What a $200/Barrel World Looks Like

No! Because Goldman doesn't determine the price of a barrel of oil. A research report by Arjun Murti can have a very short-term impact on the market--as idiots watching Fox Business News react late to his recommendations when they get reported on -- but he can't manipulate prices for several years -- and the price of oil has been steadily rising for several years!

Goldman can hire James Earl Jones to climb the Empire State building with a megaphone and proclaim that oil is going to reach $500 a barrel, and it is going to have ZERO effect on the oil market over the long term.

If Goldman "wanted" to short oil, it would be because they believe that oil is overpriced right now and the price is going to come down. I will all but guarantee you that isn't the case. They could be hedging somewhere in their investment portfolio to limit exposure to things they are doing, but there is no way in hell they are making big bets about the price of oil coming down anytime soon, and having an analyst make recommendations to the contrary. Because there is no way in hell oil isn't headed to $200 a barrel.

In this case, they stand to lose way more with the people paying Arjun Murti for his recommendations getting burned if he is making false recommendations than they could make by shorting oil contracts. Because there is no way in hell the price of oil is going anywhere but up anytime soon. Care to bet on the price of oil this time next year? Or better yet, PLEASE do short oil. Let me know the contracts you bought and how much you are borrowing to do it, so I can watch it like a spectator sport, please.

Serious, serious question. If this is what Goldman is doing, where are the huge losses they took when Murti was calling for $105 a barrel when the price was $50, three years ago? After all, he was just making a BS recommendation while they were shorting contracts. And since they were betting against the price of oil, and we know that oil has increased from $50 to $135 a barrel, they certainly got hammered. How are they even still in business?

 

Boom, OK. I am naive. And you still haven't said a thing. SPELL OUT EXACTLY WHAT I AM NAIVE ABOUT. Because this is like the 50th Oliver Stone conspiracy you have sort of alleged on one of these threads, except you just throw out two nonsensical lines in every post and no details. I don't know why I am bothering to respond, except for the hope that you will actually say something.

For the 10,000th time now. Tell me what Goldman is doing that I am so naive about. Because other than a conspiracy theory that you have hinted at, but haven't explained, you haven't said a thing that makes much sense. Henry Blodget isn't an answer. Telling me I am naive isn't an answer when you don't say anything to explain how I am naive. Goldman hedging on the subprime market -- something that makes them look smart, not manipulative-- isn't an answer, because it has nothing to do with what we are talking about.

Tell me how they are manipulating the world oil market. Tell me how an economist's report does that. And if they are doing what you I think you suggested--because at this point you haven't said anything specific enough for me to have a clue what is rattling around in your head--explain to me how they haven't been taking horrific losses since 2004 or 2005 when they first started saying the price of oil was going to skyrocket. Goldman put out a report in 2005 suggesting $105 a barrel. The price was around $50 a barrel at the time. So if they were somehow betting against oil at the same time they were predicting higher prices, they had have gotten absolutely killed. How are they hiding the losses? PLEASE address this in that sophisticated way or yours.

According to you, whenever that economist puts out a report, it is some kind of insidious pump and dump scheme--never mind the fact that Goldman has no ability to pump up the price of a barrel of oil with a research report. According to you, the traders are sitting around valuing a barrel of oil at $50 or $70 somewhere in the long term based on market factors, but this guy says it is going up to $200, so everyone is overspending, because this guy has the ability to hypnotize people and get them to overpay for a commodity by writing a research report.

I mean, you can get a loaf of bread at the supermarket for $2, but if Goldman Sachs puts out a research report saying the price is headed to $10 in the next two years, I'm naive for not believing people are going to ignore the $2 price tag--against all reason--and start willingly paying more for bread because Goldman Sachs said so!

But I'm naive. Not logical. Naive. Of course, you haven't taken anyone from point A to point B, and you haven't made a cogent point about this. As naive as I am, I can tell you exactly how much oil is being pumped worldwide--because there is a fixed supply. I can tell you what oil reserves look like at any given time. And I can chart the worldwide demand for oil. And when I look at all of those things, I can easily point out that the world's demand has steadily increased over the last decade and is now skyrocketing as countries like Brazil, China and India demand more and more to feed their overheated and fast-growing economies. I can then point out how supply is being curtailed by the oil producers who are actively trying to drive up the price (Saudi Arabia in particular). And for the 10,000th time I can patiently explain that when there is high demand and a shrinking supply of something, the price increases.

And surprise, surprise! The price of oil has gone up and is continuing to go up.

But let's say I am really naive and Goldman Sachs magically controls the price of oil--not the suppliers and the people who demand the stuff. The price of oil steadily rose since 2005 when it was around $50 and Goldman was out there ahead of everyone with a price target of $105. It is $135 a barrel right now.

So, me being naive and all, please explain how Goldman has been hiding the devastating financial losses they have been taking the last few years. Cause whatever scheme they are working with their "misinformation" that you alleged, isn't working. The price went up when they said it was going to. So they must have lost billions!

Please address this and explain this "long term" fantasy I am naive about. How are they able to manipulate a market as vital to the world's economy as the oil market for a period of years without all the other institutional investors catching on and bringing the price back down to where it should be. I mean, is Goldman the only one interested in making money? And if you know this is what is going on, PLEASE tell me how much you are leveraging everything you own and what contracts you have plowed money into to bet that the price of oil is going to come crashing back down soon. I think a naive guy like me can learn a lot from that kind of sophisticated investing.