Buy it by the gallon, the
barrel, or tanker load |
Despite oil's
importance, its price alone will not impede
progress derived from technology but will
expedite our decreasing oil dependency. Problems
prevailing in the Middle East can cause oil
price spikes anytime. OPEC nations need
customers. |
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Many
Middle East, African, Southeast Asian, and African nations
must sell oil in order to maintain stability
and support the survival of their rulers. These nations have little
else to offer the world other than perhaps
pistachios, olives and minerals. These
commodities fail to produce the easy, steady revenue steam as oil
does. This fact ensures that oil will be available
for sale on global markets. At times there will be politically
motivated disruptions in supply and non-market induced price
variations. After the chaos entropies, prices will stabilize at
market-determined levels. |
| Beyond supply,
demand and price, inflation
has a psychological
driver. US business and consumer psychology includes fear of
inflation. This fear prevents acceptance of price increases
and prevents the bidding up of raw materials, finished goods and services
beyond the incremental speculators' margin. Aside from
sporadic market speculation which can effectively
induce months of price increases, commodities and raw materials will
eventually recede to market-induced sustainable levels. |
| Oil
operates as an exception
to market forces because its supply is modulated
directly by the OPEC cartel
following non-market forces. The Arabs have plenty of oil
underground. Even when western engineers pump it
up and out, most people of the
Middle East have relatively little use for it... other than a few sheiks who need gasoline for their limousines. They will sell oil as long as there are buyers. They
cannot raise
the price of oil far beyond what buyers can
afford to pay long term. Market forces will correct the price
downward to rational levels balanced by demand-price relationships.
Over time, producing nations must sell oil or they will
disintegrate. Those arrogant demagogues floating on oil revenue must
have a large, continuous stream of revenue. |
| They
may not say please, but Middle Eastern and South
American rulers will eventually sell oil...
if not today, the day after tomorrow. |
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