Jim says:
Cannot recent trends of real oil prices be explained by a big increase in world demand (led by China) hitting short-term supply constraints? The war against Iraq and other disruption in the middle east contribute. Blips need not be due to manipulation.
Minqi Li claims that China's investment bubble is about to burst: "Over the last two years, a massive investment bubble has taken shape in the Chinese economy, where the investment-GDP ratio is approaching a ridiculously high 50 percent, possibly a world historical record. As China's investment bubble is about to burst, the Chinese economy could slow down significantly next year, dragging down other Asian economies with it" (at <http://mrzine.monthlyreview.org/li190805.html>). I don't know which bubble -- the US real estate bubble or the Chinese investment bubble -- is gonna deflate first, but one will probably drag the other down either way, so that means that there will soon be less world demand for oil (maybe beginning around 2007*) and oil prices will go down again several years from now? * "American homeowners have made trillion-dollar bet that mortgage rates will remain near record lows for at least few more years; economists worry that bet could turn bad with some interest rates already rising; Deutsche Bank analysis shows only about $80 billion, or 1 percent of mortgage debt this year will switch to adjustable rate based largely on prevailing interest rates; some $300 billion of mortgage debt will be similarly adjusted in 2006; portion will soar in 2007, with $1 trillion of nation's mortgage debt--or about 12 percent of it--switching to adjustable payments" (David Leonhardt and Motoko Rich, "The Trillion-Dollar Bet: Homeowners Take Risks in a Bid for Lower Mortgage Payments," <http://query.nytimes.com/gst/ abstract.html? res=F30E13FE3C5F0C758DDDAF0894DD404482&incamp=archive:search>, 16 Jun. 2005, p. C1).
for what it's worth, I used Excel to calculate the "real energy price" for the US from 1959 to 2004. (Data are from the ECONOMIC REPORT OF THE PRESIDENT, table B-60.) results: using XL's graphing facility, the linear and exponential trends over this period were slightly downward. The logarithmic and power trends were slighly upward, with most of the increase happening in the early 1960s. The 6th degree polynominal shows lower real prices in the 2000s than in the 1960s.
Jim, is the graph at your website? Yoshie Furuhashi <http://montages.blogspot.com> <http://monthlyreview.org> <http://mrzine.org> * Mahmoud Ahmadinejad: <http://montages.blogspot.com/2005/07/mahmoud- ahmadinejads-face.html>; <http://montages.blogspot.com/2005/07/chvez- congratulates-ahmadinejad.html>; <http://montages.blogspot.com/ 2005/06/iranian-working-class-rejects.html>
