partial to oil futures about now.
  • We can safely assume that OPEC don’t want to send the planetary economy into even more of a tailspin right now, so they’d be wise to keep their powder dry until the battle lines are clearer.
  • It’s also a fair bet that they don’t want to push oil prices up to the point that the USA, the European Union and Japan start getting serious about alternative energy. The Persian Gulf is hardly a hotbed of conservationism – they desperately need us to keep on burning that black stuff.
  • Nevertheless, the oil czars are not in the charity business. Don’t be surprised if those outlet valves are eased closed a smidgeon in the very near future.

I’m rather partial to prediction myself, so let’s look at some facts

  • Two billion people in China and India are still on a growth curve, albeit having slowed a little. Their oil consumption will probably increase steadily. Another couple of billion people in the emerging world are also aiming at living the high life. The pressure on the price of oil will increase.
  • Although oil pumping capacity exceeds demand right now, that happy situation for consumers will last months rather than years.
  • The OPEC folk really do want your dollars. How else would we in the West continue to fund Al Qaeda, Hamas, fundamentalist Islam and all the other hate groups whom we pay to hasten our own downfall?
  • Russia has climbed out of an economic mire on the back of high oil prices. They’ll be partial to staying out of it.
  • The Gulf states are heavily committed to some big spending to keep the peasants from revolting. Some are even running out of oil — are they happy right now?
  • Struggling Nigeria, Indonesia and Venezuela are hardly likely to be impressed with the status quo.

Just like the Aussie battlers, they’ll be back.

I’m punting for a stable oil price of at least US$100 a barrel within two years. Possibly within one year. If we had any common sense we’d be putting a tariff on it to bring it up there right now. Fat chance.

More about that soon.

Hmmm… anyone detect a bit of a trend here?

One thought on “Cricket and cheap oil

  1. This is a resurrected post from my old blog @MyWitsEnd. I’m happy to note that my predictions were spot on. Yet again. It’s good to be modest, but it’s even better to be right. 🙂

    Like

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