AL Berta

Oil Demand Does Not Have to Cause Higher Prices

As you said, World-wide demand did not decrease from 1946 to 1998. However, the ability of the industry to amply meet the rising demand has now been exhausted and this is where the wheels fall off of your argument. Current maximum industry production of +/- 85 mmbbls/day is scarcely keeping pace with current demand. In addition, demand is now growing faster than production is increasing. So the answer to your question in today's current supply/demand imbalance is; "Yes, higher demand equates to higher prices." The demand side is only half of the equation. With stable production levels meeting increasing demand levels, prices will indeed continue to rise.