> If these kinds of arguments are right, then in the coming slump, as in
> previous downturns, oil prices like other commodity prices are likely to
be
> depressed. If the 'oil is peaking' argument is right, then sooner or later
> a downturn will occur in which previous experience does not apply, and
> despite falling demand, oil prices stay high.
Last week, you said that the market price was not indicative of the coming
crisis of oil production, because it's not functioning like a normal price
should. Now, you're saying that if it moves in the direction you think it
should, then the market price _will_ be indicative of the coming
crisis--sooner or later. Although I don't yet know much about the specific
data that you refer to, as an argument, you have to admit this sounds pretty
fishy.
But okay, if we accept your argument, how long do we have to wait? Today,
ostensibly on news of the coming recession, November forward contracts on
crude fell 15+% from yesterday, to $22 /barrel. The price of a million btus
of natural gas was above $10 last November during the energy crisis. It is
now around $2. Are we close enough to a slowdown for this to count?
By the way, if someone really believed we had entered a new era of
immaterial productivity, that would seem to imply _less_ oil supply (and
price) elasticity w/respect to the business cycle, not a usual kind. I
haven't seen anyone make that argument, though.
Christian
