flexmarketman

Is Oil a Bubble? Part One

The last two Business Weeks have featured articles about people making tons of money bringing previously ignored oil sources to market. Other articles, mentioned here, talk about how companies and consumers are starting to conserve.

There is much discussion about how the prices are being driven by the "Emerging Markets". Having spent a lot of time in third world countries, I can tell you that those markets are far more sensitive to price swings than the US. Thus, if they are exposed to the same price swings, they are more likely to drop demand quickly.

Of course, there are factors that make these scenarios "sticky" like the comments on subsidized prices in some countries. However, like the thousands of examples in history, governments usually have a hard time maintaining price constraints on commodities. They will move. Prices will moderate.