I hate to say "I told you so…"
Ok, no I don’t. The now defunct NV1962 blog disagreed with my assessment that the ridiculous runup in oil prices in 2004 was due largely to a Kerry Risk Premium. The remaining increase is accounted for largely by a large drop in the dollar over the same period with only a relatively small risk premium surrounding events in Iraq, Nigeria, Venezuela, Norway and Russia. Beyond saying “I told you so,” I mention it because the really amazing thing is that the combined effect of war in Iraq, pseudo-nationalization in Russia, and strikes in Nigeria, Norway and Venezuela is looking to be considerably less than the Kerry Risk Premium. That’s interesting as an economic effect and politically it ought to tell so-called “swing voters” or “independents” something. The predictable effect on the economy, their paychecks, the stock market and their 401(k)s will undoubtedly tell them that Bush was the right choice in the next few months anyway, but I’ve never been one to refrain from shooting my mouth off at the earliest possible opportunity.
(My apologies to my friend who knows far more about oil than I ever will for quoting from his favorite newspaper.)
A report from the Paris-based International Energy Agency on Friday showed October oil inventory numbers higher than they’ve ever been. Cooper said when government stockpiles are added, the October 2004 inventory number is 20 million barrels higher than the August 1998 inventory number%u2014and that’s when oil bottomed out at $10 per barrel.
“People are finally waking up. The inventory picture has become such that it’s more and more difficult to paint a doomsday picture,” Cooper said.
“There never was any valid reason for prices to soar as high as they did. Fear was more important than the actual, and it took a while for reality to take center stage again.”