Sunday, June 01, 2008
This week's cover isn't nearly as good as what appeared last week, but, just in case you haven't gotten enough already, there's one more story about oil prices in the current issue of The Economist.
The image you see to the right (that goes along with the cover story) may have some "Magazine Cover Indicator" prognosticators sitting up to take notice, but it is the curious comments in the lead story that are of more import.
In a well-reasoned look at oil markets over the last few decades and the last few months, they note the following:
Stuck for answers, politicians have been looking for scapegoats. Top of the list are the speculators profiting from other people's hardship. Some $260 billion is invested in commodity funds, 20 times the level of 2003. Surely all that hot money has supercharged the demand for oil? But that is plain wrong. Such speculators do not own real oil. Every barrel they buy in the futures markets they sell back again before the contract ends. That may raise the price of “paper barrels”, but not of the black stuff refiners turn into petrol. It is true that high futures prices could lead someone to hoard oil today in the hope of a higher price tomorrow. But inventories are not especially full just now and there are few signs of hoarding.Then they go on to dismiss the entire notion of "peak oil":
Others fear that oil is pricey because it is running out. But there is little evidence to support the doctrine of “peak oil” in its extreme form. The Middle East still seems to contain a sea of the stuff. Even if new finds elsewhere have been rarer and less accessible than in the past, vast quantities of oil could now be profitably stripped from tar sands and shale. Maybe they would be accepting of "peak-oil lite"?
This week's cartoon: