<The IEA WEO 2008 - Objectivity of the International Energy Agency The Oil Drum The 2008 IEA WEO - Oil Reserves and Resources>
<DrumBeat: November 19, 2008 DrumBeat DrumBeat: November 21, 2008>

222 comments on DrumBeat: November 20, 2008

Comments can no longer be added to this story.

Show without comments | PDF version

Positive_Phototaxis on November 20, 2008 - 4:02pm Permalink | Subthread | Parent | Comments top

What I don't get is that the decrease in demand is nothing compared to the percentage decrease in oil prices.

The increase in oil prices bore little/no resemblance to the increase in demand when things were inflating... why should you expect the downside to be much different?

Comments can no longer be added to this story.
CreosoteChris on November 20, 2008 - 5:30pm Permalink | Subthread | Parent | Comments top

If I'm not misunderstanding this (and maybe I am, I'm not claiming to be a major economics expert) it's good evidence of the very severe inelasticity of the demand / supply relationship.

Small excess of demand over supply = disproportionate price hike
Small excess of supply over demand = disproportionate price drop

I see it as an illustration of the extreme dependence of the modern economy on oil.

The foreseeable future looks like this to me: every time the economy starts expanding "healthily", that only lasts until the demand for oil exceeds the supply for a while, and energy prices then proceed to skyrocket, inducing another recession.

We will lurch from crisis to crisis, with the inexorable shrinkage of supply over the long term, meaning booms getting shorter and weaker, with recessions getting longer and deeper.

I wish I didn't think this, but I do. :[

Regards Chris

Comments can no longer be added to this story.

222 comments on DrumBeat: November 20, 2008

Comments can no longer be added to this story.

Show without comments | PDF version