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Reason why Oil Price rise.
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| Kinezi |
Check out this article, this guy pretends as if he has un-earther the secret reason behind the increase in oil price. His Consipiracy style reasoning is corret, but the way he puts it is funny.. as if he has exposed a scam or mafia behind oil price rise.
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The Real Reason Why Oil Price is Rising!
By now it is becoming too obvious that the United States is playing the oil game all over again. And this is the desperate gamble of a country whose economy is neck deep in trouble.
Given this scenario, managing prices of oil is central to the US economic architecture. Expectedly, this gamble has been played in a great alliance between the US government, US financial sector and the media.
I have earlier written about :
1. The impending collapse of the US dollar on account of the inherent weakness in the US economy caused by its structural weakness as reflected in the sub-prime crisis;
2. The repeated softening of the interest rates in the US that has the potency to kill the US dollar; and
3. How the fall in the US dollar suits the US corporate sector, especially its omnipotent financial sector.
Naturally, since the past few years, the US financial sector has begun to turn its attention from currency and stock markets to commodity markets. According to The Economist, about $260 billion has been invested into the commodity market -- up nearly 20 times from what it was in 2003.
Coinciding with a weak dollar and this speculative interest of the US financial sector, prices of commodities have soared globally.
And most of these investments are bets placed by hedge and pension funds, always on the lookout for risky but high-yielding investments. What is indeed interesting to note here is that unlike margin requirements for stocks which are as high as 50 per cent in many markets, the margin requirements for commodities is a mere 5-7 per cent.
This implies that with an outlay of a mere $260 billion these speculators would be able to take positions of approximately $5 trillion -- yes, $5 trillion! -- in the futures markets. It is estimated that half of these are bets placed on oil.
Readers may note that oil is internationally traded in New York and London and denominated in US dollar only. Naturally, it has been opined by experts that since the advent of oil futures, oil prices are no longer controlled by OPEC (Organization of Petroleum Exporting Countries). Rather, it is now done by Wall Street.
This tectonic shift in the determination of international oil prices from the hands of producers to the hands of speculators is crucial to understanding the oil price rise.
Today's oil prices are believed to be determined by the four Anglo-American financial companies-turned-oil traders, viz., Goldman Sachs, Citigroup, J P Morgan Chase, and Morgan Stanley. It is only they who have any idea about who is entering into oil futures or derivative contracts. It is also they who are placing bets on oil prices and in the process ensuring that the prices of oil futures go up by the day.
But how does the increase in the price of this oil in the futures market determine the prices of oil in the spot markets? Crucially, does speculation in oil influence and determine the prices of oil in the spot markets?
Answering these questions as to whether speculation has supercharged the demand for oil The Economist, in its recent issue, states: 'But that is plain wrong. Such speculators do not own real oil. Every barrel they buy in the futures markets they sell back again before the contract ends. That may raise the price of 'paper barrels,' but not of the black stuff refiners turn into petrol. It is true that high futures prices could lead someone to hoard oil today in the hope of a higher price tomorrow. But inventories are not especially full just now and there are few signs of hoarding.'
On both counts -- that speculation in oil is not pushing up oil prices, as well as on the issue of the build-up of inventories -- the venerable Economist is wrong.
The finding of US Senate Committee in 2006
In June 2006, when the oil price in the futures markets was about $60 a barrel, a Senate Committee in the US probed the role of market speculation in oil and gas prices. The report points out that large purchase of crude oil futures contracts by speculators has, in effect, created additional demand for oil and in the process driven up the future prices of oil.
The report further stated that it was 'difficult to quantify the effect of speculation on prices,' but concluded that 'there is substantial evidence that the large amount of speculation in the current market has significantly increased prices.'
The report further estimated that speculative purchases of oil futures had added as much as $20-25 per barrel to the then prevailing price of $60 per barrel. In today's prices of approximately $130 per barrel, this means that approximately $100 per barrel could be attributed to speculation!
But the report found a serious loophole in the US regulation of oil derivatives trading, which according to experts could allow even a 'herd of elephants to walk to through it.' The report pointed out that US energy futures were traded on regulated exchanges within the US and subjected to extensive oversight by the Commodities Future Trading Commission (CFTC) -- the US regulator for commodity futures market.
In recent years, the report however pointed out to the tremendous growth in the trading of contracts which were traded on unregulated OTC (over-the-counter) electronic markets. Interestingly, the report pointed out that the trading of energy commodities by large firms on OTC electronic exchanges was exempted from CFTC oversight by a provision inserted at the behest of Enron into the Commodity Futures Modernization Act in 2000.
