Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Politics of Energy -- Ignore unavailable to you. Want to Upgrade?

To: RetiredNow who wrote (5724)	3/6/2009 1:09:04 PM
From: Brumar89	Read Replies (1) \| Respond to of 86355

In your imaginary scenario where the world only wanted 55mbpd while suppliers were offering 80mpbpd, the price would drop immediately to a very low level ... for a time. Maybe pennies a barrel??? Low enough to clear the market anyway ... clear the market means sell the 80 mbpd. But of course, that couldn't happen in real life. It'd be easier to imagine a scenario where the world demanded 80mbpd but suddenly supply was only 55mbpd. A nuclear war in the Persian Gulf might be able to accomplish something like that. Then we'd see what??? $1000 a barrel, more???? Who knows. Whatever it took to freeze out the would-be buyers of 25mbpd. Of course, those price changes would be temporary. In time, supply and demand would come into balance. Both supply and demand are a function of price. No change over a period of 20-25 years is gonna cause the kind of lasting price collapse you dream of. Given oil's utility as a liquid fuel, its gonna be used by someone for as long as its around. Now we've just had a collapse in oil prices - $147 or so down to the $40 range - and thats just come from a combination of a recession and a few positive developments on the supply side. Given the state of inventories and the depth and world-wide breadth of this recession, we're probably gonna see an additional collapse. But that is temporary - we'll live to see high prices again. The lower they go, the more certain that is. We are seeing the very beginning of this scenario play out. I think you guys are too dismissive of technological change and the speed at which it can move whole industries in a new direction. Which is it - are we gonna see whole industries move fast in a new direction or are we gonna see incremental change over decades like you said in another post today? Make up your mind.