Natural Death of Crude Oil Price Inflator TR
By Kanti Mohan Pandit
Director- Center of Business Intelligence and Forecasting
The Oil market has been one of the major means to sustain the present financial system and remained the key area of interest to the west in the post world war years. There came two oil shocks in the oil market, one in1973 and second in 1979 that changed the entire equation in the world economy. The present booming oil prices have distorted most of the global economies. Everyone is looking for a respite sooner the better. ‘Microsolar’ brings to you the TAR-SCOPE to foresee the oil future scenario with definite vision’ the Functional solar energy has an answer to your worries about the surging oil prices.
According to TAR theory the module built by ‘T’ and ‘R’ leads to inflation of product prices provided there is no presence of ‘A’ in the module particularly with ‘R’. T/R module formed through power points C1- C5-C9 has the deadly impact on oil prices. R/A module limits the inflating power of T/R module. The surging price will calm down only when T/R module is broken and both ‘T’ and ‘R’ don’t have joint focus on a circuit.network C2-C6-C91, which is the base zone for crude oil in the earth. Focus of ‘T’ on this network accentuates the crisis by T/R module. The crude oil prices that remained surging since 2002 till date have the days numbered now on account of a definite sign of T+6R module on the verge of break from July and its final activation from September 08. We can hope for a definite respite from this economic onslaught on the global economy. We would study the TAR modular relationship in the context of world oil prices in the following pages.
1861 to 1866 was historically the first major period with a big price rise in petroleum products when the crude oil price US average prices hovered round $10 to $105 per barrel in term of real 2007 dollars. This was the time when USA had its first oil well dug.
On analysis of TAR modular position during 1861 and 1867 the following facts are noted: 1. ‘T’ had its focus on the power point C5 forming modular contact T+4R with R9, Both ‘T’ and ‘R’ in power points C5 and C9 create a very strong T+4R price inflator module. ‘T’ had its exploratory focus on C2, which is the base zone for petroleum products namely Arab countries. By 1866 when the ‘T /R lost its modular contact with ‘R’ in October the oil price fell to the bottom of $40. Till then, ‘T’ had its direct focus on C2 by T+6C module.
1861: T5T6.8 A5 A6.9 R9 R8.9
1862: T6 A6 R8
1865: T7 A8 R7 R6.10
1866: T7 A9 R6
T7 had modular contact with R5 in 1867 from October and pushed up the oil price to about $70 per ounce in average. By 1870-71 T9 and R3 formed a T+6R modular contact with each other in which the ‘T’ and ‘R’ are 180 degree to each other that terminates the inflating power of T/R module till another T/R module is again set.
1867: T7 T8.10 A91 R5
1870: T9 A1 A2.4 R4 R3.6
1871: T9 A3.4 R3
1876: T92 A8 R93 R92
It is in 1876 the T+R module was again set in C92 from June that pushed up the oil price to about $44 per barrel. The price rise could not be sustained because of entry of ‘A’ in the module of T/R as T-3A in 1876. The price tumbled from here and could lift up again with major impact for long.
1891: T5 T6.9 A91 A92.2 R2 (T-3R) (T-4R)
1894: T7 A2 A3.7 R92 R91.10
T5 formed T-3R modular contacts with R2 and T6 from June 1891 formed T-4R modular contact with ‘R’ in C2 the base of petroleum products that pushed up the oil price from $12 in average to about $35 in 1894.After this the price level could not be sustained.
1918: T4 T5.9 A2 A3.6 R9 R.7
1920: T5 A4A5.8 R7
1921: T5 A5 A6.9 R7 R6.8
1922 T6 A6 A7.9 R6
During the world war second oil prices had gone up high at T+2R module by T5 and R7 in 1920, 1921 and T+R module in 1922.
From 1958 to 1970 prices were stable at about $3.00 per barrel, but in real terms the price of crude oil declined from above $17 to below $14 per barrel. The decline in the price of crude when adjusted for inflation was amplified for the international producer in 1971 and 1972 by the weakness of the US dollar
1971: T1 T2.4 A8 R91
1872 T2 A9 R91 R9.9
1973: T2 T3.5 A91 R9
1974: T3 A92 R9 R8.5
In1972 member countries experienced steady decline in the purchasing power of a barrel of oil. Throughout the post war period exporting countries found increasing demand for their crude oil but a 40% decline in the purchasing power of a barrel of oil.
