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The Forum > Article Comments > Why oil booms and busts happen > Comments

Why oil booms and busts happen : Comments

By Nawar Alsaadi, published 3/3/2016

Once upon a time oil demand declined, supply increased, and prices rallied more than 50 per cent. How could that be?

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Yes, very accurate history lesson and the part played by billionaire oil speculators, who like most speculators got burnt, when the impossible happened, the price of oil dropped with terminal velocity!

And given most folks have had an absolute bellyful of being treated as cash cow captive markets! Onya Saudis and the oil glut caused by apparent overproduction?

Or just maybe, an easing demand from ostensibly the largest energy market, China?

And a dwindling oil market and or demand there, teller of the real story about the state of their contracting energy dependant economy?
Rhrosty.
Posted by Rhrosty, Thursday, 3 March 2016 12:07:21 PM
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I suspect all-liquids will never exceed 100 mbpd so for practical purposes we are at Peak Oil now. The question how long is any plateau and when and how fast will it decline. The US fracking miracle hasn't been repeated in other countries. Strangely Australia now has higher GDP growth than the US but we are perilously dependent upon oil and fuel imports.

I think when liquid fuels go from 97 mbpd to say 80 there will a panic. Food prices must increase. Airline CEOs won't get their bonus. Unemployment may mean people can't afford electric cars the alternative to gas guzzlers. On the one hand reduced supply should mean an oil price increase but weaker demand via recession works against that. The 2008 GFC showed that $150 a barrel is unworkable so maybe the last drop (barrel) of oil will be priced in the $50-100 range.
Posted by Taswegian, Thursday, 3 March 2016 1:30:29 PM
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