We are in a recession and demand for oil has dropped yet we still see prices rise. This is while supply is actually abundant. Some people say there is a glut.
Oil demand in economic terms is described as inelastic. This means that a rise in prices will not affect consumption or demand. Is this true?
Are we going to see $110 oil by summer? Will we see $4.00 gasoline by summer?
Maybe. They are really playing with us. Wasn't that long ago that we thought $2 a gallon was insane-- now we are pretty used to $3. As long as people buy it,it will rise.
The trend for oil prices is definitely up and will continue. Demand might have taken a pause with the recession but the recession will eventually come to an end and the real demand for oil in places like China and India will become more of a factor. Too there is the hangover from the world fiscal crisis and a weak dollar which also contributes to the price of oil. Long term it can only get worse as peak production is expected around 2014 when production begins to fall in the face of rising demand. Rising prices will affect demand without a doubt. People will find ways to use less oil, driving less and lowering their thermostats. If you need to keep warm, you can put on a jacket, but if you're hungry, you have to eat to live and people aren't going to sacrifice meals for a joy ride on Sunday afternoon.
No, it won't go up forever. It'll either drop when we find a practical renewable source of energy, or it'll go up high enough that a(nother) war will happen over control of the oil.
I'm hoping for the first one.
As long as resources dwindle and no suitable substitute is found prices IMO will continue to rise.
Resources are not dwindling. The problem is in the refining of oil, we have not built a new refinery in this Country since the mid 70's but our consumption has steadily increased. The answer is to drill and start building refineries, there is no such thing as clean coal and the Earth will be just fine.
*shoves both hands deep in her pockets* Probably! *kicks the rear tire, grumbles* stupid oil. *mumble mumble* Alternatives...*sighs...walks off*
Oh, I am sorry. .I think oil is definitely draining our pockets.
I think in future oil prices jump high because of global economy recovery, demand increase day by day and supply short.
Well, it is a finite resource. It took thousands of years to create it. It's certainly being used up at a faster rate than it can be created. You should watch a documentary called "Global Warning". No..not Global Warming. This one's about the world having reached the peak of oil discoveries, and the likelihood of the supply beginning to fall over the next few decades.
So no matter how you slice it, demand will always outstrip supply, even if we cut back our use. Therefore prices will rise. Sorry.
The hunt is on for alternatives. We'll likely reach a point where the alternatives either become a little cheaper or oil becomes about equal in cost.
Well put, that's what I think too. It just depends how quickly we reach that point where there are enough good alternatives to reduce consumption. The problem is that as developing econmies get richer and more power hungry you can have alternatives being introduced at quite a high rate without reducing overall global demand, so it may take a while to have viable alternatives for all of the myriad uses of oil.
From a perspective of trading, I think oil is not at a point of being peak as is advertised by people like Pickens.
The theory that many have is the inelasticity on the demand side of oil........This states that a higher price does not affect demand much.
I would have to say that at this point demand is weak as compared to supply. This is a temporary condition and oil is currently traded on basis that demand will recover significantly.
The question should be: Is there a point where prices will break the back of the consumer to a point where demand is seriously weakened? Will the consumer reduce gasoline consumption by public transit, ride sharing, alternate fuel, or just walking? Will petroluem based plastics and industrial derivatives be replaced with ones such as methacrylates which are derived from natural gas? Will heating and electricity generation be non-oil.
If these are the cases, then oil will not be inelastic on the demand side.
We shall certainly see.
Back to a traders perspecitve (fundamentals aside)........I see oil toping at around $110/bbl in late June. The trend while upward is weak and is slightly consolidating. I think in July it will be good to be short oil (just based on the charts 100 is psychological barrier and 110 is the top point. While a weak resistance, 110 is a barrier after 100 and in my opinion a good point for failure)...........That is the counter-trendist in me speaking and not investment advice.
"Will oil prices go up forever?"
As long as we keep buying it from the middle east it will
They may hate America but they love our money
Well I hope for my buisness sake it levels off but for my personal interests I hope it goes through the roof because my wife makes a lot more than I do and she's in oil.
most ideas for renewable sources such as electric cars or other ideas seem to be only something the wealthy will be able to afford
There is a simple solution to living with the high cost of gasoline that many will not want to hear.
Buy a scooter for driving back and forth to work and for short errands. I get 105 MPG! With what it saves in gas costs, no insurance, no plates, no registration and reduced maintenance costs it is a break even deal, covering the scooters cost, in about a year or so. Typically they cost about $700 or $800 brand new. For those in Las Vegas I could tell you where to buy a new one for $450.
I know its not for everybody... Especially during the wintertime and rain. But if gas was ever to hit really high levels, lets say over $5 per gallon, many just may wish they had one. I suspect one day, in not so many years to come, that gas will even hit $10 a gallon and higher. It will only keep rising.
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