Demand is looking strong and there is no reason prices will not keep rising until there is a hiccup in the growth.
Existing literature has mostly focused on the relationship between unemployment and oil prices of developed countries, the current study used the data from developing country Pakistan to investigate the relationship between oil prices and unemployment. The current study used monthly data from the period 1991:01–2010:12, making 238 observations of each variable for analysis and employed Toda Yamamoto causality test. The results of current study suggested the significant effect of oil prices on unemployment
GoghGoner wrote:Airlines fares have seen price deflation 2014-2017 that will be ending this year. Airline passenger rate has a negative relationship with prices and after declining for a few years is now back above the rate achieved in 2007. Airlines are very exposed to oil prices.
Alfred Tennyson wrote:We are not now that strength which in old days
Moved earth and heaven, that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.
The global economy needs rising consumption, especially through a growing middle class, and that can only happen if oil prices are kept low.
rockdoc123 wrote:The global economy needs rising consumption, especially through a growing middle class, and that can only happen if oil prices are kept low.
yet demand/consumption continued to rise that whole period from 2011 through 2014 when oil prices hovered above $100/bbl. So what do you consider as "low"? Obviously it must be above $100
Demand grew significantly in the Middle East. It grew in Asia. It fell/flat-lined in the US and Europe.
Demand growth is very strong in oil importing nations this past year and is much stronger in the period mentioned. It is not some kind-of of linear line that you seem to imagine it to be.
You are saying oil when you should be saying "all liquids".
rockdoc123 wrote:And I'm afraid it is pretty much a linear line when you look at global demand. I've posted graphs of that numerous times here.
The slowdown in 2018 demand growth is mainly due to the impact of higher oil prices, changing patterns of oil use in China, recent weakness in OECD demand and the switch to natural gas in several non-OECD countries.
Yeah, when the timeline is expanded, the graph loses granularity. There is a huge difference of demand growth of 1.8 mbd vs 1.3 mbd. If supply is less than demand, inventories fall like they did the past year.
rockdoc123 wrote:Yeah, when the timeline is expanded, the graph loses granularity. There is a huge difference of demand growth of 1.8 mbd vs 1.3 mbd. If supply is less than demand, inventories fall like they did the past year.
The point is not that it is increasing at slightly slower or faster rates, the point is demand was increasing and still is. It is not decreasing and that is the point that the ETP twits seem to not understand.
Not sure what it is you are arguing here about. My original comment was to the comment someone made that rising consumption can only happen if oil prices are low. That is patently incorrect according to recent history. $100/bbl did not kill demand, it was oversupply that made the price drop. Obviously there is a high price that will cause problems but we have yet to test it.
After 2008, consumption dropped significantly until QE and ZIRP kicked in, which is about the time oil prices jumped up as consumption began to rise. Hard to determine true cause and effect when markets and consumer confidence are being manipulated to such an extent.
GoghGoner wrote:Here is the latest from the IEA that explicitly states that demand is affected by price. That is econ 101, rockdoc.
GHung wrote:After 2008, consumption dropped significantly until QE and ZIRP kicked in, which is about the time oil prices jumped up as consumption began to rise. Hard to determine true cause and effect when markets and consumer confidence are being manipulated to such an extent.
Outcast_Searcher wrote:GoghGoner wrote:Here is the latest from the IEA that explicitly states that demand is affected by price. That is econ 101, rockdoc.
Maybe before trying to pontificate about economics, have the first clue about it?
First, they're talking about reduced demand growth, not reduced demand.
Econ 101 also teaches about inelastic demand. That's oil products like gasoline for the consumer. For the driving people really need to do (go to work, the store, etc), demand is HIGHLY inelastic because people feel they NEED that transport fuel to get by. So even if you triple the gasoline price or multiply it by ten, in the short term, people will generally drive enough to get to work and the grocery store etc. Optional driving can dry up in a heartbeat if the price gets high enough to be painful, of course.
Outcast_Searcher wrote:GHung wrote:After 2008, consumption dropped significantly until QE and ZIRP kicked in, which is about the time oil prices jumped up as consumption began to rise. Hard to determine true cause and effect when markets and consumer confidence are being manipulated to such an extent.
Ah yes, that strawman again. If you don't like what the markets tell you or if you don't understand it, then blame the big "manipulation conspiracy", those shadowy figures that invisibly "manipulate" the markets in ways you dislike so.
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