The Price Of Oil

[DemocratSinceBirth]

I believe it was Paul Krugman who once wrote that we would see $10.00 a barrel oil before we would see a $100.00 a barrel oil because the price would collapse from lack of demand before it got that high...

$90.00 a barrel oil is just unbelievable... It stands the law of supply and demand on its head... I do think high prices will eventually result in lower demand but not before there is a lot of pain, most of it inflicted on folks that can least afford it, here but in especially the Third World...


on edit- I think it was Krug but I'm not sure...The statement stayed in my head because it was pithy.

[Hydra]

1. You would think that

But if people are not given a better option, it will still sell, no matter that it reaches $500 per barrel.

I desperately want a car that runs on something other than petroleum or ethanol, but it almost seems I would have to build it myself to get one.

[Jim__]

4. Sure. They'll lower it to $85 per barrel and tell us the price of oil is down. - n/t

[DemocratSinceBirth]

5. The Demand For Oil Is Inelastic; Up Until A Point

There's a inflection point where folks will start cutting back their usage, demand will drop, and subsequently so will prices...

[Tesha]

7. This is only true in a small market; the market for oil is worldwide...

...and there are plenty of other new-and-upcoming purchasers
to buy any oil that we pass by.

Tesha

[Blaze Diem]

2. Question is: Will they lower the ppb before the winter cold hits

There are enormous profits at stake when necessity demands use, but will they wait until the public cries are loud enough before lowering the ppb.
Or do they execute lowerer prices before winter to somewhat quiet the masses, thus the lure of the publics false sense of security.

hmmm?

[Devlzown]

3. Makes no sense to me.

Where I live, there is no dependable public transportation. People will drive their cars if gas is $10.00 a gallon, although less I'm sure. I wouldn't drive if I lived anyplace that did have good public transportation -- I hate driving. But I don't, so I do.

[RB TexLa]

6. Doesn't stand the law on it's head, demand will support $90

[DemocratSinceBirth]

When Does Demand Crater?

We're not only the folks in the world who have to pay for it

[RB TexLa]

10. That answer would have to come from someone who knows much more about it than I do

but I'd think it's over the $100 mark easy.

[Just-plain-Kathy]

8. The law of supply and demand went out the window thanks to the oilmen in the White House.

Oil companies are allowed to control the market.

[LSK]

9. think global, not just USA

Other countries have cars too.

[Viva_La_Revolution]

11. Krugman was way wrong...

just looking around any smart person can see that the demand for oil will not falter.
Count the things in the room you occupy right now that use oil as a base. Ask yourself if you can do without ALL of them.
computer, clock, tv, plastic, building materials, the food on your plate...
on second thought, it would be easier to count the things around you that do NOT require oil for manufacture of transportation.

silly man.

[wuushew]

13. The OP implies Krugman was wrong

but no context, date or source is ever given.

[Viva_La_Revolution]

15. that's unfortunate...

I'll see what I can dig up...

[Viva_La_Revolution]

16. I think I'm getting close...

and I agree, I don't think it was Krugman either. searches found nothing.

http://money.cnn.com/2007/08/07/news/economy/cheap_oil/index.htm
Why oil won't hit $100
New production, new energy sources and some conservation could push down prices by 2010 - but don't expect $20 a barrel anytime soon.
By Steve Hargreaves, CNNMoney.com staff writer
August 7 2007: 1:17 PM EDT

NEW YORK (CNNMoney.com) -- Despite oil's record high last week, forget about crude going to $100 a barrel.
Prices have already dropped about 7 percent since last week, and are likely to fall even more in the coming years.
That's the consensus of analysts, who say rising production, the advent of biofuels, and conservation measures will likely lead to lower oil prices by 2015.
But how much lower is subject to wide interpretations, and estimates rage from $20 to $60 a barrel.


edit: this line cracks me up!
"But while the possibility of $100 seems to be fading fast..."

counts on fingers... August ($70-$75?), September, October. 2.5 months and we're at $90.

[cliss]

12. This thing is moving up quickly.

This is out of control.

Here are some quick results of the price moving to the stratosphere:

1. Oil producing countries do extremely well.

2. The U.S. economy goes down, by the same amount.

3. Pushes down the dollar even further, and causes more "flight" from the dollar. = a death spiral.

4. Pushes up food prices to the moon. Everything will go up in price, but mostly Ag products.

5. Causes enormous instability for our economy and that's why you hear Bush talking about WW3, and Cheney lusting for dropping bombs on Iran.

6. All oil dependent countries will be hit, hard. But Europe not as much as the U.S. They use less than half the oil that we do, per capita.

7. The lower economic strata will be hit the hardest, you will see a lot of hitch hikers, people walking around with a gas can. But - it will move up the economy quickly.

[Deja Q]

18. #3 - repeatable for any number of topics

The vicious circle must be broken, somewhere, somehow.

Then, amongst other things, the dollar will go back up and trade deficits decline.

[Junkdrawer]

14. I've Googled and Googled and I can't find Krugman saying ANYTHING like that....

Please don't slime Krugman like that.

[Deja Q]

17. Like China; the country that subsidizes oil purchases?

Damn communists; can't their people pull themselves up by their own bootstraps without getting help from their government or anyone else?


:sarcasm:

[Viva_La_Revolution]

19. Help me DSB,

I've googled and googled my little fingers to the bone, and I can't figure out who said it. It just doesn't sound like Krugman to me.

Remember anything else? Column? Book? How long ago?