Tuesday, June 10, 2008
Oil costs a lot of fucking money. Does anyone else wonder why?
Current prices have caused a drop in demand (people stayed at home on Memorial day, and if they went out left the SUV at home). Supply is stable or growing, due to companies bringing online all kinds of sources that make sense at current prices. Normally reduced demand and increased supply leads to lower prices, but that is not happening, because (you heard it here first), we are in the middle of a huge fucking oil bubble.
Prices are going higher because people think they will be even higher in the future. Not surprising, because after recent equity and real estate meltdowns, investors need to plow their easy money somewhere. But lets face it -- we are not using THAT much more gas (even with china) than we were in 1999. And we're not producing THAT much less oil.
Remember during the dotcom boom when blairwitch.com tried to acquire General Motors? Oil is the blairwitch of 2008.
What are the key takeaways? First, don't make any long term decisions premised on extremely expensive oil. Second, the $2 tip you were generously giving cab drivers last year ISN'T A GOOD TIP ANYMORE.
Current prices have caused a drop in demand (people stayed at home on Memorial day, and if they went out left the SUV at home). Supply is stable or growing, due to companies bringing online all kinds of sources that make sense at current prices. Normally reduced demand and increased supply leads to lower prices, but that is not happening, because (you heard it here first), we are in the middle of a huge fucking oil bubble.
Prices are going higher because people think they will be even higher in the future. Not surprising, because after recent equity and real estate meltdowns, investors need to plow their easy money somewhere. But lets face it -- we are not using THAT much more gas (even with china) than we were in 1999. And we're not producing THAT much less oil.
Remember during the dotcom boom when blairwitch.com tried to acquire General Motors? Oil is the blairwitch of 2008.
What are the key takeaways? First, don't make any long term decisions premised on extremely expensive oil. Second, the $2 tip you were generously giving cab drivers last year ISN'T A GOOD TIP ANYMORE.