The report concludes that consequential impact on account of lack of market oversight has been 'substantial.'
NYMEX (New York Mercantile Exchange) traders are required to keep records of all trades and report large trades to the CFTC enabling it to gauge the extent of speculation in the markets and to detect, prevent, and prosecute price manipulation. In contrast, however, traders on unregulated OTC electronic exchanges are not required to keep records or file any information with the CFTC as these trades are exempt from its oversight.
Consequently, as there is no monitoring of such trading by the oversight body, the committee believes that it allows speculators to indulge in price manipulation.
Finally, the report concludes that to a certain extent, whether or not any level of speculation is 'excessive' lies entirely in the eye of the beholder. In the absence of data, however, it is impossible to begin the analysis or engage in an informed debate over whether our energy markets are functioning properly or are in the midst of a speculative bubble.
That was two years back. And much water has flown in the Mississippi since then.
The link to the spot markets
Now to answer the second leg of the question: how speculators are able to translate the future prices into spot prices.
The answer to this question is fairly simple. After all, oil price is highly inelastic -- i.e. even a substantial increase in price does not alter the consumption pattern. No wonder, a mere 3-4 per cent annual global growth has translated into more than a 40 per cent annual increase in prices for the past three or four years.
But there is more to it. One may note that the world supply and demand is evenly matched at about 85 million barrels every day. Only if supplies exceed demand by a substantial margin can any downward pressure on oil prices be created. In contrast, if someone with deep pockets picks up even a small quantity of oil, it dramatically alters the delicate global demand-supply gap, creating enormous upward pressure on prices.
What is interesting to note is that the US strategic oil reserves were at approximately 350 million barrels for a decade till 2006. However, for the past year and a half these reserves have doubled to more than 700 million barrels. Naturally, this build-up of strategic oil reserves by the US (of 350 million barrels) is adding enormous pressure on the oil demand and consequently its prices.
Do the oil speculators know of this reserves build-up by the US and are indulging in rampant speculation? Are they acting in tandem with the US government? Worse still, are they bordering on recklessness knowing fully well that if the oil prices fall the US government will be forced to a 'Bears Stearns' on them and bail them out? One is not sure.
But who foots bill at such high prices? At an average price of even $100 per barrel, the entire cost for the purchase of this additional 350 million barrels by the US works out to a mere $35 billion. Needless to emphasise, this can be funded by the US by allowing it currency printing presses to work overtime. After all, it has a currency that is acceptable globally and people worldwide are willing to exchange it for precious oil.
No wonder Goldman Sachs predicts that oil will touch $200 to a barrel shortly, knowing fully well that the US government will back its prediction.
And, in the past three years alone the world has paid an estimated additional $3 trillion for its oil purchases. Oil speculators (and not oil producers) are the biggest beneficiaries of this price increase.
In the process, the US has been able to keep the value of the US dollar afloat -- perhaps at an extra cost of a mere $35 billion to its exchequer!
The global crude oil price rise is complex, sinister and beyond innocent economic theories of demand and supply. It is speculation, geopolitics and much more. Obviously, there is a symbiotic link between the US, the US dollar and the oil prices. And unless this truth is understood and the link broken, oil prices cannot be controlled.
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http://www.rediff.com/money/2008/jun/02mrv.htm
BTW some comments below that article is interesting read too. |
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| guerra-monstru |
| "This is not about blame," US Treasury Secretary Hank Paulson recently said. "It's about supply and demand." According to Paulson, "speculators have had very little impact." |
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| Ssshhh |
| quote: | Originally posted by guerra-monstru
"This is not about blame," US Treasury Secretary Hank Paulson recently said. "It's about supply and demand." According to Paulson, "speculators have had very little impact." |
This is the most disgusting thing I've ever read. The problem with a finite resource such as oil, is that only supply-side economics applies.
According to the consumer demand concept, if prices go up, demand decreases, causing prices to eventually fall. Notice how demand-side economics simply doesn't fit.
Normal supply and demand economics DOES NOT APPLY TO FINITE RESOURCES SUCH AS OIL. I don't understand why people can't get it through their heads.
Enjoy your monolithic oil companies, I've been carpooling and riding my bike since mid-2006. Sticking it to the man. |
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| Groundhog Boy |
| quote: | Originally posted by Ssshhh
This is the most disgusting thing I've ever read. The problem with a finite resource such as oil, is that only supply-side economics applies.
