Editorial in the Energy Current supports Peak Oil, not speculation, for rise in prices.
From The Energy Current via The Oil Drum's daily Drumbeat news roundup.
EDITORIAL: Peak oil, not speculation
by Steven Kopits, Managing Director, Douglas-Westwood, New York
NEW YORK: In seeking to explain the run up in oil prices from 2004 to 2008, commentators often turn to "speculation" as the primary cause. While speculation - or at least a kind of piling-on - may have explained the very late stages of the oil price rally, the willingness to attribute oil prices primarily to financial investors - as the CBS news show '60 Minutes' did a few months back - risks drawing the wrong lesson from the period. Let's re-wind the clock and recall the events of the time.
After many years of solid growth, oil production plateaued in October 2004. Regardless of the price level, the oil supply simply stopped responding, and from then on, the world had to make do with broadly flat supplies. Ordinarily, the expansion of the world's economy would be accompanied by increased energy consumption and an inelastic oil supply might have been expected to hinder economic development. It didn't. In the four years to mid-2008, the world economy expanded by 18 percent. The global economy boomed, even without new oil.
We all know how that turned out.
More at the link.
EDITORIAL: Peak oil, not speculation
by Steven Kopits, Managing Director, Douglas-Westwood, New York
NEW YORK: In seeking to explain the run up in oil prices from 2004 to 2008, commentators often turn to "speculation" as the primary cause. While speculation - or at least a kind of piling-on - may have explained the very late stages of the oil price rally, the willingness to attribute oil prices primarily to financial investors - as the CBS news show '60 Minutes' did a few months back - risks drawing the wrong lesson from the period. Let's re-wind the clock and recall the events of the time.
After many years of solid growth, oil production plateaued in October 2004. Regardless of the price level, the oil supply simply stopped responding, and from then on, the world had to make do with broadly flat supplies. Ordinarily, the expansion of the world's economy would be accompanied by increased energy consumption and an inelastic oil supply might have been expected to hinder economic development. It didn't. In the four years to mid-2008, the world economy expanded by 18 percent. The global economy boomed, even without new oil.
We all know how that turned out.
More at the link.