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Politics : Politics of Energy

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To: J_F_Shepard who wrote (1507)	8/12/2008 4:20:53 PM
From: miraje	Read Replies (2) of 86355

If we have a total supply of 10 million barrels a day and then have an additional 1 million barrels come on stream it's reasonable to expect a 10% effect..... No it's not. If one stipulates that supply and demand are both sitting at "10 million barrels a day", then bringing on another million barrels per day would cause a drop in price much greater than 10%. The reason that crude prices are now in triple digits is that there is no longer any meaningful supply buffer. A few years back when gasoline was a buck a gallon, there was a supply buffer, although it was considerably less than 10%..

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