RE:RE:RE:RE:RE:EIA reportOil demand has been relatively inelastic (in richer societies) in the past but that is going to change as substutions arise....
Anyone in West and Europe that runs taxi fleet, delivery service etc....they are going to be done with oil as soon as they can as people get fed up with the volitility.
Alot of people have been on the fence with EV's but this could be straw that broke camels back.
Watching a big science experiment in front of our very own eyes each day....
Pandemic ends...lol let's pump gasoline to 2 bucks a litre and raise interest rates at same time....
I think this time demand goes down...lots of people broke...
Broke means you walk or take the bus or subway
JohnJBond wrote: Yes stagflation, and all sorts of other economic difficulties likely ahead.
When the inflation rate exceeds the interest rate - then the insurnace model doesn't work!
Bubbles in real estate, cryto (tulip) currencies, high tech stock etc
There are all sorts of problems on the horizon.
What does that mean for oil?
All that matters for oil is demand vs supply.
Demand for oil is inelastic.
Supply of oil is elastic.
Those last two sentances are the answer to a question you may be wrestling with.
Stagflation, inflation, high interest rates, all have more of a negative affect on supply than they do on demand.
Oil is the blood that runs our world. Using a biological example, reducing metabolic activity doesn't reduce the need for blood. If you want to use less blood, you have to cut off a limb. Its a rough example, but you get the idea.
Inflation, stagflation, high interest rates - all are a concern economically, but I my focus is on the demand/supply situation. If they affect demand and supply equally, then they are irrelevant. If they affect supply more than demand, then they are benefitial to oil producers.
In the past, supply was always able to swamp demand. The ability to do that this year, or next year, or the year after, is all that matters to me presently.
I can't see it right now. I don't think you can frighten the world again into locking its doors for a year. I don't think governements have the resourses to pay people to stay at home again.
The greens have done their damage - the big projects are not happenning. The shale surprise is over. Its taken years to supress the oil sector - it will take years to undo that damage - I can't see it happening this year, next year or the year after.
As for electric cars - yes there will be more and more - but high interest rates, inflation and stagflation will result in less people buying them, and more people keeping old gas cars on the road. The existing fleet of internal combustion engine cars isnt going to disappear this year, next year or the year after.
I hear everything you say, but it doesn't give me anything to change my view (other than there will be some volitility in the next two months from changes to the Iran and Ukraine situation).
As for OPEC - they have more invested in the future of oil than anyone. They are holding at their 400 boe/day increase. Imagine how much pressure they have been under from Biden (who must be doing all he can to lower prices). They are unlikely to ignore Biden lightly. This further suggests they don't have the extra supply they claim to.