[frankthetank]

http://www.vheadline.com/readnews.asp?id=26014

In percentage terms, growth in 2004 was very close to 4%, the highest for over 25 years. This big number sharply conflicts with forward planning ideas and beliefs of the IEA and other energy players -- especially the world's 10-biggest oil corporations. None of these players figure and plan for demand growth being anything over 1.75%-per-year on a long-term basis. Some, such as BP and ENI, still claim today that the 'normal' long-term rate is about 1.3%-per-year!

very good point

One of the biggest problems facing the IEA, the EIA and a host of analysts and 'experts' who claim that 'high prices cut demand', either directly or through damping economic growth, is that this does not happen in the real world. Since early 1999 oil prices have risen about 400%. Oil demand growth in 2004 at nearly 4% was the highest in 25 years. In each year since 1999 world oil demand growth has been higher than the previous year -- as prices rise!

comments?

[ohanian]

On the consumer side, to back the notion of slow growth being a fixed paradigm, oil users are everywhere thought to show 'price elastic' response to higher prices, that is they instantly cut their consumption whenever prices rise. On the supply side, the same high prices are expected to rapidly bring new and big suppliers into the market.

If this does not happen, we have an oil crisis.

Not If this does not happen, we have an oil crisis
but WHEN this does not happen, we have an oil crisis

[SD_Scott]

There's a couple of articles on asia times about this. I can't remember the link, but the article explains that the high price likely won't reduce demand.

[JohnDenver]

There's a couple of articles on asia times about this. I can't remember the link, but the article explains that the high price likely won't reduce demand.

Only one thing will reduce the demand: Greenspan and the Chinese central bank making a conscious decision to stop the party by seriously jacking up interest rates. Personally, I don't think they have the nards to do it right now. It's safer to just leave the punch bowl out, and keep their fingers crossed. Don't rock the boat...

[PhilBiker]

One important problem with oil prices and the apparent inelasticity of demand (which been very eloquently addressed by my personal hero Matt Simmons) is that the price, even at double or triple or even quadruple today's price, is dispraportionatly low already.

Example: It won't take $5 a gallon in the US to significatly change our habits, it will take $15 a gallon. $2 per gallon is practically free considering how much effort and expense is required to extract and refine versus how much energy we get from it.

This is why Matt calls for close to $200/barrel prices. A "fair price" is not always what relatively free markets yield. Crude oil and its distillates are massively undervalued and have been forever.

[tokyo_to_motueka]

http://www.vheadline.com/readnews.asp?id=26014

Since early 1999 oil prices have risen about 400%. Oil demand growth in 2004 at nearly 4% was the highest in 25 years. In each year since 1999 world oil demand growth has been higher than the previous year -- as prices rise!

comments?

Mr. McKillop is on the money now.
This is the crux of these Alice in Wonderland economic myths.

Nymex crude:
December 10, 1998: $10.72
March 3, 2005: $55

Increase= 414%

As Mr McKillop says, until you get EXTREME prices ($200+) crude demand displays NEGATVE PRICE ELASTICITY!!!!!

Why can't the mainstream business press read the numbers and TELL THE TRUTH???
WHY WHY WHY WHY WHY ???????

It's a giant conspriracy. No, no, not to hide iminent PO.
But to stop the kid from pointing at the Emperor's new clothes and laughing at the silliness of everyone around him!!!

They don't want Joe Public to understand that the economic model is complete joke.

Because once ordinary people face up to the silliness, it's all over red rover, for this pyramid scheme.