Friday, January 04, 2008

My fuel hedge - can I mail my car?

The military situation in Iraq is arguably improving, and Iraqi oil exports are beginning to flow again. Tensions between US and Iran have eased a bit. There are forecasts for a mild late winter in the United States, which should help bolster oil and gasoline inventories going into the spring and summer driving season.

So, why are oil prices going up now…?

Experts say the answer lies in the investment decisions of traders and hedge funds. With the markets in equities, housing, credit and currency shaky in the United States, traders are betting on oil and other commodities as a perceived safe haven. Recent interest rate cuts by the U.S Federal Reserve had underscored for traders the depths of the country's economic risks and led them to buy oil futures.

Vinod Khosla must be a sad man. He has been spearheading the new energy initiatives together with his friends from PE ecosystem and has been making some significant investments in solar and other non-conventional energy sector like wind and biofuel development, but so far they are making only a slight contribution to energy supplies.

To those holding euros or yen, the weakening dollar makes oil and gold look cheaper; they can bid up prices in dollar terms without spending any more of their own currency. Moreover, gold, and nowadays oil too, is seen as a haven when the dollar is weak—so the latter’s drop may be accelerating the former’s rise.

Is there a way to mail my car with me inside? I am a poor guy. I don’t want to be poorer. So what do I do? I bought MRPL stock so that I can offset my fat fuel bill with gains from stock price. That’s my inflation hedge. What say you?

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