NVDL: Question - does the 80% increase in oil prices over the last 18 months suggest a speculative bubble or is it a reflection of fundamental factors (such as rising demand)? The quick answer - a bit of both, and not as much speculation as you might have either hoped or feared. Killing speculation is a temporary remedy, doing so may re-ignite demand.
There are very very few people in the world who truly understand the dynamics around oil. The media doesn't have a clue. The media mostly report in knee jerk fashion, quoting one source, then another, often saying what the market wants to hear, and lacking the ability either to interpret or provide insight. The same is frighteningly true of presidents and other business experts.
So if you want the real insights on oil, where can you find them? Well, there are a few resources I trust. TheOilDrum.com is on the top of my list. Kunstler.com provides interesting commentary. Richard Heinberg, Kenneth Deffeyes etc. And George Soros.
What I've clipped below represents some of the most important and cogent analysis I've read on 'the oil price bubble' to date.
There are very very few people in the world who truly understand the dynamics around oil. The media doesn't have a clue. The media mostly report in knee jerk fashion, quoting one source, then another, often saying what the market wants to hear, and lacking the ability either to interpret or provide insight. The same is frighteningly true of presidents and other business experts.
So if you want the real insights on oil, where can you find them? Well, there are a few resources I trust. TheOilDrum.com is on the top of my list. Kunstler.com provides interesting commentary. Richard Heinberg, Kenneth Deffeyes etc. And George Soros.
What I've clipped below represents some of the most important and cogent analysis I've read on 'the oil price bubble' to date.
The principal question is whether the sharp oil price increase is a speculative bubble or simply reflects fundamental factors such as rapidly rising demand from developing nations and an increasingly limited supply, caused by the dwindling availability of easily extractable oil reserves. So, is this a bubble? The answer is that there is a bubble superimposed on an upward trend in oil prices, a trend that has a strong foundation in reality. It is a fact that, absent a recession, demand is growing faster than the supply of available reserves, and this would persist even if speculation and commodity index buying were eliminated. Those problems can be solved only by developing carbon-free sources of energy. It should not divert our attention from the pressing need for developing alternative energy sources, and that will entail higher prices, at least in the early stages. In the absence of alternative sources, the price of oil is liable to rise indefinitely.
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