According to the consumer demand concept, if prices go up, demand decreases, causing prices to eventually fall. Notice how demand-side economics simply doesn't fit.
Normal supply and demand economics DOES NOT APPLY TO FINITE RESOURCES SUCH AS OIL. I don't understand why people can't get it through their heads.
Enjoy your monolithic oil companies, I've been carpooling and riding my bike since mid-2006. Sticking it to the man. |
You realize that China's demand has been growing significantly. Stop looking at this as a US problem.
In my opinion, you can thank our national debt for this problem for 2 reasons - 1) lower value of dollar and 2) lots of interest payments to China, who holds much of our debt and can now afford expensive oil. |
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| Ssshhh |
| quote: | Originally posted by Groundhog Boy
You realize that China's demand has been growing significantly. |
Ugh... You don't read. You just reinforced my statement. |
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| Kinezi |
| quote: | Originally posted by Groundhog Boy
You realize that China's demand has been growing significantly. Stop looking at this as a US problem.
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You only read in news what you want to read.. isnt it?
OPEC countries have said it clearly a lot of times that they will not increase production because 'the supply is meeting the demand'. Be it China's demand or India's demand.. the current production and supply from OPEC is meeting the demand.. you get it? Rising demand or falling demand... supply is meeting it.. so this demand theory has nothing to do with rising oil prices.. |
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| Fir3start3r |
| quote: | Originally posted by Kinezi
You only read in news what you want to read.. isnt it?
OPEC countries have said it clearly a lot of times that they will not increase production because 'the supply is meeting the demand'. Be it China's demand or India's demand.. the current production and supply from OPEC is meeting the demand.. you get it? Rising demand or falling demand... supply is meeting it.. so this demand theory has nothing to do with rising oil prices.. |
Not to burst your bubble but...
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June 14, 2008
Plan Would Lift Saudi Oil Output
By JAD MOUAWAD
Saudi Arabia, the world’s biggest oil exporter, is planning to increase its output next month by about a half-million barrels a day, according to analysts and oil traders who have been briefed by Saudi officials.
The increase could bring Saudi output to a production level of 10 million barrels a day, which, if sustained, would be the kingdom’s highest ever. The move was seen as a sign that the Saudis are becoming increasingly nervous about both the political and economic effect of high oil prices. In recent weeks, soaring fuel costs have incited demonstrations and protests from Italy to Indonesia.
Saudi Arabia is currently pumping 9.45 million barrels a day, which is an increase of about 300,000 barrels from last month.
While they are reaping record profits, the Saudis are concerned that today’s record prices might eventually damp economic growth and lead to lower oil demand, as is already happening in the United States and other developed countries. The current prices are also making alternative fuels more viable, threatening the long-term prospects of the oil-based economy.
President Bush visited Saudi Arabia twice this year, pleading with King Abdullah to step up production. While the Saudis resisted the calls then, arguing that the markets were well supplied, they seem to have since concluded that they needed to disrupt the momentum that has been building in commodity markets, sending prices higher.
The Saudi plans were disclosed in interviews with several oil traders and analysts who said that Saudi oil officials had privately conveyed their production plans recently to some traders and companies in the United States. The analysts declined to be identified so as not to be cut off from future information from the Saudis.
Last week, King Abdullah also took the unprecedented step of arranging on short notice a major gathering of oil producers and consumers to address the causes of the price rally. The meeting will be held on June 22 in the Red Sea town of Jeddah.
Oil prices have gained 40 percent this year, rising to nearly $140 a barrel in recent days and driving gasoline costs above $4 a gallon. Some analysts have predicted that prices could reach $200 a barrel this year as oil consumption continues to rise rapidly while supplies lag.
The growing volatility of the markets, including a record one-day gain of $10.75 a barrel last week, has persuaded the Saudis that they need to step in, analysts said.
Tony Fratto, a White House spokesman, said, “We would welcome any and all increases in oil production, including from Saudi Arabia.”
But the measure carries some risks to the kingdom and is not guaranteed to bring down prices, analysts said. Some investors doubt that Saudi Arabia has the capacity to increase its production beyond its current levels.
“This clearly represents the biggest test for them,” said John Kilduff, a senior vice president at the brokerage firm MF Global, who said the move could backfire if investors failed to respond to the extra Saudi supplies. No other producer has the capacity to quickly expand production.
