http://www.economist.com/news/business-and-finance/21646096-price-oil-has-bounced-recovery-some-way-dead-cat-bounce
Recently, because of the high demand for oil, the prices have increased dramatically. According to the article, some of the factors causing the spike in the oil prices are temporary. Also according the the article, Americans are wanting more and more gas guzzilling cars. Because of the demand for these gas guzzilling cars, there will be a surge in demand for energy, but not for awhile. The article concludes with the idea that it will be at least 5 months before oil prices become stable again.
5 comments:
Oil is going to have these temporary ebbs and flows due to the cyclic nature of production types. The summer blend costs more to produce so oil stayed above $50/barrel for a while. I have read that many sources believe it will get below $40 before it is all said and done. This is a very interesting time to study demand on less efficient cars. I think consumers would be extremely shortsighted if they changed purchase habits due to the unknown nature of this price downturn. What do you think?
I agree that consumers would be shortsighted if they changed purchase habits in regard to vehicles. Oil will continue to fluctuate. In my opinion, consumers should continue to focus on more efficient cars for both environmental and economic reasons.
Although America is producing more oil and it has benefitted GDP it has not had a good affect on the environment. As the companies create their gains from the cheap energy they are devastating the environment and their is no way to pay for these issues with the market. This demonstrates a market failure that needs to be addressed more thoroughly.
I read an article today where Former Fed Chair Alan Greenspan says that the problem with the American oil market is that the oil production has not declined as it was expected to and as exporting American crude is illegal, all of the excess oil is just building up in storage.
And this is creating abnormalities in the system.
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