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Politics : Formerly About Advanced Micro Devices
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To: tejek who wrote (427554)10/17/2008 4:21:09 PM
From: TimF  Read Replies (1) of 1578416
 
Perceptions of future supply can have an important impact on prices. If oil is seen as being in shorter supply in the future (less new drilling) then there is an incentive to sell less of it now, so you can sell more of it at the future higher prices.

There are costs involved in not selling it now, at the very least there is the time value of money consideration, so selling it for twice as much in 25 years might not be desirable, you might want the money now, but if the time frame is shorter or the increase is larger then you have an incentive not to produce as much, or even (if the time value is sufficiently short and the price increase sufficiently large to overcome storage costs) to store the oil to keep it off the market.
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