Noticed lately how the prospect of rising oil prices has recently been driving the Dow to record heights? http://cnnfn.com/markets/9903/11/markets300p/index.htm clips from article: Sub-Heading: Oil moves to the front burner "Oil stocks, largely responsible for the Dow's advance to a new record Wednesday, once again took the leadership in the market, charging higher as world oil prices continued to rise." "I think definitely they need to cut supply --there is a glut of oil around and anything they can do should help the oil stocks. said Patricia Chadwick, director of U.S. equities at Invesco." When I read this, I recalled a report from 2 weeks ago that seemed as though it could somehow be related: http://cnn.com/WORLD/meast/9902/28/iraq.us.02/index.html clips from article: Iraq: Key oil pipeline damaged by U.S. airstrike "A U.S. airstrike severed an Iraqi pipeline Sunday, halting the flow of oil to Turkey, an Iraqi official said." "The pipeline allegedly hit Sunday carries the bulk of Iraq's oil exports from oilfields in northern Iraq to the Turkish Mediterranean port of Ceyhan." That's one way to cut the supply! The announcement that OPEC Nations might agree to cut oil production did not come out until Wednesday, March 10, yet the major oil stocks started rising immediately after the airstrike on the pipeline, February 28! http://cnnfn.com/worldbiz/9903/11/oil/ http://cnnfn.com/markets/wires/9903/10/oil_wg/index.htm EXXON


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Makes one wonder about the true motivation behind all of our attacks on Iraq and the entire Gulf War. Is it all a huge conspiracy between the Pentagon, Oil, and Defense industries? The Pentagon continues these daily bombings to get rid of all of our non-compliant weapons stockpiles, The Oil Companies watch their profits rise as the supply of oil is partially demolished, and the Defense Industry claims huge new revenues for replacing our entire weapon supply with new compliant artillery. In the meantime, the average Joe Six Pack will pay higher gas prices and higher taxes to cover huge new military defense budgets. What a racket! It's no wonder they don't want to kill Sadam Hussein - he's a hero to our Military-Industrial Complex!

-- man (infoman@web.com), March 13, 1999

Answers

Man,

I think that you are wrong about this. Even if rising oil prices are lifting the Dow in the short run, higher prices are a negative for the economy and the stock market in the longer run. The low inflation that we are enjoying is one of the major reasons that stocks are so high. The price-earning ratio for the S&P 500 is now the highest it has ever been. Because the price of oil affects so many aspects of our economy, rising prices will eventually lead to higer inflation and thus negatively affect the stock market.

-- Incredulous (ytt000@aol.com), March 13, 1999.

Incredulous,

Point well taken, but that just makes it worse. They are not doing it to boost he Dow or the economy, but merely for their own self-interests. We will be the ones that pay the price for their corruption.

-- man (infoman@web.com), March 13, 1999.

I would have to aggree about the effects on oil prices as a fluke, however I have been wondering about the incredible numbers of cruise missiles used in the last six months. Not only are there y2k problems but also GPS problems as well. I just find it hard to belive that a bunch of tin shacks in the afghan wilderness really merits 70 missiles. At a quarter megabuck a piece?

We didnt' even launch that many at Saddam Insane in Desert Storm. I keep thinking about Jay Leno, and Doritos:

"Launch all you want, dont worry, we'll make more."

-- huntschbaack. (quasimodo@belltower.com), March 15, 1999.