Updated: A Possible Bright Spot on the Horizon?

Yesterday, a Saudi Oil Ministry spokesman said that "oil should be fairly priced at $70-$80/barrel." It was at $95 or so at the time, and it tells me two things:

1. Traders usually listen to this guy, and begin selling or buying on his announcements.

2. Oil is hysterically over-priced by at least $15/barrel. By "hysterically", I mean the usual trader hysteria, this time from the protests in the Middle East. Libya in particular only pumps about 2 million barrels/day, and isn't a significant player to the U.S., yet it's both the U.S. and European markets that have gone off the rails over the protests.

3. It's all much ado about nothing, except the hunt for profits before the Financial Reform laws take effect in September. This is probably why commodities have also gone off the rails--we've endured droughts and floods before, and it didn't drive up costs nearly so much. I imagine there'll be a whole new world comer September to go with the new mortgage laws--now, Fannie and Freddie are destined for the scrap heap, meaning the only ways you can get a mortgage in the future are through FHA (at 10% down, with PMI, with income limits), or through the bank (30% down with variable rates for 40 years).

If you have a 30-year mortgage, you're holding onto a coveted relic. Expect more homes to sell NOW while the mortgage-gettin' is still good.

UPDATE: We're only getting the last 5% of our oil from the middle East--the rest comes from Mexico and Canada, so we have "already moved our house" like Thomas Friedman pleads in today's NY Times editorial. This is just a measure of how much hysteria there is with oil traders--apparently, while they stood there watching a trading board, the world moved on without them. Thomas is just as bad as the oil traders, shrieking about investment in wind and solar--we no longer need those things unless something suddenly erupts in Canada or Mexico. Solar and wind have become toys for the rich, while the rest of us are cutting out consumption by watching our time of use, and switching to off-peak hours, driving only when necessary, and turning down the thermostat. Thomas was also left behind, I see.

UPDATE #2: Traders are now starting to sell off wheat and other commodities with demand based in the U.S., and moving their money to "desert foods"--the sell-off isn't big enough to be noticeable here...yet. Desert foods are things like dates, lamb, palm oil, some vegetables, some greens, tobacco, coffee, stuff that doesn't have to be imported--it grows or is raised right there in the countries. Apparently traders think they can speed up the toppling of dictators by starving the protesters (well, that's my guess, anyway).

They may be putting the "army runs on its stomach" phrase to the test.