WDC/Sandisk Corporation Message Board

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Technology Stocks : WDC/Sandisk Corporation

WDC 179.68

-1.0%

Dec 29 3:59 PM EST

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To: limtex who wrote (26838)	10/17/2004 11:09:51 AM
From: Art Bechhoefer	Read Replies (2) of 60323

Limtex, regarding oil price "bubble" and the impact on consumer products, including flash cards, several journals, including The Economist (generally quite conservative) have a different view. The higher prices are caused not just by increasing demand but by the fact that current demand almost matches production capacity. That means inventories get lower than normal, and low inventories are considered one of the main factors affecting higher oil prices. In earlier periods, production capacity generally exceeded demand by a significant amount. That is no longer true. Therefore, the real problem is that oil prices may never return even to $35 per barrel. A little over a year ago, economists and other government experts were saying that oil would return to a level around $20 to $25. Then it was $30. Later they thought things might settle out at $35. Now they're saying that it's likely the price will fall back to $40 at a time when it's pushing $55. The only way that prices could drop for anything more than a couple weeks would be if there were strict energy conservation policies in effect. That's because conservation is the ONLY short term solution. I don't hear much about energy conservation these days. That's why I'm a little concerned that consumer demand for products like flash memory will be curtailed over a considerable period. Art

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