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Oil prices going down?

Discussion in 'Business & Economics' started by sarah, Sep 25, 2006.

  1. sarah

    sarah Well-Known Member

    Aug 8, 2006
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    The price of oil has calmed down quite a bit in the past few months, and now seems to be hovering at around $60 (per barrel). I recall a few months ago, being told that the price of crude oil was only going to go up and that there was no light at the end of this tunnel. What happened? Can anyone explain to me how it is that the has been such a dramatic shift in the oil industry so relatively quickly?
  2. capitalist_junkie

    capitalist_junkie Well-Known Member

    Jul 15, 2006
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    Somebody lied?

    The market is so volatile, I don't think there's any way you can predict this kind of stuff. You're speculations usually turn out wrong.
  3. dong

    dong Well-Known Member

    Aug 22, 2006
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    The one thing I understand about economics is the basic theory of supply versus demand. In this case, we're all aware that we're burning up oil at a far faster rate than is produced, and thus it's not a sustainable resource. We also think that at projected rates, oil will run out within about 30-40 years or so. It is becoming increasingly difficult to find sources of oil for geographical, political reasons (Middle-East? This part confuses me) but demand still rises especially due to a sudden spike in SUV purchaces in the US and a massive boom in the auto industry in China, to name two recent examples.

    What alot of people suspect is that the oil companies are seeking to maximise their profits by milking as much out of this resource as possible as seeking conversion and alternative technologies is expensive and will severely undercut the cash flow, or at least as far as I understood it. What people would take an issue to is the fact that their general practice is more economically rather than environmentally or socially driven.

    Of course, I do not have much of an appreciation of such points- can anybody provide a more detailed/accurate analysis?

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