Comments on: The OPEC Oil Consumption Cycle and the Dangers of Cheap, Subsidized Energy

By: Turning Oil Into Water: The Middle Eastern Resource Accident Waiting To Happen? | MoneyEnergy

Fri, 10 Jul 2009 11:01:05 +0000

[...] Why Your World Is About To Get A Whole Lot Smaller 10 Fast Facts About The World’s Declining Oil Supply Where the U.S. Gets Its Oil (can you guess the top 5 countries oil is imported from?) The OPEC Oil Consumption Cycle and the Dangers of Cheap Energy [...]

By: Early Retirement Extreme

Early Retirement Extreme — Thu, 09 Jul 2009 15:42:42 +0000

Price volatility indicates that production (which is geologically limited, not economically limited) can not be adjusted to increased demand. What happens from these supply constraints is that the price goes up, then people give up some consumption. This creates a small buffer of oversupply. The price drops again. However, the buffer is used very fast, so the price shoots up again; this time higher than before.

It is very difficult to do any economic planning. I recommend seeking alternatives ASAP. That is, alternatives, not replacements.

By: MoneyEnergy

MoneyEnergy — Thu, 09 Jul 2009 15:04:05 +0000

I think that the higher the spikes go, the more tendency they’ll have to occur, too, since during a recession producers have to cut back on production – which creates another supply glut for later on. Even right now, once the economy comes back, prices will have to shoot up again, because up to at least a third of all production has shut down.

By: Neil

Neil — Thu, 09 Jul 2009 13:15:59 +0000

I think the most worrying aspect of the oil price is its instability. Last year oil was trading at $150, earlier this year it was $35, now it’s on its way back up again. If the price was on a steady and gradual upward path it would give the incentive to develop technologies to reduce our reliance on cheap oil. As it is, the next oil price spike could de-rail any fragile recovery that takes hold in western economies.

Any country that is subsidising the consumption of oil is adding dangerously to overconsumption, making future price spikes worse.