It's conceivable that oil could hit $100 a barrel soon, but the increases are being driven by momentum traders and speculators more than by fundamentals, say some analysts: "Hedge funds and other players are supremely in control of this market. It's a case of the tail wagging the dog." [BusinessWeek]
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I agree, oil prices are no longer dependent on "usual" market forces, supply and demand. The price is totally artificial. There certainly isn't some massive shortage of the stuff.
Menawhile, OPEC laughs all the way to the bank...
The key phrase there is some analysts. The article also quotes analysts who think the current price reflects market fundamentals pretty accurately, with speculation as a much smaller secondary factor.
Also, even the analysts who say $100/barrel oil reflects a speculative bubble still concede that market forces support a price of at least $60/barrel. Personally, I would be pleasantly surprised to see gasoline prices below $2.50/gallon again in my lifetime. Likewise, it wouldn't surprise me in the least if $5/gallon were the going rate at some time within the next two years.
@5cents: There may not be a shortage now, but you should acquaint yourself with the concept of Peak Oil. That's the point after which supply will no longer meet demand. Pessimists on this subject will tell you the peak was in 2005 and were currently at a production plateau. The wild optimists will tell you we have another 30 years to get used to the idea of finding a substitute for petroleum.
Until as recently as 2 years ago, OPEC set an informal price target of $50-$55/barrel. That was the point at which they made a handsome profit, yet not so high that the buyers get serious about alternative fuels. These days, no one knows what the real target is. The Saudis say that market fundamentals don't support $80/barrel…so you have to ask yourself why they haven't done anything to increase supply and bring the price back down. It could be because they can't actually increase supply anymore.
I hope it does hit $100. Then maybe some poor people will get off the roads and traffic will lighten a little.
@lorddave: and you can keep paying more gas tax for your gas guzzler. anyone that makes a comment like that either drives one or is a troll, in either case is a scum bag. but then look at your handle.
Since we refuse to do the right thing and raise gas tax , then perhaps $5 a gallon might help. with a little luck, Turkey will go into Iraq, Iran will continue to strut, Chavez will continue to be Chavez, and then we may ask ourselves why we continue to want to depend on these places for energy.
Just another way for everyone to subsidize the baby boomers retirement.