Till 1973 the oil price did not rise much but as soon as T4 established T+4R modular contacts with R8 the oil price took a jump to touch $12 per barrel.
The US imposed price controls on domestically produced oil in an attempt to lessen the impact of the 1973-74-price increase. That resulted in U.S. consumers of crude oil paying about 50 percent more for imports than for domestic production. U.S producers received less than world market price. In effect, the domestic petroleum industry was subsidizing the US consumers.
. C2, the base zone for Crude oil got focus of ‘T’ in 1973 but without support of ‘R’ in the module of ‘T’ could not raise the price up. From 1974 T+6R initiated this T/R module to inflate price rise. T4 from 1975 August formed module with R8 as T+4R and kept the up trend intact. In 1976 T/R module not being present the oil price went down.
Third important hyper rise in oil price took place in 1979 when T+R module was formed in the power point C5 that has the capability to pull up price very sharp. Oil price for imported oil turned up from $15 to $24 per barrel in average in 1979 and to $32 in 1980. The oil price was up 11 times from 1974 to 1980. The price of important crude oil price in US was roughly 50% higher than the domestic one in between 1974-1980
1979: T5 A4 A5.10 R5 (T5 +R5)
1980: T6 T5 (4-7) A5 A6.10 R5 R4.7
The modular change in 1979 with T5+ R5 in power point C5 is important which can boost up the price. In 1980 this modular combination persisted till July. T6 and R5 are as technically relevant module as T+R in C5 that can boost up the price.
1981: T6 A6 R4
The T6+A6 module in C6 acts against oil price hike since this module is set to increase the production of crude more to support the price status quo or let it fall down.
1989: T9 A2A3.8 R92 R91.10 (T+2R) (R+4A.8)
1990: T9 A3 R91 (T+6A)
1991: T91 A4 A5.9 R91 (T+R)(T+6A)
From 1989-90 T/R was in acute converging mode as T9 and R92 R91.10 in 1989, T9, and R91 in 1990. T+6A module was set from August 1989 and lasted till March 1990.Then the price fell to the point of R+6A set in August 1990
After the convergence was over the price again rose up.
Percentage change in oil prices:
1991-95 -5.8
1997 -4.2
1998 -31.9 at low level production
1999 -11.2
2000 2.8
2001 -2.7
1997: The OPEC spot oil price that was $23.07 in January 1997 fell down to the bottom of $9.82 by December 1998.
From the bottom of 9.82 the prices lifted up to $29.50 by December 1, 2000
From here oil prices started tumbling again to touch $17.82 by December 2001.
Why this sharp ups and down in these three years? T93 has a modular contact with R6 to form T+6R module in 1997 but because ‘R’ had R+4A modular contact with A91 that became an anti force to pull down the price. The teeth of ‘R’ to pull up the price in contact with ‘T’ has been blunt by its modular contact with ‘A’
In 1998 the T/R modular contact is missing till May. On the opposite R+6A module was present to push the oil price down.
1997:T93 A91 R6R5.7
1998: T93 T1.5 A92 A93 (6-9) R5
There has been continuous fall in prices of crude oil in the international market year after year.1998-99 was the worst year for a major fall to –31.9% on account of R+6A module. ‘T’ and ‘R’ were diverging form 1991 and ‘R’ and ‘A’ were converging. This is detrimental to price rise. TA module subsides the oil price with more of supply opposite to T/R module that inflates the oil price by curtailing the supply. T/A module remained active as T-1A. R/A module acts opposite to T/R module. The absence of T/A module in this year that is basically instrumental to add to production was absent. The trough had arrived on 11/12th Feb.1999 when the price rolled down below $10 per barrel. In Feb. alone in 10 days the price fell 10% because of A+C/R+6C modules present there in C92 from 14th Feb to 28th Feb.
