The Oil Economy
When it comes to the high cost and low supply-side sensitivity in the oil market I’m of 2 minds. The first thought is in that our own futures markets are largely what is driving the demand it’s all just another big Soros plot.
But the other side is that it’s Economic Warfare 301. We can aford to pay these prices better than anyone else in the world so while, yes, it does hurt the impact of these high prices are effecting less stable economies much more quickly and in a more severe way.
Oil consumption in the US is up over the last 30 years but due to the efficiency and conservation efforts it’s not up nearly what some might think. Overall US consumption is actually fairly stable.
But China (and other tenuous but fast growing economies) is another story. China’s industrial base is growing very fast. So fast in fact that oil isn’t the only commodity China is putting the squeeze on. Cement is also a hot item with prices heading toward potential records.
So we want to cool down China as a consumer we do just what we’d do to slow down something we don’t want sold here in the States. We drive up the price.
I know I’m fantasizing but it is a curios thought…