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Politics : Welcome to Slider's Dugout -- Ignore unavailable to you. Want to Upgrade?

To: RonMerks who wrote (9482)	5/6/2008 12:00:57 PM
From: jim_p	Read Replies (1) \| Respond to of 50313

"Something doesn't jive with rising inventories, slowing demand, and slowing economy. I guess I'll soon find out." Despite record oil prices, we're now at a point in time were oil demand has continued to increase and it is now about to exceed daily production with no supply cushion left. With no cushion, the risk is that any disruption in oil supply will cause oil prices to spike much higher and historically when the cushion is gone prices have always gone higher. Stepping back and looking at the macro picture, there has never been a period in time in history when a dramatic increase in oil prices has not brought on new supplies which historically have lowered prices. What this tells me is the world does not have the natural resources to support 10% growth in places like China and India and it’s the 10% growth in developing countries that have cushioned the bursting of the largest credit/housing bubble in history here in the US and also in places like the UK. It’s not just oil, its food, metals and virtually all natural resources. Since past recessions have only decreased the rate of growth for the demand in oil.....the question you have to ask yourself is what the economy will look like when we are forced to accept negative growth in oil production because we’re getting pretty close to that point in time. The conclusion has to be that it's going to be a lot worse than past recessions and the resulting inflation and reduced spending power caused by the high prices at a time when the consumer is leveraged up to the highest leverage since the 1920’s and home prices are declining…….well you can use your imagination on how bad it might look a few years from now? Jim