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Crude Oil Roller Coaster


April 21st, 2016 10:10 AM

Crude Oil Roller Coaster

Oil is in the middle of one of the largest price fallouts of all time. In fact, we are in the third largest oil fallout of all time when you adjust for inflation, and there is now a discussion about how long this bear market will last. Investors seemed concerned because they remember the financial pain caused by oversupply and lower demand of oil.

Here is a video from Yahoo finance explaining oils third recession.

 

 

There are two sides to every coin and one thing that has stayed the same in oil is its volatility.  

  • There was recently a strike in Saudi Arabia which caused output to drop but that strike is over now.
  • Iran was having trouble finding oil tankers to move its oil supply but this is likely a problem Iran will solve easily.
  • Sun-Edison the solar company just filed for bankruptcy protection, but technically, the growth of solar power has been consistently positive since 2010 even though the return on investment in many cases can be decades.
  • OPEC is expecting oil output to fall over the next year which would help to lower the supply, but shale oil producers have proved they can be extremely resilient while at the same time OPEC seemed less relevant in 2015 than ever before.
  • Oil producing countries are becoming more open to production freezes and talks, on the other hand, many countries like Russia are hurting bad due to low prices and are put in a position where negotiations could hurt them even more.
  • Wind, wave and hydroelectric generation continue to improve but in many cases are suppressed by the power storage problem. Technology is growing so fast that it is more likely than not, power storage will become more efficient in the process making wind, wave, and solar technology more feasible.
  • Falling oil prices are good for American drivers, but when price comes down, the one thing Americans overlook is usually a 401K heavy in the oil and energy sector.

Oil was responsible for the biggest population boom the world has ever seen but the question is, will innovation catch up and when it does, will oil play as big of a role in our society as it does now? If oil can’t continue to play a major role in our modern society, the demand could very well go down and along with it the price it is sold at on the market.

U.S. sources of energy will continue to grow with technology. Geothermal seems like a viable option in many places across the U.S. while wave technology would probably be useful in places like Hawaii and California. Nuclear power is one of the best technologies ever invented but is very dangerous in areas with more frequent and large seismic activity.  Coal works extremely well but is dirty and can cause major problems as you see in China. Wind power works well but most people don’t want to live near them because they are very noisy and not necessarily pleasant to look at all the time which creates a problem of transmitting that power long distances. All of these sources of energy threaten the demand of oil. All of these sources of energy have pros and cons.

The fact of the matter is, clean energy is quickly getting better but not there yet and our dependence on oil is crucial for our society. As long as the volatility in oil prices continues to exist, so will its impact on the world’s financial markets and investors.

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About Dr. Ron Caskey

Dr. Caskey has over 30 years experience as a trusted financial professional. Over the past three decades, he has helped scores of valued clients create, protect, and distribute wealth in an effort to greatly enhance their overall quality of life. He lives with his wife Jeannine in Firestone, Colorado. They have raised 5 kids and have 11 grandkids.

Dr. Caskey's top priorty is working with you to both learn about your particular situation and to make sure you are fully educated so that together we can find the solutions that work best for your particular situation.

*Disclaimer* - *Guarantees are backed by the financial strength and claims-paying ability of the issuing company. Bonus annuities may include higher surrender charges, longer surrender periods, lower caps, higher spreads, or other restrictions that are not included in similar annuities that don’t offer a bonus. By responding you may be contacted by an insurance agent. Annuities are designed to meet long-term needs for retirement income. They provide guarantees against the loss of principal and credited interest, and the reassurance of a death benefit for beneficiaries. This website and its contents, downloads, videos and audio files are designed to provide general information on the subjects covered and is provided to you for informational purposes only. Pursuant to IRS Circular 230, it is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that Ron Caskey does not give legal or tax advice. Please consult your tax advisor or attorney. Ron Caskey is a registered and licensed insurance agent resident in the state of Colorado, non resident in multiple other states. This website focuses on insurance products in an attempt to avoid volatility. The term "Safe Money" should not be understood as signifying a guarantee or a guaranteed investment.*
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