[KevO]

$this->bbcode_second_pass_quote('', 'W')hen the price of a commodity rises, economists tell us, demand eventually goes down. But with oil prices setting new records, there’s apparently no let-up in demand from gas-guzzling drivers, businesses posting strong growth around the world and investors betting that crude prices are headed even higher.

Since a low of roughly $50 a barrel in January, crude oil prices recently broke through $78, setting a new record. On Wednesday, oil prices took a breather — and speculators took some profits, pushing prices lower. But with global demand for oil showing no signs of easing, that pullback could be short-lived.

The latest numbers from the U.S. Energy Dept. added fuel to an already hot oil market. Weekly numbers released Wednesday showed that oil stockpiles dropped by 6.5 million barrels — nearly 10 times the drawdown analysts had expected.

[Tanada]

Demand has gone down in places where they can no longer afford oil, so that much is true. However western European and the north American consumers are so much richer to start with and have such easy credit on top of that wealth that they have been able to keep increasing their consumption. The world as a whole has not increased, it just shifted resource allocation.

[shortonoil]

It shouldn’t take much more of an increase ($10 to $15) to result in a depression in the Western world. Then demand will go down ------ a lot. Energy drives the economy, and the economy drives the price, not the other way around.

[Eli]

Short I think the metrics of that analysis are a bit skewed.

Our problem now is that we have gotten to where we are going to get crushed by the exponential function.

Chindia will now be what sinks us, they are booming and they do not want to slow their growth and their populations will suck up any demand destruction that the US and Europe produce. As will the Arab populations.

And in with an economic depression the costs of production of oil are only going to become worse for the major Oil companies creating a further squeeze.

[Ayame]

$this->bbcode_second_pass_quote('shortonoil', 'T')hen demand will go down ------ a lot. Energy drives the economy, and the economy drives the price, not the other way around.

[TreebeardsUncle]

Hello.
That is consistent with the substantial falloffs in the oil stocks that have been evident over the past 10 days or so since the spike
that occured after Transocean bought out Global Santa Fe. Since then Transocean (RIG) has gone from about $120/share to about $100/share. I sold out of BHI, Ensco, Global Santa Fe, Rig, Noble, Rowan, Diamond Offshore, Helmerich & Payne, Cameron Energy, Core Laboratories, and Smith International today.