Oil prices fell on Friday, slipping $1.88 to settle at $134.86 a barrel on the New York Mercantile Exchange, after reports of the prospective Saudi increase trickled into the market.
Ibrahim al-Muhanna, an adviser at the Saudi petroleum ministry, declined to comment on the production increase but said that Saudi Arabia was uncomfortable with oil prices. “Our goal is to bring back stability to the oil market,” he said.
Consumers are complaining that rising fuel prices are imposing a growing toll on their economies, and contributing to higher food costs. The Australian prime minister, Kevin Rudd, said this month that it was time “to apply the blowtorch to the OPEC organization.”
In Washington, bipartisan support is also growing to pass a law allowing the Justice Department to engage in antitrust proceedings against OPEC producers accused of curbing supplies to drive up prices.
Pressure is also mounting in consuming countries to address record energy prices. Congress is debating measures that would tackle speculators, whom many in Washington blame for driving up commodity prices.
When the Organization of the Petroleum Exporting Countries, of which Saudi Arabia is the most powerful member, met in March, it decided against increasing production, blaming speculators and a declining dollar, not a shortfall in supplies, for driving up oil prices.
Saudi Arabia’s unilateral policy could put it at odds with other members of the OPEC cartel. In a report from the group’s secretariat on Friday, OPEC analysts said they saw no need to put more oil on the market. “Claims that the recent surge in prices is due to a supply shortage are unjustified,” the report said.
Saudi Arabia is completing a huge expansion program in its oil industry that is expected to bring its production capacity to 12.5 million barrels a day by 2009. As part of that expansion, Saudi Aramco, the country’s national oil company, is planning to start soon an oil field, called Khursaniyah, with a daily production rate of 500,000 barrels.
The production increase, which would amount to less than 1 percent of global consumption, could be made public next week at the energy meeting, which is expected to bring together a large number of consuming and producing countries, including the United States, Russia, Britain, China, India and Japan.
While the meeting is not expected to achieve anything tangible, Saudi officials hope that tackling the issue publicly will break the upward momentum that is dominating oil markets.
“They’ve created pressure on themselves to make a concrete move at this meeting,” said Adam Robinson, an analyst at Lehman Brothers. “But when the king calls an oil summit, the markets would do well to take heed.”
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>>Source<< |
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| Groundhog Boy |
| quote: | Originally posted by Kinezi
You only read in news what you want to read.. isnt it?
OPEC countries have said it clearly a lot of times that they will not increase production because 'the supply is meeting the demand'. Be it China's demand or India's demand.. the current production and supply from OPEC is meeting the demand.. you get it? Rising demand or falling demand... supply is meeting it.. so this demand theory has nothing to do with rising oil prices.. |
First, you're taking OPEC's, the entity that gets the most benefit from high oil prices, word on this? Do I even need to point out the flaw in that?
Second, there is a finite supply of oil. If you were OPEC, would you pump it faster to exploit your only product as fast as possible, at low rates? Their only goal is to keep it under a level that would cause an economic collapse for their buyers, which would cause a decrease in demand.
If you think that India and China aren't using more oil than they were a few years ago or that OPEC has upped their production enough to deal with their demand, you're just simply nuts. Here's the OPEC production numbers - http://www.mees.com/Energy_Tables/crude2004.htm. Look at the current output to past years - it hasn't gone up much, particularly compared with the increased demand.
Lastly, it's kind of interesting that you'd accuse me of only reading the news that I want when you've done just the same. |
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| Groundhog Boy |
| quote: | Originally posted by Ssshhh
This is the most disgusting thing I've ever read. The problem with a finite resource such as oil, is that only supply-side economics applies.
According to the consumer demand concept, if prices go up, demand decreases, causing prices to eventually fall. Notice how demand-side economics simply doesn't fit.
Normal supply and demand economics DOES NOT APPLY TO FINITE RESOURCES SUCH AS OIL. I don't understand why people can't get it through their heads.
Enjoy your monolithic oil companies, I've been carpooling and riding my bike since mid-2006. Sticking it to the man. |
It seems that the Saudis disagree with you about the impact of demand:
| quote: | | While they are reaping record profits, the Saudis are concerned that today’s record prices might eventually damp economic growth and lead to lower oil demand, as is already happening in the United States and other developed countries. The current prices are also making alternative fuels more viable, threatening the long-term prospects of the oil-based economy. |
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| Ssshhh |
| quote: | Originally posted by Groundhog Boy
It seems that the Saudis disagree with you about the impact of demand: |
China, India, Russia are increasing demand, in fact, Russia is sucking their oil fields dry. You said it yourself, stop looking at only the US.
