Elephant In Exile

Hi Elephant,
I enjoy your blog, keep up the good work.
I'll take your wager on oil prices. I think that even with the way things are going, $50 is a big psychological hurdle for the markets. I partially agree with your Feds in that I think in the medium term the price of oil should stabilize somewhere around the $37 to $40 range. We could still see a spike in the very short term, and certainly in the long term the rules of supply and demand dictate that the price will only go up.
Here in Calgary, Alberta we're enjoying these prices. Our provincial government picks up an additional $500 million (or there abouts) in oil royalties for every $1 price increase. But we know that this sort of pricing leads to problems in other sectors of the economy, contributing to that boom/bust cycle that we're accustomed to. It's also a little scary being so dependent on one sector so much.
There was a popular bumper sticker a few years back during the last bust cycle: "Please God let there be another boom; I promise I won't piss it away like last time".
Hope that's true.

B
 

Hey B,

Welcome Back, and thanks for your readership! As we discussed before, this isn't the end of the world and in fact is good news for you and the oil producing regions of Canada. I'm probably wrong, but I think the market sentinment will keep pusing things up for a while with part of the blame going to our short sightedness and lack of a plan in Iraq.

I'm hoping that you'll get a hefty bonus out of all this!
 

Ha, I wish. I do consulting work so the best I can hope for is to continue working (not that I'm complaining). In fact I'm looking for a new project right now. You boys in DC need a consultant for anything?

B