"Mike Rapoport" wrote in message
link.net...
The same cycle happens every year in the energy market election or not. Summer passes and electrical and gasoline
demand drop and inventories build. The hurricane risk abates. Prices reach a low in early fall. At some point
people start thinking about how cold it might possibly get during the winter and prices rise in late fall. Winter
comes and is almost never as bad as people imagined it might be (they assumed the worst back in the fall) and
prices moderate going into spring.

The president has had very little to do with energy prices. Prices have been driven by the industrialization of
the third world, mainly China and India. There are many (billions) more consumers of energy that there were in the
past. If you think back ten years, only North America, Europe and Japan were using much energy per capita. Now
everyone on the planet is. There was simply no way for energy production to grow fast enough to keep prices
constant, so prices rose. At the new, higher, prices, exploration makes economic sense in high cost areas and
alternatives (ethanol, shale oil, bio, wind ect). The next shoe to drop will be corn prices rising as all the new
ethanol plants come on line. The energy market will become more stable at some point but the seasonal component
will always be there.

The administration is under pressure for not having an energy policy and I predict that they will come up with one
very soon (weeks). There will be little substance, mostly extending existing alternative energy incentives and
R&D funding for technology that is 25yrs away like hydrogen. There will be little substance because they can't
really effect supply (every availible rig has been drilling nonstop for the past few years already) and most of the
demand growth is not in the US.

Mike
MU-2

So when did we switch from a true supply and demand economy to one of pure speculation? The energy market volatility
is incredible. Even tools such as hedging are incredibly risky. Manufacturers are in a terrible bind. At least in
all but the energy rich countries.

Joe Schneider
8437R



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