Tuesday, August 09, 2005

Sixty-Four Dollar Oil

On Monday, August 8, 2005--the day that President Bush signed that massive corporate welfare program also known as the "energy bill"--oil prices came within a gnat's eyelash of sixty-four dollars a barrel. Prices hit $63.99 during trading and closed at $63.94.

Markets get jittery when supplies are tight. Monday' s record price was attributed to security concerns in Saudi Arabia. Tomorrow it will be something else, perhaps the passage of a dog leash law in Podunk, Oklahoma. These days it takes very little to spook the oil markets. Get used to it.

For several fundamental reasons, prices will continue to rise. They'll rise in the short term because we've not yet seen prices high enough to quench demand. They'll rise in the long term because, as I have previously written, we've reached the point where each year's worldwide oil production will be less than the previous year's.

Copyright (C) 2005 James Michael Brennan, All Rights Reserved


Post a Comment

<< Home