Oil consumption is dropping, so why the high prices?

Jack Yan
Jun 9, 2008 at 11:25 AM
10 comments

This is from the Historian’s Vox blog: oil consumption has been dropping since 2004.

   By the typeface, I would guess this is from The Economist.
   So if oil consumption is going down, and the law of supply and demand holds, why are prices at an all-time high? The Historian gives some decent horse sense on this—and it should remind us that the oil companies have a vested interest (and the MSM are too dumb) to keep the panic going.
   According to this graph, which I haven’t looked further into: global demand on oil is decreasing. The US dollar is weak, so prices are high relative to that dollar—but high oil prices should have less of an effect on other countries who are converting their own currencies to US dollars to purchase crude. Let’s also not forget that OPEC is a cartel that sets its own prices, and the oil companies are setting their own prices, too, raking in multi-billion-dollar profits per annum.
   He also points out there is speculation—which means the bubble will burst at some stage.

10 comments

Jack Yan’s rating:

★★★★

Tags:

This also appears in:

Comments

I have heard Oil companies are doing extremely well these days.....

I am waiting to make my conclusion on this one. Asian demand for oil is at an all time high and the West's rhetoric regarding Iran probably is at play as well...

With those variables -- I wonder if a "bubble" will burst any time soon...

This is my first full year as a caterer/business owner and I'm feeling the hurt. Oil prices, food prices...I can just barely stay competitive nowadays compared to a year ago.

[this is good]

Speculation... LOL...... That's the most absurd market influencer ever and it's about as scientific as brick. Some executive puts out a few sound bites and spins a few tag lines in the press suggesting that the price of oil will go up and the housing market may fall. So what !!! It's utter rubish good man as well you know sir.

I wouldn’t mind a secondary source on the stats, for sure. Karlos: agreed that speculation is just a bunch of bollocks. In fact, most trading is founded on BS.

Hi Mr. Yan,

I've been in review..and I'm still confused about the actual reason for the soaring high oil / gas prices.

I read this early this morning, and it seems to conflict with many sources.

However, maybe one of your readers can figure this energy/oil issue. In Los Angeles, the price of gas rises about 4-5cents a day, I think on Thurs. it will be around $4.50 a gallon. At this rate $5.00 a gallon seems not that far away!

http://www.businessweek.com/ap/financialnews/D91851SG2.htm

Thanks.

Simply:
Bill

It isn't just the oil companies and OPEC playing with the numbers on gas prices.

[this is good]

Sorry,

I meant to add much more than the comment that was saved...

The reason can also be from the institutional investors taking over the commodity futures market over the last 2 -3 years.

I have came across this testimonial from Michael Masters (long-short equity hedge fund manager) to the Committee on Homeland Security and Governmental Affairs United States Senate. Here is a portion of the statements in this article:

http://qualitytw.blogspot.com/2008/06/are-institutional-investors.html

If you want the full report, I can send to anyone by email from (I just didn't know how to attach the large document to my blog).

Thanks!

Thanks, Todd. You are right that institutionalization is another factor. As to attaching documents to blogs, I would suggest uploading yours to Rapidshare. It will then provide you with a linkable URL to post on your blog.

Oil consumption is dropping, so why the high prices?

Comments

Post a comment

Advertisement