Production decline sends oil over $80

The price of oil briefly topped the $80-per barrel mark today, setting a new intraday record. This news comes a mere 24 hours after OPEC announced they would increase production by somewhere between 500,000 and 700,000 barrels per day. Joseph Hargett wrote a post in Schaeffer’s Research Daily Market Blog that tied the record oil price to a recently-released report from the US Energy Department that noted “a decline of more than 7 million barrels in US petroleum supplies.” This is, reportedly, the sixth consecutive decline in gasoline inventories. Hargett also noted that “at last check, the October contract for crude oil was up $1.58, or 2%, at $79.81 per barrel.”

This record-breaking day for the price of oil comes after the previous record intraday high was set on August 1 at $78.70. Hargett noted that the decline in oil reserves was an unexpected one, which possibly exacerbated the negative investor reaction. He stated, “according to analysts, traders were surprised to see the decline, as supplies have now dropped 14.5 million barrels from mid-August level,” before adding that, “still, U.S. crude supplies are up about 1.4% since last year.”
Hargett mentioned that oil-related stock have been taking the news very well as the “CBOE Oil Index (OIX) was last up 1.5%, while the AMEX Oil & Gas Index (XOI) had added 1.04%.”

Bernanke can’t have it both ways

Dealbreaker, an expert financial blog, has made several predictions as to what investors won’t be hearing from Federal Reserve Chairman Ben Bernanke in his televised address on September 18.  While many investors and analysts are predicting an interest rate cut, John Carney declared that Bernanke won’t be giving investors the straight story because he is running away from a basic fact. According to Carney, Bernanke will not tell investors that “we can bail out the mortgage market or we can pursue monetary stability,” despite the fact that it remains to be the case. Carney is adamant that “we cannot do both at the same time.”

The post was convinced that attempts to curb inflation will be offset by the proposed bailout to the mortgage industry. Carney stated “the problem is- it takes new money to bail out bad collateral. That means a lot of new money unless banks start lending to high-risk markets. But our new, improved regulatory policies have clamped down on this.” Since banks have tightened up lending standards, it will be difficult to inject new money into the economy without literally printing up more money- one of the fastest ways to accelerate inflation.

Essentially, Carney is convinced that regardless of what Bernanke reveals in his much-anticipated speech next week, he may not be telling investors what he really thinks. 

Google seeks a plug-in car

VentureBeat is reporting that Google is throwing its hat into the environmentally-friendly automobile industry. This morning, a post by Matt Marshall stated that “Google.org, the company’s philanthropic arm, said it will offer $10M to start-ups offering the best ideas for advancing sustainable transportation.” This is not the first time Google has offered financing to the growing green vehicle industry. Marshall also reported that today’s announcement comes on the heels of a similar (albeit smaller) round of funding made several months ago when the company gave away a million dollars in grants to several non-profit organizations within the electric and plug-in vehicle industry.

This latest announcement signifies the company’s first foray into financing for-profit green vehicle concepts. It remains to be seen whether the company itself will begin construction of its own signature plug-in vehicle, but the speculation continues to mount.

Marshall included a statement from Google in this post that outlined their intentions with this latest round of financing. “Consumers still can’t buy plug-in vehicles- and that’s a problem… The severity of global warming requires solutions from NGOs, governments, individuals and (very importantly) the private sector.” Google also accused mainstream auto-makers of dragging their feet in regards to their electric vehicle lines. Additionally, the company stated its belief that the electric vehicle industry will require “its own ecosystem of companies in order to flourish.”

Uncertainty triggers British mortgage rates rise

Finance Markets, an expert financial blog based in England, is reporting that banks and lenders involved in the mortgage industry are taking a second look at raising mortgage rates. In fact, the post reports that one British bank has already begun raising rates, partially in response to negative fall-out from exposure to the American sub-prime crisis. According to Gill Montia, who wrote the post, announced that British bank Abbey National, part of the Santander Group, has raised its mortgage rate across the board by 0.1 to 0.2%.

The post also quotes Nici Audhlam-Gardiner, Abbey National’s head of mortgages, as saying “the current trends will be sustained over a significant period.” Montia stated that many analysts expect other companies will follow Abbey’s move immediately.
This news comes on the heels of an announcement by Mervyn King, Governor of the Bank of England, that warned both mortgage borrowers and businesses to expect higher interest rates in the coming months. Gill Montia stated that “Mr King is hopeful that if the current difficulties in the credit markets are managed properly, economic stability will not be threatened.” Additionally, King was adamant that the Bank of England would not bail out lenders that became too exposed to US sub-prime borrowing; stating that “it would penalise the prudent banks, and could mistakenly encourage excess risk-taking in the future.”

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