Do you find it customary to disagree with someone for no reason at all? You just became hypocritical because of your posts. I guess some people are just natural egotistical pricks, and have to disagree with everything, in order to slip in their own irrelevant opinion. |
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| Kinezi |
| quote: | Originally posted by Fir3start3r
Not to burst your bubble but...
>>Source<< |
Yeah right, that just came in 30 mins after I wrote that post.. Saudie govt just gave in to international pressure once again.. there is no rational behind increasing oil production.. it will reduce the price of oil for say next 2 months... and than again the speculators will start pushing the price higher.. and than again people will ask Saudies to increase production further.. this same story gets repeated and has happened like a zillion times.. rising production has failed to decrease price of oil in past.. so it will this time.
This whole supply demand mismatch reason behind rising oil prices is bull. It obvious you will ridicule common sense and ask for 'sources'.. So read this source .. its dated May 19:
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Oil was below $127 a barrel on Monday, after OPEC's president said the producer group would not call an early meeting and was unlikely even at its September gathering to boost supply as the world had enough oil.
U.S. light crude for June delivery was up 12 cents at $126.41 a barrel by 4:18 p.m. British time.
It closed at $126.29 a barrel on Friday after touching a record peak of $127.82 earlier that day after publication of a bullish price forecast from investment bank Goldman Sachs.
London Brent crude was down 53 cents at $124.46 a barrel.
Chakib Khelil, president of the Organization of the Petroleum Exporting Countries, said oil markets were well supplied and blamed high prices on speculation, a weak dollar and geopolitical problems.
"As for OPEC, indications shows that there is no shortage (of supply)," he said in Algiers
Khelil said OPEC would not meet before its next scheduled gathering in September and that this meeting was unlikely to result in an output increase.
"All in all, there is little indication that we are on the verge of a major price breakdown," said Edward Meir, analyst at broker MF Global.
He said a production increase from Saudi Arabia, revealed on Friday, was only "token" in terms of extra production.
Saudi Arabia has boosted oil output by 300,000 barrels per day to meet demand and compensate for other producers' lower output, Saudi Oil Minister Ali al-Naimi said on Friday.
On Monday, the Saudi state news agency quoted Naimi saying that current level of oil output was fulfilling market demand.
U.S. President George W. Bush said on Saturday he was pleased with the Saudi move, but it was not enough to solve problems in the top energy consumer the United States.
OPEC COMMENTS
But comments by OPEC oil ministers on Monday all highlighted that global oil supplies are enough to cope with demand.
Qatar oil minister Abdullah al-Attiyah also said there was no need to boost oil supplies to global markets. "The market doesn't need more oil," he said, pointing to a cut in forecast oil demand growth by the International Energy Agency.
"There is more oil in the market than consumers want," said Iraqi oil minister Hussain al-Shahristani.
Iraq aims to boost total oil exports to 2.3 million barrels per day from 2.0 million bpd by the end of the year, he said.
Oil prices have risen sixfold since 2002 and doubled since last year as rising demand from China and other developing nations has stretched spare production capacity, adding pressure on the U.S. economy already hard hit by a housing slump.
Diesel has taken centre stage in the world energy crunch as tight power supplies in China, South Africa, Chile, Argentina and parts of the Middle East triggered a boom in demand for middle distillates for electric generators.
Chinese demand for imported diesel is expected to rise even further in June after last week's earthquake disrupted gas supplies to major cities and as companies built stockpiles ahead of the summer Olympics.
Investment bank Lehman Brothers warned that record-breaking commodities prices that were drawing in hundreds of billions of dollars in new investments threaten to create an asset bubble.
(Additional reporting by Fayen Wong in Perth; editing by James Jukwey)
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As I said, on ground.. minus the paper trading and actual oil purchasing.. the current supply is meeting the demand.. but all this rising demand from China, India and blah blah blah from the so called analysts and forecasters at Lehman, Goldman, Merril and lead people/FII/Lehman, Goldman, Merril to invest in oil in the paper market.. which is rising the price of oil..
http://www.iht.com/articles/reuters...MARKETS-OIL.php |
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| Kinezi |
| quote: | Originally posted by Groundhog Boy
First, you're taking OPEC's, the entity that gets the most benefit from high oil prices, word on this? Do I even need to point out the flaw in that? |
No they dont get the most benefit from high oil prices.. actually they have said it clearly few months back that they DO NOT want the price of oil to rise further as this is decreasing the demand and people are starting to look for alternative sources of energy.. they dont want this.. do some googling and you will find your source/article on that statement made by opec.. they have clearly said that they do not want oil prices to rise further.. and they know that simply increasing production will not bring the price down as it has never worked in past...
