[lakeweb]

Welcome To The Real Word:
http://www.contraryinvestor.com/mo.htm

Quote: "And, as you’d guess, back in the early 1970’s circumstances were quite similar to what we are now experiencing."

The difference between the seventies and now is that the seventies were caused by political shortages and the pressure was removed in short order.

I believe the nature of fractional reserve banking has been discussed here before. In a nut shell, money is created from debt. But in the last fifteen years the nature of that debt has been changing:

http://www.comw.org/poc/0301.html

There is a chance that we don't face an immediate problem. Word on the street is that mega projects will come on line quick enough to put some room between demand and capacity. But of course, this only puts off the inevitable. Worse, it could accelerate it if oil pulls back to the $45-50 range. This range is a green light for china's refineries.

Best, Dan.

[MrBill]

Look forward to reading them. Thanks for posting the links. Cheers.

[DigitalCubano]

Thanks for posting the links, Lakeweb. In response to what you wrote, I have one immediate question that I've been tossing around for a while. Certainly, it makes sense in any case that oil prices will fluctuate as demand fluctuates, but I have always been curious as to whether any sort of "memory" gets priced into commodities if one of the pricing issues is fundamental scarcity (i.e. reserve fears instead of production constraints)?

For example, let's assume that next summer demand pushes oil to some really high level such that "demand destruction" occurs, bringing the price down. Let's also assume that traders are convinced that this is a fundamental supply issue and that they are convinced that the production rate has "peaked." Won't this knowledge limit the lower bound at which future prices settle? In other words, prices might still fluctuate, but wouldn't there still be an upward trend because of the increased risk of supply/demand imbalance? I can't imagine that the markets just "forget" and discount previous imbalances.

This might be a non-sequitor, but in response to some of the hub-bub in another forum, I'd like Mr. Bill to know that I appreciate your insight! Keep your posts coming. I'm learning a heck of a lot from you!

[rogerhb]

$this->bbcode_second_pass_quote('DigitalCubano', 'I') have always been curious as to whether any sort of "memory" gets priced into commodities

[lakeweb]

$this->bbcode_second_pass_quote('DigitalCubano', 'T')hanks for posting the links, Lakeweb. In response to what you wrote, I have one immediate question that I've been tossing around for a while. Certainly, it makes sense in any case that oil prices will fluctuate as demand fluctuates, but I have always been curious as to whether any sort of "memory" gets priced into commodities if one of the pricing issues is fundamental scarcity (i.e. reserve fears instead of production constraints)?