Oil Continues to confuse me
Here is an article saying that the price for oil won't hold up. I think this shows me I really don't understand economics. This sounds entirely plausible to me. Yet I don't think the oil boom is going away. I don't see how world demand will come down exactly. And Thomas Friedman seems to say that we need set a price floor for a gallon of oil. I don't really understand that either. Plus he makes the point that China is subsidizing it's oil prices. That should keep the price of oil higher than what is efficient right? Also, if the oil boom does come down what does that mean? How do you think it will play politically?
Labels: oil
posted by Hoff1 @ 6:48 AM
1 Comments
1 Comments:
I'm going to look to Scott on the economics here, but I think your point of global demand is critical. Oil prices may rise and fall, but I think their average price (say per year) will consistently rise as long as global demand increases (as it's likely to do) and new sources aren't tapped (I have no idea on this one). I guess I just simplify it down to supply-and-demand. On the plus side, I think this also encourages changes in human behavior, some of which are already starting.
People (at least Americans) seem to have very poor memories. I think it was two summer's ago that gas reached it's all-time high (until that point), which isn't much of a surprise to us now. The surprising thing was what happened after that summer was over and gas prices started to drop: sales of SUV's actually increased (though 2005 tells a different tale). Despite this, I think that SUV sales will steadily decrease -- I think people have shaken it as we're seeing this year.
I'll leave the politics to someone else since my head hurts.
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