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The Ethanol Industry: An Insider's Take

It's no doubt not acceptable but I do believe the price of oil is determined in a monopolistic way. It's not necessary that you have a conspiracy, all you need, which we have, is the industry to be in the hands of very large entities that have a common interest and no effective consumer checks on their market power. The price of oil can be determined quite easily if you have big money moving mostly in one direction in the futures market, the place where the price per barrel is set.
That being said I don't think we will see $90 barrel anytime soon, at least it will not hold at that level should it briefly reach it. The reason is simple. The benefactors of the bonanza would be shooting themselves in the foot. The enormous profits acquired would not be worth as much as they would be at a lower per barrel figure. Since oil is an ingredient in so many products and directly effects agricultural production, prices of everything must eventually reflect oil's increases. The net result is, the profits earned aren't worth as much as at some lower level of the barrel price of oil. There is a very dampening (stagflation) effect to the economy which works as well since it will change behavior and not just in benefical conservation. The people living in rural areas that must drive long distances are acutely effected and they depend on more expensive forms of heating fuels also. Fuel consumption isn't elastic for many people because they don't really have any choice. There is a price level where it forces people to make very difficult life style changes. I think a stable $90/bbl. figure is beyond the point of balance of these factors. Vic

The Ethanol Industry: An Insider's Take

It's no doubt not acceptable but I do believe the price of oil is determined in a monopolistic way. It's not necessary that you have a conspiracy, all you need, which we have, is the industry to be in the hands of very large entities that have a common interest and no effective consumer checks on their market power. The price of oil can be determined quite easily if you have big money moving mostly in one direction in the futures market, the place where the price per barrel is set.
That being said I don't think we will see $90 barrel anytime soon, at least it will not hold at that level should it briefly reach it. The reason is simple. The benefactors of the bonanza would be shooting themselves in the foot. The enormous profits acquired would not be worth as much as they would be at a lower per barrel figure. Since oil is an ingredient in so many products and directly effects agricultural production, prices of everything must eventually reflect oil's increases. The net result is, the profits earned aren't worth as much as at some lower level of the barrel price of oil. There is a very dampening (stagflation) effect to the economy which works as well since it will change behavior and not just in benefical conservation. The people living in rural areas that must drive long distances are acutely effected and they depend on more expensive forms of heating fuels also. Fuel consumption isn't elastic for many people because they don't really have any choice. There is a price level where it forces people to make very difficult life style changes. I think a stable $90/bbl. figure is beyond the point of balance of these factors. Vic