Hoarding is exactly what the government is doing right now by filling the SPR, and frankly it's the best thing that could happen. It drives prices up. High prices encourage demand destruction. They also finance new well development. The hoarded oil gives us a buffer to fall back on once shortages become more prevalent. High prices are what we need in order to adapt to what's coming, and the sooner they happen, the better.
Posted: Fri Nov 12, 2004 7:07 am Post subject: Strongest effect on the price of oil
What do you believe is the strongest effect on the price of oil.
The biggest two for me are the geopolitical crisis in the Middle East and also the increase of demand for Oil in China.
Destji - I'd agree with you over the cut in Iraqi output due to the US-led invasion and the general destabilization of the ME as a major factor pushing prices up.
I'd differ with you on China, on the grounds that US growth of oil usage is as large or larger than China's, and of course in on a massively greater base.
A third factor is the continuing loss of GOM supplies from hurricane Ivan, which were 30% and have only slowly been recovering.
The underlying issue, without which none of the above would affect prices, is that we're running out of sufficient accessible oil to maintain economic growth.
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