Bending the Third Rail
Because We Should, We Can, We Do
Monday, January 23, 2006
Oil Prices
I haven't written about oil much lately. After the Katrina spike, oil prices dropped precipitously through the holidays. Now they're on the rise again and are approaching Katrina levels again.

If you've been reading The Oil Drum or my posts you knew this was going to happen, so it's not really a big surprise. But what is interesting is how the media is covering the oil price jump.

Thus far the stated rationale for the increase is jitteriness over Iran and the international situation. To some degree, this is certainly true. But, just to recall earlier posts, the real dynamics underlying the price increases are much more complex. The onset of peak oil, lost production from Katrina, and the end of Europe lending the U.S. reserve gasoline supplies during the Katrina emergency (and the U.S. paying it back) is the larger reason.

But never fear. If the economy slows in 2006, the good news will be the oil prices will fall due to weakening demand. At least for awhile (look at the trend on the chart). The bad news in a slowing economy? You don't need me to tell you that.

ADDED: Ran into this at The Big Picture:
High oil prices are no longer being looked at as a “temporary event of uncertain duration.” [according to long term futures contracts, see the link above for futures charts]. Between China's growing use of petroleum, their global attempts to assure a study supply, the Iran situation, high Oil may be a persistent part of the market’s future (Notice no one is even talking about post hurricane recovery anymore).
Written at 11:58 AM by Greyhair.
1 comments
1 Comments:
Anonymous Anonymous said...
Oil going to 100

mynewsbot.com
12:24 PM  
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