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Technology Stocks : WDC/Sandisk Corporation
WDC 172.26-2.2%Dec 31 3:59 PM EST
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To: John Carragher who wrote (26913)11/2/2004 10:12:58 AM
From: Art Bechhoefer  Read Replies (3) of 60323
 
John, increased demand for oil is not the sole cause of higher oil prices. But higher oil prices definitely will affect consumer demand for all kinds of durable goods, from cell phones to cars to digital cameras.

The spot price for oil is closely related to inventories. Thus, when traders and hedge fund managers believe there is no chance that oil could be released from the strategic petroleum reserve, they will bid up the price of oil, simply on the basis of lower than normal inventories.

The decision not to use the strategic reserve to stabilize oil prices definitely has resulted in windfall profits for the oil companies, especially domestic oil producers, many of which are heavy contributors to the political party of their choice. The other important decision affecting the domestic price of oil relates to conservation, which is the only short term method of forcing down oil prices. Without a concerted effort to reduce unnecessary consumption, no relief is possible. As I have mentioned in a previous post, the only sure conclusion one can draw from the present situation is that continuing high energy costs will curtail consumer demand for discretionary items, including flash memory.

Art
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