I wonder how they’ll be after the midterms or in two years if a dem gets elected, since I doubt these prices will ever go back down at this point. I imagine the 600% (if people are lucky) price increase will suddenly no longer become a problem and “the economy” will be doing great.
Commodity prices are not like retail prices in that they are purely set by supply and demand balances. If prices remain artificially high it will lead to overproduction, and in turn the filling of inventory and eventually price collapse as we run out of room to put the oil and the only way to keep it in the ground is to make it uneconomic to drill
This is why the strait of hormuz thing will blow up oil prices, because you’re suddenly holding up 10-20% of the world’s supply. That means the draining of storage elsewhere has to be incentived immediately. In relatively short order inventories will start running low and then the thing goes stratospheric.
For context the oil price collapse back in 2014-2016 was driven by like a 1% oversupply from shale drillers
Sorry, I should’ve been clear that I was talking about the retail prices for oil there, the price per barrel will stabilise but I doubt that will be passed onto consumers. You’re absolutely right though.
I wonder how they’ll be after the midterms or in two years if a dem gets elected, since I doubt these prices will ever go back down at this point. I imagine the 600% (if people are lucky) price increase will suddenly no longer become a problem and “the economy” will be doing great.
What do you mean? This is GREAT for the economy! Just like how natural disasters, mass shootings, and terrorism also make line go up.
Commodity prices are not like retail prices in that they are purely set by supply and demand balances. If prices remain artificially high it will lead to overproduction, and in turn the filling of inventory and eventually price collapse as we run out of room to put the oil and the only way to keep it in the ground is to make it uneconomic to drill
This is why the strait of hormuz thing will blow up oil prices, because you’re suddenly holding up 10-20% of the world’s supply. That means the draining of storage elsewhere has to be incentived immediately. In relatively short order inventories will start running low and then the thing goes stratospheric.
For context the oil price collapse back in 2014-2016 was driven by like a 1% oversupply from shale drillers
Sorry, I should’ve been clear that I was talking about the retail prices for oil there, the price per barrel will stabilise but I doubt that will be passed onto consumers. You’re absolutely right though.