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The oil bulls are correct in their explanations of why prices have jumped, to a record $138.54 a barrel on Friday. It's indisputable that worldwide demand has surged, chiefly driven by strong growth in China, India and the Middle East. It's also true that most of the world's reserves are controlled by governments in places like Russia and Venezuela that mismanage production, thus curtailing supply growth.
But rather than forming a permanent new plateau for prices - as the bulls contend - those forces are causing a classically unstable market that's destined for a steep fall.
There’s been endless talk of commodities being in a bubble. Oil is in a bubble, we hear. But supply has to exceed demand in a bubble. It does not. Last February for the first time in the history of the world demand for oil exceeded production – that situation has remained the case for 90 days. But there is no supply shortage of bonds. And you have to question the real value and use of the underlying asset.
The bubble, if it’s anywhere, is in bonds and they, in my humble opinion, will be the next one to pop.
The Bush administration hired the consulting firm BearingPoint to help write the law in 2004. The bill was approved by the Iraqi cabinet in February 2007. The Bush administration considers the passage of the law a benchmark for the government of Prime Minister Nuri Kamal al-Maliki.
Iraq's energy reserves are an incredibly rich prize. According to the U.S. Department of Energy, "Iraq contains 112 billion barrels of proven oil reserves, the second largest in the world (behind Saudi Arabia), along with roughly 220 billion barrels of probable and possible resources. Iraq's true potential may be far greater than this, however, as the country is relatively unexplored due to years of war and sanctions." For perspective, the Saudis have 260 billion barrels of proven reserves.
But the real gem -- what one oil consultant called the "Holy Grail" of the industry -- lies in Iraq's vast western desert. It's one of the last "virgin" fields on the planet, and it has the potential to catapult Iraq to No. 1 in the world in oil reserves.
Originally posted by dbates
This has little to do with the price of the dollar, and everything to do with supply and demand.
If oil was going to drop, why would someone like Boone Pickens (The oil man) invest so heavily in alternative energy.
Just listen to him for yourself. He says oil will continue to to climb.
He even clearly states that this is not a bubble. The prices will continue to stay high.
Originally posted by sty
the fact is that the global demand of petrol is higher than the available resources.
We would need to double the petrol output in order to keep the price to 50$ during the next 20 years. Well.. this will not happen..
Originally posted by TheRepublic
i wish what you said was correct, but unfortunatly it is not. in order for oil to hit $50 a barrel the dollar would have to be worth what it was back in 1999 or 1998. inflation is the reason for oils rise, and inflation is only going upwards. oil is not really "worth" much more than it was back then it is just what we gauge its worth with has been devalued.