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Bubble economics: Oil soars as coal and oil refiners plummet

Posted July 2, 2008

Speculators continued to inflate the oil bubble to new heights, leaving today’s bathtub ring at above $144 a barrel after the government reported a bigger-than-expected drop in U.S. supplies. Of course, the media proclaimed that “the threat of conflict with Iran weighed on traders’ minds”.

by J. Christoph Amberger

Baltimore — (TFN): Speculators continued to inflate the oil bubble to new heights, leaving today’s bathtub ring at above $144 a barrel after the government reported a bigger-than-expected drop in U.S. supplies. Of course, the media proclaimed that “the threat of conflict with Iran weighed on traders’ minds”.

This would have been a definite possibility, were it not for the fact that the juxtaposition of “trader” and “mind” makes for as interesting an oxymoron as “jumbo shrimp” and “Rapid City, South Dakota”.

Their headlong push into crude pushed light, sweet crude for August delivery as high as $144.13 on the New York Mercantile Exchange shortly after the market closed.

But while you can’t open a radio or turn on a newspaper without someone quoting distressed consumers complaining about $4-a-gallon gasoline (by the way, they’re paying TWICE that in Europe and call it a dumping price), the handful of remaining domestic oil refineries fell even faster and lower than the rest of the market.

Western Refining, Inc. (WNR) closed down -9.70%… Calumet Specialty Products Partners (CLMT)… down -8.14%… even Valero Energy Corporation (VLO), which last weekend’s visiting guest expert Todd Schoenberger selected as Best Oil Stock to Buy Now closed down -6.09%.

Interestingly enough, despite the much-touted increased “demand” for energy-related commodity, energy-related resource companies were among those who’ve taken it on the chin over the past two days. Among today’s top losers today were:

James River Coal Company (JRCC)… down -22.18%
International Coal Group (ICO)… down -19.68%
Massey Energy Company (MEE)… down -18.92%… and all that in a single day!

Which is the latest and clearest indication that we’re dealing with a full-fledged asset bubble that is testing the surface tension of its oily, black membrane.

So please make sure you catch Laura Cadden’s Hot Stock Pick of the Week as early as possible. And check out our free new special report…

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Posted by J. Christoph Amberger · Filed Under Oil and Energy 

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