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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: Raymond Duray who wrote (56582)11/28/2004 10:48:52 AM
From: BubbaFred  Read Replies (2) of 74559
 
<<...the world is running at 99% of available wellhead capacity..>> That's what I read also but it is only part of the story. The $40 price level is still very sweet if there is a need to drop it to that level. OPEC only wanted to maintain it at $30 and is undoubtedly a nice surprise to be enjoying today's price levels. It is not from lack of supply or shortage. The supply from Iraq becomes very critical factor to the supply and price levels and that's one important goal for US invasion - full control of world's oil supply. All the tax incentives for buying big SUV's and gas guzzlers is one small part of the equation, that Americans continue to consume as much oil as they possibly can, but just enough to balance the supply and demand. Unlike power plants that can use coal, vehicles use gasoline from crude oil. Why there is no incentive for energy conservation? Why there is no tax incentive for utilizing alternative energy like solar and wind?

I think there are other forces that keep it at today's price levels. When supply and demand is pretty tightly matched up, then it doesn't take huge sum of money to manipulate the price or control just 0.1% (hypothetical number) of the supply. If there is a bigger imbalance (say 3% oversupply) then it takes enormous amount of money to control the price and the risk become much greater as well. Besides, someone(s) are getting hefty profits for those heavy crudes these days, compared to getting nothing 5-8 years ago.
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