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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Paul Kern who wrote (102929)	6/16/2008 12:06:34 AM
From: skinowski	Respond to of 206184

I understand your line of thinking, and it certainly represents a valid concern. After all, these are the kinds of games that OPEC used to play for years. Even without any "evil" intent, it is natural that producers would avoid using their wells in a way that could reduce their useful life. It doesn't seem, however, that producers would be squeezing us too much. They generate near record volumes of oil. Presently, the global demand is over 87 million barrels a day. And they do come up with that volume. I don't know how they estimate excess capacity - the volume by which production can be increased on short notice - but, reportedly, the remaining excess capacity is very low, only a fraction of historic levels. Also, my main interest in the original post was to argue against the view that "long only funds" and other speculative investors may be instrumental in bringing the price of oil to today's high levels. My argument was that independently of the "bets" placed by investors, ultimately the futures prices are tightly connected to the final, cash price - which depends on supply and demand. When politicians are blaming investors and speculators, they are barking up the wrong tree.