Wednesday, April 13, 2005

51.86 - There's Only One Left

da ting be, I keep running into this habit of believing predictions. keep doing that, and you might as well say "screw it" and sit around waiting for the millenium bug and the second coming of Jee-bus. Tracking the price in recent days (US$7 swing down in just one week), I still believe it is underpriced not for trading purposes, but for future planning purposes. I'd love to see the bowser price dip under an AU$1, but that's out of student greed.

The price dip today, a whopping US$1.85, is being attributed to three things-

1) US stockpile is building sufficently (so oil isn't scarce enough just yet)
2) Saudi production is increasing (supply grows)
3) Chinese consumption is slowing (demand weakens)

There's still underlying causes though - demand is weakening, not declining. Demand will continue to rise until an alternative energy source overtakes oil. Supply has a roof - once production is engaged fully, the producers won't be able to increase production to stabilise price hikes. A demand controlled market for a scarce resource? that'll be pretty.

Imagine four big men - U.S., E.U., R.F. and China - all dying for a Big Mac - And There's Only One Left. posted by Keegan at 8:45 pm

----------------