Oil sets new record on expected rate cut

[Lone_Star_Dem]

Source: AP - CNNMoney

Crude moves over $80 a barrel as traders expect the Federal Reserve to cut interest rates, spur economic growth.
September 17 2007: 3:19 PM EDT

NEW YORK (AP) -- Oil prices set another record and other energy futures rose Monday on expectations that the Federal Reserve will cut the benchmark federal funds rate, a move the market expects will support the economy and ensure its thirst for oil and gasoline.

"If the economy's going to be okay, then oil prices are probably undervalued," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago.

Light, sweet crude for October delivery rose $1.47 to settle at $80.57 a barrel on the New York Mercantile Exchange, another record closing high. Oil also set a new trading high earlier in the session of $80.70 a barrel.

Though they are at record Nymex trading highs, oil prices are still well below inflation-adjusted highs of $96 to $101 a barrel achieved in the early 1980s.

Oil futures rose as high as $80.50 on Monday, a new trading record. Oil prices set several new records over $80 a barrel last week for a number of reasons, including perceptions that problems in the subprime mortgage industry would have a minor effect on the economy.

Read more: http://money.cnn.com/2007/09/17/markets/bc.apfn.oilprices.ap/index.htm?postversion=2007091715

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The consumer cannot win for losing, or so it would appear.

[Cirque du So-What]

1. Why do I get the feeling

that oil prices would have risen whether the Fed raised, lowered, or kept interest rates the same?

[Nickster]

2. You're just being cynical! /sarcasm

[Warpy]

3. They would have

Oil fields in Mexico and Saudi Arabia are starting to decline. Iraq is offline, for all intents and purposes. Stupid keeps threatening Iran.

Plus, the dollar is weak.

Forget about that $20/bbl oil. That's in the past. What we need is a program akin to the space race to develop alternatives.

Vote accordingly.

[Javaman]

4. "well below inflation-adjusted highs of $96 to $101 a barrel achieved in the early 1980s."

I'm always amused when that little factoid comes out with every increase.

It's supposed to make us say, "oh, whew, at least it's not as bad as back then, right??"

folks, it's worse. Back then wages were at pace with the cost of living.

they aren't now. period. and haven't been for a long while.

So when the say the old inflationary bullshit adjusted crap, they never take in cost of living and the rate of change in wages.

[Dont_Bogart_the_Pretzel]

8. $100 per barrel in the 80's

I don't remember price at the pump being +/-4.00 per gallon back then.

[Javaman]

11. I won't even try to explain it. nt

[legin]

9. $96 to $101 ????

I've looked at these inflation-adjusted figures before, and $96 to $101 is quite on the high side.

e.g. I got $66 (bit on the low side from what I remember) here :-
http://www.inflationdata.com/inflation/inflation_rate/Historical_Oil_Prices_Table.asp

[legin]

10. Thinking about it, that could be the average for the whole year

(the $66 figure that is)

So we are still not doing very well.

[endarkenment]

5. If the economy's going to be okay, then oil prices are probably undervalued

We are then on the fulcrum where the effect of peak oil supply and economic demand are balanced against each other, any increase in demand kicks the price up until it causes the balancing economic slowdown.

How long before the ever deflating dollar ceases to be the fiat currency?

[sarcasmo]

6. MSM does not care about this story, it' s all ORENTHAL all the time act 2.

That's Orenthal Simpson ladies and gentleman.

[Supersedeas]

12. OJ, the McCanns, hell they will even dig up Jon Mark Karr in order to avoid doing real journalism

[xchrom]

7. screw 'em while you can. n/t