This is not a bubble, it is reality. Bubbles are typified by prices rising far beyond the real value of the product. The question is, just how much is the consumer willing to pay to drive his 5000 lb SUV 15 miles in 15 minutes while riding in air conditioned comfort? Is that result more desireable than walking or riding a bicycle that same distance (2-5 hours at $XX/hr, whatever value you put on your time)? If so, then the price of gasoline and crude oil is still cheap when compared to the benefit enjoyed by the consumer.Is current Oil Price a bubble? When wiil this bubble burst?
I'm starting to notice some speculation of that, yes. The price keeps rising, but demand isn't rising /that/ fast, and supply is pretty high.
Even if the price 'crashes,' though, it's not likely to fall much below 80 - there's a lot of wells that become unprofitable below that price, so that would represent a very elastic point in the supply curve. That is, if the price hit 75, so much supply would dry up that demand wouldn't be met, and the price would have to rise.Is current Oil Price a bubble? When wiil this bubble burst?
No they are not a bubble, they are here because they are long over due I'm afraid. And they are not going down any time soon.
it might burst when our economy tanks.
and that might not be to far off.
NO
Did the Cigarette price ever go back to a dime a pack
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment