[Bas]

My own personal observation: The inelasticity of demand for oil seems to go down through developments in the biofuel and hybrid car area's. This means oildemand could go down faster if a barrel reaches say a 100 $ than it would have 10 years ago, this due to new alternatives like biodiesel and hybrids.

[RdSnt]

$this->bbcode_second_pass_quote('Bas', 'M')y own personal observation: The inelasticity of demand for oil seems to go down through developments in the biofuel and hybrid car area's. This means oildemand could go down faster if a barrel reaches say a 100 $ than it would have 10 years ago, this due to new alternatives like biodiesel and hybrids.

[RonMN]

But even at a sustained $50 oil...airlines are dieing, pensions are vanishing, Truckers are refusing to haul because they're actually loosing money when they work, bus companies are hurting, and food prices have gone up noticably.

What will $100 oil bring?

[aahala]

One would expect increasing price elasticity, if the price of the input
rises faster than the price of other inputs for the finished product.

Since such much of crude is consumed by gasoline for example, when
crude prices rise faster than the other costs, then at some point the
price of gasoline rises more directly with crude price increases, making
consumers more and more directly affected by crude prices.

Price elasticity is usually not a constant across the entire demand
curve.

[Bas]

$this->bbcode_second_pass_quote('', 'P')rice elasticity is usually not a constant across the entire demand
curve.

[Bas]

and this inelasticy of demand will trigger the initial big crisis a la the early 80s. And meryl Lynch is right, prices will drop after a collapse in demand (at 1** $) that will surely happen but prices will still remain considerably higher than they are now for the rest of the petrolage with regular spikes (that will diminish in effect on the economy from the big one that we'll have in....2007/8?).