CNBC usually has a quick online survey each morning. Today, they asked what we thought we would see first, the Dow back up to 13,000 or gas at $5 per gallon. 58% believed we will see gas prices go back up before the Dow does. It makes you wonder if they know what happened at yesterday's OPEC meeting, which the Saudi ambassador described as the worst ever meeting. It was the first time in twenty years that they were divided, especially bitterly divided, as they are now.
The Saudis wanted to increase production, to lower the price of oil and to support the anemic world economies. Saudi Arabia has the capacity to produce more oil. Most other nations, like Iran and Venezuela, are producing as much oil as they can. Therefore, they want to keep the price as high as possible. (Besides, anything that hurts the U.S. must be a good thing, to their way of thinking.)
The Saudis walked out disappointed, promising to increase their own production, regardless of the rest of OPEC. At first thought, anything that reduces the monopolistic power of OPEC cannot be a bad thing! One can only hope this is a permanent change. Secondly, with the Saudis promise to increase oil production enough to reduce prices at the pump, why did 58% of the CNBC viewers think we'd see $5 gas before we see a 13,000 point Dow?
Saudi Arabia produces primarily heavy crude, not the light, sweet crude needed for gasoline. They produce the wrong type of oil for your car to use.
Given that I'm bearish on the stock market for the next few months, the CNBC viewers are likely to be correct, darn it!