Organization for Petroleum Exporting countries OPEC had to face the biggest crisis of 38 years history to cope with the with increasing production and falling prices. Low prices had built up the unprecedented inventory all over the world for last one and half year since Feb.1999.Oil Company’s shares all over the world took a beating and burnt almost $50 billion from their bottom line as a result of falling oil prices. . This was possible because of the R+6A/T+4R module without T/A module that depressed the demand and kept the inventory of oil piled up. The reversed happened in 2004 September when T+2A module along with T-4R module was present but R/A module non-existent. This resulted in the demand to be at par or rising but faced severe supply constraints on account of political, civil, and terrorism crisis in the oil belt along with hurricane Ivan.
It was after 12th Feb. 1999 again the oil prices started rising and reached the peak in Dec.
1999:T1 A93 A1.6 R4 (R+6C in Feb12, 1999)(T-8R) (T+A.6)
2000: T1 T2.7 A1 A2.7 R4 R3.9 (T+A) (T-8R)(T-8A)
T-8R module in 1999 along with R-4A module prevailed in 1999. The result of this combined module was to let the oil price go up but at moderate rate. ‘T’ and ‘R’ had converging mode that has the ability to inflate oil prices up continued in 2000 also.
2001: T2 A2A3.6 R3
2002: T2 T3.7 A3 A4.7 R3 R2.2
2003: T3 A4 A5.8 R4 R3.9
The WTI price range of oil hovered around $32 per barrel by January 2001 and to $19.89 by November 2001. In 2001 the oil price hovered round $25 per barrel. .
On Feb 02 when ‘R’ shifted its focus to C2 to form T+R inflator module in the base of crude oil circuit C2 without ‘A’ there was again a rise in the crude price that touched $28.85 by 15th of May 2002.
. In 2003 the WTI price after touching $23.58 in April went up to $30.90 by December.
The principal reason for oil prices not inflating much in single direction is the presence of T/A module along with T/R module.
2004: T3 T4.10 A5 A6.9 R1 (T+2C/R+4C)
T3 and R1 are in diverging mode but ready to form modules to influence each other to create on oil prices.
‘T’ has its operational module as T+2C on C5 to join the R+4C module there. Both had T/R operation activated to inflate prices up that took the WTI oil price from $41.10 on 16th September to $55 by 16th October 2004 that was a rise of 34% in one month.
Until the March 28, 2000 adoption of the $22-$28 price band for the OPEC basket of crude, oil prices only exceeded $24.00 per barrel in response to war or conflict in the Middle East. With limited spare production capacity OPEC abandoned its price band in 2005 and was powerless to stem a surge in oil prices which was reminiscent of the late 1970s.
In 2005 the OPEC spot oil prices FOB ranged from $32.21per barrel on January to $62.36 on 2nd Sep. and down to $50.28 on 2nd December.
2005:T3 T4.6 A6 A7.10 R1 R93.4
T4 and R93 have formed T-4R module with A6 in the module of T-4R that pushed the oil price up to$ 50 from $32. -a rise of 56% in 4 months activated at T+2C/R+4C in C5 and later at T+2C/R+6C in C6. This later module took the prices further up to $56.18 in Jan.2006 and $70.23 by 10th August 2006.
2006: T4 T5.12 A7 A8.11 R93 R92.11 (T-4R)
In 2006 T-4R continued without ‘A’ in the module that pushed up the oil price from $50 to $70 in 4th August 2006 – a rise of 40%.
In 2006 the prices started from$56.18, went up to $70.23 on 4th August and again fell to $55 by 3rd November caused by break of T/R older module.
2007:T4 T5.8 A8 R92 (T+6R)
In 2007 oil prices started from $55.06 touched $73.83 on 10th August (a rise of 47.4%) then fell to $71.76 in Sep. and again rose up from Oct. to $86.83 in December. This is an overall rise of 57.8% over January price.
2008: T5 A9 R92 R91.6 (T+6R) (T+4A)
In 2008 by 4th January the oil price reached to $96 56 and further up to 10.28 by 2nd May and $126 by 6th June. The price continued rising to achieve 50% rise till $126 per barrel on 6th June 2008.
The T+6R module is going to end by July that will determine the further movement in oil prices in downward course.
