PeakOil is You
Re: Another Oil price Record
Re: Another Record ($133.80)
by DantesPeak » Wed 21 May 2008, 19:36:12
$this->bbcode_second_pass_quote('Novus', 'T')he land export model is starting to come into play. We saw how this worked with rice a few months back and how the rice markets failed. As prices went too high producers started pulling product off the market as they were no longer willing to sell such a valuable resource. Market theory states high prices should give incentive for producers to produce more but that is not what we are seeing. Kazakhstan pulled their oil from the market despite the record price. Now prices are even higher and more producers are to becoming tight fisted with their supplies. The oil market is going the way of the rice market. Market theory is failing us and markets themselves are failing. The new reality is the land export model. High prices = less supply. Learn it, get ready for it, live it, it is the new reality.
I said almost exactly the same thing on a Hyperinflation or Dollar thread here at PO a month or so ago.
However I didn't think this would occur in the first half of 2008. I am still not sure if we are going to follow the rice model right now, although closed oil export markets and/or a collapse in the purchasing power of the US dollar is ahead sometime in the not too distant future - unfortunately.
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Re: Another Record ($134.12)
by bodigami » Wed 21 May 2008, 20:03:24
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Re: Another Record ($134.12)
by charliehelyes » Wed 21 May 2008, 20:11:29
$this->bbcode_second_pass_quote('zensui', '[')url=http://www.livecharts.co.uk/MarketCharts/crude.php]$134.44[/url] 
how I'm having fun today
Now thats just rediculous how I'm having fun today
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charliehelyes - Peat
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Re: Another Record ($133.80)
by Peleg » Wed 21 May 2008, 20:13:04
$this->bbcode_second_pass_quote('DantesPeak', '')$this->bbcode_second_pass_quote('Novus', 'T')he land export model is starting to come into play. We saw how this worked with rice a few months back and how the rice markets failed. As prices went too high producers started pulling product off the market as they were no longer willing to sell such a valuable resource. Market theory states high prices should give incentive for producers to produce more but that is not what we are seeing. Kazakhstan pulled their oil from the market despite the record price. Now prices are even higher and more producers are to becoming tight fisted with their supplies. The oil market is going the way of the rice market. Market theory is failing us and markets themselves are failing. The new reality is the land export model. High prices = less supply. Learn it, get ready for it, live it, it is the new reality.
I said almost exactly the same thing on a Hyperinflation or Dollar thread here at PO a month or so ago.
However I didn't think this would occur in the first half of 2008. I am still not sure if we are going to follow the rice model right now, although closed oil export markets and/or a collapse in the purchasing power of the US dollar is ahead sometime in the not too distant future - unfortunately.
This is not a failure of theory. Micro-economic theory predicts that people and entities in the market place will make decisions that best suite their own interests. As producing countries realize it would be better for them to build their own infrastructures and use the oil they have to sustain their own country into the future (keep the light son basically) they will do just that. Countries don't disappear too often. Empires fall, but alot of countries like Russia could do better for themselves by keeping their oil.
What is the trade off. Dollars now, versus oil later. The elasticity of demand compared to the longevity of opportunity for your own nation to use it's own oil. If I were the head of a country like that, I would evalute the economic potential and get started immediately building our own oil processing infrastructure. That is turn your domestic oil into domestic GDP growth not trade growth, with the clear intention of working into a position where your GDP does not depend on oil.
Countries that keep giving America oil on the cheap are setting us up for the fall everyone sees coming.
It will become very clear, very soon what the cost of high oil prices is to the West. That is when the deep social changes will start to happen.
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Peleg - Lignite
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You guys were supposed to ease me into this situation. 
