Badger Blog Alliance

Sic Semper Tyrannis

Thursday, June 12, 2008

Re: The tale of two commodities

Tee Bee,

Tully's article reminds us that supply and demand work in all markets. I remember him saying when houses became overpriced people stopped buying them. Now, house prices are coming back to realistic levels and people are starting to buy houses again.

Seems to me the same is true for the oil market. Evidence in the shutdown of heavy vehicle production, stats showing we are really using less gasoline etc all point to the fact supply and demand work in oil markets as well.

Are there differences in the markets? Sure there are, but the laws of supply and demand are not one of those. Again, every analyst I read who says oil is overpriced says they are looking at the short term. Reports have it there is a lot of oil bobbing on the waves, waiting for higher prices as long as signs keep pointing to sharply higher prices what incentive does someone sitting on three or four tankers of oil have to bring the oil to market?