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Politics : View from the Center and Left

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To: biotech_bull who wrote (72793)	6/18/2008 4:46:32 PM
From: Cogito	Read Replies (1) of 542149

>>This maybe a stupid question. If supply and demand are in such precarious balance, doesn't that argue against supply having a significant impact on the price? IOW, once the price of Oil started spiking because of increased demand from China, India and the global/ME uncertainties etc the OPEC didn't have the capacity to increase supply to an extent that would impact prices << BB - It's not just supply that affects the price. It's the balance between supply and demand. Whenever supply is tight, even if it is just barely meeting demand, prices will rise to some extent. Consensus seems to be that worldwide production is about a million barrels a day below demand. It's a fact that the output from non-Opec countries has been declining. US production has been flat for the last few years, but is slowly starting to ramp up. Since we, as a nation, use 20 million barrels of oil per day, it seems to me that we have it within our power to deal with the current shortfall of supply, mostly by reducing our own demand. - Allen

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