Saj Karsan

Oil: Does Supply and Demand Still Apply?

Hi Cjworth. That's just not the case. The IEA predicts growth in supply for at least the next two years: www.forbes.com/reuters...

Ozzy, I agree that the size of the wells is not identified. My intent was to show how a high price increases supply activity. If you have data on the size of the fields I'd love to see it. Regarding trends, I'm not saying we should look at the price trend, I'm showing that high prices result in more exploration which results in more supply. It is erroneous to draw a conclusion that we've run out of oil when it's clear from the chart that the oil price was so low for so long that there wasn't any POINT to finding new oil, which is why we're at where we are. By the way, well drilling peaks in 2007 not 2005, and only because that's the last year of data available! 2008 will mostly be higher still, again drive by incentives considering the high prices.

Tern, In no way does this talk down the spot price. It takes time for oil exploration to yield results. My conclusion clearly states this is a long-term effect.

MattB, agreed the supply side was simplified here. This is just one aspect of the supply/demand effect I'm trying to illustrate, but your points are valid.

Lou, you are right, poor choice of words on my part.