So, where is this speculative oil that has been taking out of the market being stored? It has to be somewhere? And its not. The increase in the demand side of the demand/supply equation, caused by the emergence of the Bric countries (Brazil, India, China and others, especially the wealty Arab countries themselves) has stressed the demand side and prices have come down. Meanwhile, the quality of oil has been degrading and it has become harder to find and expensive and difficult to extract. Major fields like the Mexican fields in the gulf are depeting very, very quickly. This is all called peak oil(where we have used 50% of the oil on earth). No one knows if we have reached peak oil but if it hasn`t come yet, it will soon. Alternative energy and in particular uranium is where its at. Uranium development is what eventually will take the Arab grip off the world throat. That will happen progressively. Meantime oil producing countries can make hay.
Market price reflects future shortage. |
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