Originally Posted by
captscott26
Oil is simply not worth 140/barrel! There has been demand destruction all over the market in this country, and it is visible everywhere. People are trading in their SUVīs for much more fuel efficient cars, we are driving now when we HAVE to, not when we WANT to. We had a decrease in demand over the Memorial Day holiday.....A DECREASE!!! Airlines are rapidly reducing routes, thereby using less oil! If it was worth 140, or 130, or even 120, we would not see all of these things.
Oil is where it is right now because of speculation. Two days ago oil was down over 10%, then some big mouth(who probably owns millions in oil futures) at Morgan Stanley gives his prediction that oil will hit 150 by July 4. Result....$11 gain in one day!!! This is the type of behavior that needs to be stopped. It is intentional and in my opinion criminal. If the government made it less attractive to buy oil futures as a safety net against everything you would see oil tumble and settle at around 80/barrel, which is where it belongs IMHO.
Spot on. The price of oil is driven by people investing in speculation of what the price will do in the future. The supply and demand curve for oil is mostly inelastic, meaning as price goes up, people still buy just as much. But there is a breaking point. Eventually people will say "enough is enough." Demand will go down, futures investors will realize this, pull their money out and find something else to speculate on. Maybe coal will be the next big thing since by then we'll all buy hybrid cars and need to charge the batteries with electricity. So the price per KWH will go through the roof, and people will be complaining about having big 60" plasma TVs. Eventually, oil will hit a peak and come down. If I knew the when/where/why, I wouldn't be posting here, I'd be making billions. The only reason I know it'll come down eventually is b/c the economy has a pattern. In the 90s, it was tech stocks. A few years ago is was the housing market and insane loans to people who couldn't afford them. Today it's oil. I'm hopeful that the bubble will pop soon. There was a DECREASE in demand over Memorial Day weekend, which is unprecedented. And overall, there has been a decrease in demand for oil since then. People are driving less, and the airlines are downsizing. I think that the only thing that'll get investors to pull their money out of speculating on oil is demand must decrease.