Bubble or Bumbling: Send in the idots to brilliantly pontificate about oil (they're pretty crazy, so far, but get the right answer here)

"The future is here, it's just not well-distributed yet"- William Gibson

There are plenty of explanations for what's happening in the global oil markets. It's caused by the economic boom in the world's largest developing countries, particularly China and India. It's caused by the unwillingness of the oil cartel Opec to pump more crude. It's caused by the fact that the world has reached peak oil - the moment in our history where supplies of the black stuff start to dwindle.

All of these factors may have contributed to the upward trend in the oil price over the past six years, which has seen the cost of a barrel of crude rise from around $20 a barrel to $135 a barrel today. None of them really explain, however, why the price should have gone up by more than $5 in the past 24 hours and by a third in little more than a month. That sort of price action is the result of a speculative frenzy of the sort that was witnessed in the dotcom mania of the late 1990s. The oil market, to put it simply, is a massive bubble waiting to be popped.

[And] in the oil market, the fundamentals no longer matter.- Larry Elliott

NVDL: Really? Is that Elliot or Idiot? Actually the bubble that needs to be popped is the thought bubble of lunacy that envelops your brain, and since you're writing and communicating this garbage, you're also infecting the human intellectual stream with this nonsense. Here's the correct assessment of these high prices:

Oil's No Bubble
Lionel Laurent and Carl Gutierrez, 05.21.08, 4:00 PM ET

Oil's astonishing rise is becoming a cliché on Wall Street, but the rise is real and will keep going until supply catches up with demand. "The story of the past month has been the sudden surge demand in China for diesel fuel," said Jeff Rubin, Chief Economist and Chief Strategist at CIBC World Markets. Power plants in some areas in China are running desperately short of coal and certain earthquake-hit regions are relying on diesel generators for power.

Rubin stressed, though, that the spike in demand over the past month is only a footnote to the bigger story: "Even at $133, demand hasn't been reined in, and without a real raise in supply we think it's ultimately going to go over $200 a barrel."

NVDL: To summarise, fundamental factors, the simplest possible explanation, are why oil is going up. Again (repeat after me if it'll help you remember): Supply is not able to meet demand. It's Economics 101, and yes, it really is that simple. And some of the most brilliant and esteemed economics writers, and 'experts' are still arguing that it's not even happening. Reality is going to hit these denialists very very hard. It's going to hurt. Because now stubbornly and stupidly reasoning against reason is really going to cost us, and we can't afford to continue being the dimwitted species that fucked up the planet.

An interesting additional point: the reason why oil companies haven't built additional refineries since the mid 70's is they know there is no reason to - because we haven't found the means to produce more than we are producing now, and haven't for some time. There have been no major new oil field discoveries since the early 80's, when all we found was the North Sea, Prudhoe Bay and some Russian oil. Now it's 20 years later exept we found all the big stuff (that wasn't so big after all) there was to find. So that in itself says a lot. Actions - of the oil companies - speak louder than statements from OPEC or anyone else.

Another question: for those informed few of us, what do we do? Do we wait until the world catches on? Do we also operate as per normal, or do we begin to proactively make the sort of changes that we can only guess, and estimate and imagine are the most practical, reasonable and rational. My guess is we start fending (and thinking) for ourselves NOW.