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View Full Version : Get Ready for the Oil-Price Drop,The world economy can't handle current energy prices



megimoo
06-07-2008, 12:20 PM
The price of crude oil has jumped as high as $135 lately, up from $87 in early February. The news encouraged some Wall Street analysts to suggest oil might approach $200 before long. In fact, that's quite impossible: The world economy can't handle current energy prices, much less a big increase.

Which in turn means that oil prices will fall. Market analysts often claim oil prices are almost entirely determined by supply. Demand is said to be insensitive ("inelastic") to price. Market analysts often claim oil prices are almost entirely determined by supply. Demand is said to be insensitive ("inelastic") to price. The standard example is that many Americans have to drive to work and most gas-guzzling SUVs will still be on the road even if the affluent few can trade theirs for a Prius. Whatever the price, we'll pay it.

Nine out of 10 previous postwar recessions began shortly after a big spike in the price of oil.

This idea rests on two fallacies. The first is to exaggerate the United States' importance when it comes to ups and downs in worldwide oil demand. In fact, America is using no more oil than we did in 2004.

The second fallacy is to greatly exaggerate the importance of passenger cars in the United States. It's true that Americans are driving less and buying four-cylinder cars - but that's not where we should be looking for serious "demand destruction."

Two-thirds of petroleum in the United States is used for transportation - but half of the transportation sector's fuel flows into commercial trucks, trains, buses, airplanes and ships. As a result, only 44 percent of each barrel of oil is used to produce gasoline in this country, and some of that gasoline fuels business - delivery vans, landscapers' trucks, fishing boats, industrial and farm machinery, etc.

http://cato.org/pub_display.php?pub_id=9450

CLibertarian
06-07-2008, 12:49 PM
Interesting Article. His predictions do have historical evidence to support them.

LogansPapa
06-07-2008, 12:53 PM
Interesting Article. His predictions do have historical evidence to support them.

Including an economically emerging China and India - with a total work force of roughly a billion individuals?

CLibertarian
06-07-2008, 01:12 PM
Including an economically emerging China and India - with a total work force of roughly a billion individuals?

I didn't say that. This is a new factor to add in. Back in the 50's we had Japan coming online as a new economic power as well as the recovering economies of Europe after WWII. The historirical evidence does include these factora which are not too unlike the factors that you have mentioned.

Like I said, it will be interesting to see if the author's prediction occurs.

LogansPapa
06-07-2008, 01:31 PM
I didn't say that. This is a new factor to add in. Back in the 50's we had Japan coming online as a new economic power as well as the recovering economies of Europe after WWII. The historirical evidence does include these factora which are not too unlike the factors that you have mentioned.

Like I said, it will be interesting to see if the author's prediction occurs.

It will in deed. But remember what Ray Crok, McDonald’s founder was fond of saying, "Volume overcomes everything."

Goldwater
06-07-2008, 02:36 PM
They'll stay high as long as interest rates aren't raised and the dollar remains weak.

Aklover
06-07-2008, 02:37 PM
I didn't say that. This is a new factor to add in. Back in the 50's we had Japan coming online as a new economic power as well as the recovering economies of Europe after WWII. The historirical evidence does include these factora which are not too unlike the factors that you have mentioned.

Like I said, it will be interesting to see if the author's prediction occurs.



There were never 2 billion people in Europe and Japan. It will hit $150 per barrel before it starts to level off much less come down. Its for the good of the American people that oil prices continue to rise till the election, between now and November they might finally get it and send a lot of Dims home.

lacarnut
06-07-2008, 02:58 PM
There were never 2 billion people in Europe and Japan. It will hit $150 per barrel before it starts to level off much less come down. Its for the good of the American people that oil prices continue to rise till the election, between now and November they might finally get it and send a lot of Dims home.

Good point; the only solution the Democraps have is more alternative energy, tax the shit of it and nationalize the industry. In which case, we will see $10 per gal in a few years.

Aklover
06-07-2008, 03:05 PM
Good point; the only solution the Democraps have is more alternative energy, tax the shit of it and nationalize the industry. In which case, we will see $10 per gal in a few years.


IF you want to know why most of the alternatives are unworkable look into an author named Robert Zubrin.


http://youtube.com/watch?v=NLRuGUPkyh4

His solution >>>>>> http://youtube.com/watch?v=vAUmFjHxI1c <<<<<< it really is the only way flex fuels would be viable.

Constitutionally Speaking
06-07-2008, 09:36 PM
They'll stay high as long as interest rates aren't raised and the dollar remains weak.


It will remain high as long as the difference between daily supply and daily demand remains so slim. There is no room for error and thus every potential disruptions sends the speculators out to bid up the price hoping to make a quick buck.

Goldwater
06-07-2008, 10:07 PM
It will remain high as long as the difference between daily supply and daily demand remains so slim. There is no room for error and thus every potential disruptions sends the speculators out to bid up the price hoping to make a quick buck.

That doesn't leave explanation for it being cheaper is in other parts of the world.