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	Name:	MartiniMan -
	Subject:	One piece to add
	Date:	11/14/2008 3:18:14 PM

WW's explanation is an excellent one. What people tend to forget is oil is one of many commodities that experience price fluctuations based on a variety of factors (many of the unique to the commodity with the exception of supply and demand). I wish I had a nickel for every person that told me over the last several years that oil would never go back down because of the alleged demand of India and China (heck I could retire and still afford $4 gas). When I asked them for the data that worldwide demand of oil doubled over a relatively short period of time there was none forthcoming. Oil booms are nothing new and if history tells us anything they will pass away while we wait for the next one.

You have to be very suspicious of the sustainability of significant price increases in any commodity when it occurs over a relatively short timeframe. That is a sure sign that speculators are running amuck and a bubble is forming. By the law of physics bubbles have always and will always burst......it's just a matter of when and the velocity of the deflation. Oil was impacted significantly by the weak dollar and speculation in the short run and will be impacted by an overall increase in demand by countries striving for a middle class like India and China over the long run and by continued strong demand in developed countries like the U.S.

The quick deflation in the price of oil (and the subsequent reduction at the pumps) reflects a significant increase in supply over the last 2-3 years, the recent reduction in demand due to the economic slowdown (all caused by Obama I am sure......just trying to figure out exactly how and then I will get back to you) and significant strengthening of the yankee dollar. All this is driving speculators to take their profits for those who were in early and absorb their losses for the poor saps that got in late.

One interesting side effect of the collapse in oil may be instability in Russia. That economy and its government have been inordinately propped up by oil revenue and with that evaporating I fear they will look at ways to distract their populace from their internal misery index with a little empire building (i.e., Medeved coming to visit Cuba and Venezuela).

Other messages in this thread:

View Entire Thread

Gas Prices - Open Debate - Maverick - 11/14/2008 12:19:42 AM

Gas Prices - Open Debate - Swimmer27 - 11/14/2008 5:23:54 AM

Gas Prices - Open Debate - water_watcher - 11/14/2008 7:06:51 AM

Gas Prices - Open Debate - GoneFishin - 11/14/2008 11:33:03 AM

One piece to add - MartiniMan - 11/14/2008 3:18:14 PM

One piece to add - GoneFishin - 11/14/2008 3:37:41 PM

Without a doubt.... - CAT BOAT - 11/15/2008 10:37:17 AM

Here We Go Again..... - Mack - 11/15/2008 7:26:38 PM

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