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Interesting article on the reasons why the recent price jumps in oil is not a bubble - yet.
1. Oil companies don't control world oil flow and cannot impact prices.
2. Oil producing countries have no incentive to lower prices.
3. Oil production according to most experts is not keeping up with worldwide demand.
4. When everyone says there is a bubble, there usually isn't.
5. If this were the stock market, everyone would be happy.
Submitted: Jun 18, 2008 Views: 128 Comments: 4 Likes: 1
View Article: http://www.twintrader.com/blog/too-early-to-call-an-%E2%80%9Coil-bu...
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This is a trader's game to figure out whether oil is properly priced at $135 / barrel or whether it should be $20 lower or higher. The point is that it is where it is, and we need to have a government policy that leads us to change our ways and focus on renewable resources.
Posted: Jun 18, 2008
@ James Ords - I agree with you but economics do make a difference. If oil is going to stay high than that alone will provide encouragement to find alternative fuels. But it oil crashes then we'll see the same thing that happened inthe 70s. The economics of alternative energy will become negative and all of these promising start-ups and initiatives will falter.
Posted: Jun 18, 2008
David, I think that what James is suggesting is similar to what is suggested in this article published by another member.
http://www.bestcashcow.com/the_economy/article/jrodgers/the-most-sensible-idea-on-domestic-energy-policy
It actually makes a lot of sense to me. The government would be guaranteeing that the prices of oil will be high (or taxed at a high rate) so that the economics will remain for alternatives whatever happens to the underlying price.
Posted: Jun 18, 2008
@soczie - That makes sense if you want to lower the standard of living of everyone on the planet.
Posted: Jun 18, 2008
