This is a sentence I read everyday since oil passed $90:
Quote:
|
Many investors buy commodities such as oil as a hedge against inflation when the dollar falls.
|
That's a sign that the market reflexes are stupid and that "oil prices rise are unjustified" as the Saudi minister was saying.
The problem with bubbles is that everybody put their money on the same things at the same time and sell other same things at the same time as well.
There always has been up and down in inventories and oil demand has always been on the rise since WW2. Today for some reason we get a frenzy on crude futures as if oil will be a rare thing soon while demand from India and China will keep booming off the charts.
That's not going to happen.
Economies have autoregulating safeguards. If the price of one product rises too much then demand falls, simply because poeple can't pay for it anymore.
And, no the economic developement is not based on the ability of burning more petroleum fuels.
The most advandced way of transportation in our civilisation is not the car, but high speed trains on electrified lines (TGV, MagLev etc). And using electricity produced by non fossil fuels of course.
IMO, traffic jams alone should reduce gas consumption in Asia and other developing countries which can't follow up with building roads.