... dropped about 7% in the last two days. No sign of speculative activity there, just the normal day-to-day variation of supply and/or demand! Don't you just hate when they change direction on a weekly (or more often) basis?

Ancient Chinese curse: May you live in interesting times.

Well, you can't say this isn't interesting.

and it could even turn out to be a Chinese Curse!

Phil,

Just because the price is volatile, doesn't mean the fundamentals aren't pushing it in one direction. With demand pressing supply so tightly, volatility is to be expected... so that anything that spooks the herd one way or the other will cause outsized swings.

Unless these swings represent changes in the price at which the sovereign oil producers are selling oil to the major oil companies and refiners, then what we see is speculation, which I view as any participation in the oil market by entities which neither produce nor consume that oil. I have heard several of the people involved in that "market" state that only 1/10 of 1% of all the oil contracts which are traded result in physical delivery. Thus, 99.9% of all the oil dealings are peripheral to the true function of the market, which is to implement the extraction of this oil from the ground and its delivery to bulk users.

Of course, to be consistent, I must allow that almost all market transactions - for commodities, stocks, etc. - are speculation. I am consistent.

copied and pasted from Reuters....

Extra7/16/2008 12:01 AM ET How much oil it'd take to buy the US

At the recent price of $140 a barrel, it turns out to be a mere 400 billion barrels, or just about the combined reserves of Iran and Saudi Arabia.

Today, the net worth of the entire country is equivalent to a mere 400 billion barrels of oil. That's a smidgeon less than the proven reserves of two Middle Eastern countries: Saudi Arabia (264 billion barrels) and Iran (139 billion barrels).

America has never been worth less in barrels of oil.

I learned this by measuring the net worth of all U.S. households and nonprofit organizations in barrels of oil. Every three months the Federal Reserve estimates the value of our collective tangible assets, financial assets and liabilities to arrive at our net worth. It's the whole enchilada -- all our cars, our houses, our durable "stuff," bank deposits, stocks, bonds and mutual funds. Everything. Then it subtracts all our mortgages, consumer credit and other debt to arrive at our net worth.

The value of the U.S., in barrels:

Year

Household net worth*

Price of oil

Barrels to buy America

1970

$3.4 trillion

$3.18

1.1 trillion

1975

$5.1 trillion

$7.67

670.3 billion

1980

$9.5 trillion

$21.59

438.6 billion

1985

$14.2 trillion

$24.09

589.7 billion

1990

$20.3 trillion

$20.03

1.1 trillion

1995

$27.7 trillion

$14.62

1.9 trillion

1998

$37.4 trillion

$11.18

3.3 trillion

2004

$48.1 trillion

$42.00

1.1 trillion

2007

$57.7 trillion

$120.00

481 billion

2008

$56 trillion**

$140.00

400 billion

Hi Days. This IS an interesting little arithmetical exercise you have done here, and I think the information is enlightening. However, your estimate of our net worth leaves a few things out. Here is your description of where you got these figures:

I learned this by measuring the net worth of all U.S. households and nonprofit organizations in barrels of oil. Every three months the Federal Reserve estimates the value of our collective tangible assets, financial assets and liabilities to arrive at our net worth. It's the whole enchilada -- all our cars, our houses, our durable "stuff," bank deposits, stocks, bonds and mutual funds. Everything. Then it subtracts all our mortgages, consumer credit and other debt to arrive at our net worth.

LeRoy: This is indeed how the 'net worth' of all U.S. households is calculated. Be aware, though, it is not the same as 'national wealth'. To calculate national wealth, you would need to attach a monetary value to all of our natural capital (the value of our lakes and streams, our forests and grasslands, our clean air and water, all the gifts of Mother Nature), and our human capital (all the knowledge, skills, training and education that our workforce has). These things are not included in net worth calculations. No, Saudi Arabia and Iran could not 'buy' the United States of America with all their oil reserves.

Doesn't mean we're not in trouble, though.......

I was careful to state it was copy and paste...

I'm thinking the guy was just looking at buying our residence, I don't think it included our factories, corporate worth (except as concerns public traded corporations) or farm lands. Plus, it would be tainted by the ridiculous housing market; if new demand entered from overseas, it would push prices up dramatically.

but it was an eye-opener for oil prices. Wish the table would have pasted intact.