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OPEC on Friday cut its forecast for global oil demand growth in 2008 for the third time this year, the latest sign that record-high oil prices are slowing consumption.
The exporter group also said that it is pumping more than forecast demand for its oil, and that the current production rate combined with extra supply from Saudi Arabia should lead to rising inventories in the third quarter.
World oil demand will rise by 1.10 million barrels per day (bpd) this year, 60,000 bpd less than the previous forecast, OPEC said in its Monthly Oil Market Report for June. The previous reductions were in May and February.
"The slow U.S. economy along with current oil prices will have its effect on oil demand not only in the U.S. but across the OECD countries in the second half of this year," the report by OPEC economists said.
"China, the Middle East, Latin America and India are expected to show healthy growth in oil demand for the remainder of the year."
The report reaffirms OPEC's view that consumers have enough oil and that factors beyond oil supply and demand are sending prices to all-time highs. Crude oil hit a record $139.12 a barrel a week ago.
Some consumer countries, such as the United States, say current prices reflect a tight balance between supply and demand. The U.S. this year has been urging OPEC to raise output.
But the Organization of the Petroleum Exporting Countries says factors like the weakness of the U.S. dollar, political tension and speculation are leading the market higher.
"Current price levels do not reflect supply and demand realities," OPEC said.
"A review of prospects for the remainder of the year also shows little support for prices to remain at current levels."
LESS THAN IEA
Producer and consumer countries will meet on June 22 in Jeddah, Saudi Arabia, to discuss the reasons for the jump in prices, OPEC said. But the meeting is not expected to lead to an easy fix.
British Prime Minister Gordon Brown, who plans to attend, said on Thursday he did not expect the talks to result in a short-term rise in oil output, but urged the world to work on a long-term energy strategy.
OPEC, source of two in every five barrels of oil, is the latest forecaster to trim its projection for world oil demand this year because of the slowing world economy and high prices.
But OPEC's adjustment is much smaller than that of the International Energy Agency, the adviser to 27 industrialized countries, which earlier this week cut its demand growth forecast by 230,000 bpd.
Strong consumption in China and the Middle East has been offsetting weak demand in members of the Organization for Economic Co-operation and Development (OECD).
OPEC again trimmed its estimate for supply from non-member countries in 2008, although its lower projection for demand resulted in little change in the amount of oil OPEC members need to pump to balance the market.
It expects non-OPEC supply to average 50.13 million bpd this year, down 50,000 bpd from the previous forecast, mainly due to lower-than-expected output from the UK. Expected demand for OPEC oil is steady at 31.82 million bpd.
The 13 OPEC members produced 32.19 million bpd in May, the report said, citing figures from secondary sources. It also said Saudi Arabia is expected to raise output by 300,000 bpd in June.
That puts OPEC production higher than expected demand for the group's oil in 2008, and should lead to a higher-than-normal inventory build in the third quarter and a contra-seasonal rise in the fourth.
"This clearly demonstrates that the market is amply supplied and that claims that the recent surge in prices is due to a supply shortage are unjustified," OPEC said.[b]
(Reporting by Alex Lawler; editing by Barbara Lewis)
http://www.newsdaily.com/stories/wl...ec-oil-outlook/
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| quote: | [b]Originally posted by Groundhog Boy
Second, there is a finite supply of oil. If you were OPEC, would you pump it faster to exploit your only product as fast as possible, at low rates? Their only goal is to keep it under a level that would cause an economic collapse for their buyers, which would cause a decrease in demand. |
Yes there is a finite supply of oil.. but I dont get what you mean.. you think OPEC's goal is to keep it under a level that would cause an economic collapse for their buyers, which would cause a decrease in demand?
| quote: | Originally posted by Groundhog Boy
If you think that India and China aren't using more oil than they were a few years ago or that OPEC has upped their production enough to deal with their demand, you're just simply nuts. Here's the OPEC production numbers - http://www.mees.com/Energy_Tables/crude2004.htm. Look at the current output to past years - it hasn't gone up much, particularly compared with the increased demand.
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Your source only says the supply side.. where is the figure of rising demand and the so called 'shortage' of oil? |
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