There certainly is a supply problem in the oil market, along with the demand…..which may be lessening due to high prices. Although fungible, oil doesn’t cost the same whether drilled in Alaska or Kuwait as witnesed by the price spreads between the contracts at the NYMEX, ICE, and Dubai exchanges. Oil price at the well head is different in Texas than in Illinois(yes, they produce oil in Illinois), or Kuwait. Quality of oil also affects the price to a major degree. Much of the oil produced in the USA is sold for well below the spot price(or nearby futures price), as oil well operators like to lock in prices with long term contracts. It should be interesting to see when these contracts rollover reflecting the newer, higher prices, what the impact will be at the retail level. This bull market in oil has all the attributes of a classic bull market. There will be price declines sometimes in the future, because oil, like all commodities, are subject to the law that….. nothing goes up forever. One benefit of having speculators in the oil market is that they’ve allowed for the prices to have a much slower uptrend than if there was no liquidity added due to the speculators. Absent speculators, one could surmise that oil would be witheld from the market and there would be gas shortages and supply disruptions similar to the 1972-73 fiasco. Back during the Arab oil embargo, the lack of liquidity due to speculation caused a host of the aforementioned problems. With the present market system in place, such disruptions, although painful for many, still allow for oil to be obtained at the retail level.

Jeff

Do you have javascript disabled. You might have an extension (if you use firefox) which disables js? I had to enable scripting on the sun-times site to see the pictures.

cheers.

* its doubled recently, from around $80 to $140 for crude and in similar proportion for the gas pump price. That might not seem “small”, but (and correct me if I’m wrong) when supplies start to run out, prices increase exponentially, so on log scale a 100% increase only signals the beginning. The Saudis have long non-airconditioned nights ahead of them and so do we!

And black, brown, and curvy girls will be in demand in this country as models when that shriveled witch Anna Wintour says they are, and not before. Brava to Sozzani, whatever her motivation; Meisel’s photos are always sublime eye candy and sometimes, as in this case, much more.

I noticed that G.W. didn’t mention that H.W. signed the moratorium on off shore drilling. Is America really so daft? There isn’t a supply problem with the oil market. Moreover, any oil drilled in the US will still be an international commodity. If oil is at $150/bbl, it will cost the same whether it gets drilled in Kuwait or Alaska. Only if we can produce enough to significantly alter the total, world production can new drilling change the game…and i’m sure that even in that case something will happen to keep the price high.

In a weekly S&R feature, Dr. Denny highlights hypocrisy and holds our politicians and public officials accountable in the most damning way imaginable: he prints the words they actually said….