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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Moominoid who wrote (6816)	5/28/2006 4:58:36 PM
From: elmatador	Read Replies (2) \| Respond to of 217592

What is really troubling markets is not so much inflation, for the factors that might drive global prices higher continue to be overwhelmed by powerful underlying forces. When a good or a service increases in price coming from avery low base it is not inflation. Is not easy to analyse this: We can look to oil prices two ways: 1) The prevalent price of oil in 1973 was too low and the price after that was more close to it's fair value. 2) But are prices dictated by a cartel using quotas system considered too low or too high? The OPEC cartel had -to a certain degree- controlled the price of oil via quotas. When too low everyone cheated and the prices plummeted. In 1986 prices were driven too low because they were pumping as if North Sea oil wasn't there and prices wered driven to the ground. Now is a different underlying factors driving oil prices. Even if there won't be a cartel there prices will be kept high. There's no North Sea and Dubai oil are no more. Gabon, Equador, are all marginal producers and Caucasus oil didn't amount to what was projected. Globalization put 2.5/3 billion people in to the world economy. Those Chinese, Indians and USSR countries are now consumers. And they will continue to be and will consume even more. CONCLUSION: Oil is not inflated.