Sunday, June 7, 2009

Oil price - up 50 percent since February

This increase is not just down to the recent weakness of the dollar. The market for oil is tightening.

Inflation rates - both here and in the US - have fallen in recent months. However, this decline was almost entirely due to the unwinding of the speculative surge in oil prices last summer. With oil prices on the rise again, inflation will again start to creep up.

An oil price shock, coupled with a deep recession - that is what we call stagflation.


  1. Oil prices rises are a symptom of inflation (in the money supply), not the cause. :)

  2. I have read that China have been stockpiling and US inventories havn't been so high for a long time. Storage capacity is running out. It will likely drop soon.

  3. anon 10:49

    Agreed. Higher oil prices are a symptom of monetary growth.


  4. Totally disagree. Higher oil prices are a symptom of lack of supply.

    Look at the oil production figures and you will see that growth in oil production stopped in 2005.

  5. @alice

    Read The Partys Over to find out about the bubble no-one wants to talk about....

    Good sites on the topic are The Oil Drum, or Energy Bulletin. Also google "Matthew Simmons".

  6. I have no idea whether we have reached "Peak Oil" or not. But I do think that Peak Oil is the only scare story about mineral resources that's been worth thinking about in my lifetime, all others being obvious crap, to be dismissed instantly.

    On non-mineral resources, the worries about overfishing seem reasonable to me, not least because I was an overfisher in my adolescence.


  8. If it was a simple matter of inflation, why would the price fluctuate so much? Wouldn't we see a slow, steady climb instead of these spikes? And most importantly, wouldn't there be increased consumption to drive demand? Seems more likely it's a case of 'pump and dump' by a financial cartel to me...

  9. I myself looked to purchase crude (via ETFs) as a hedge against inflation, if others share my view then oil will go up. I view the actions of the UK government as inflationary to reduce companies/individuals indebtedness at the expense of the old (they will die soon so the Gov doesn’t care about them) and the sensible.