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Originally Posted by bkkandrew Now, we can see that the number of cars in China has increased 53% from 2005 to 2007. Yet in the same period oil production has decreased by 0.036%. This significantly is the period of the large rise in oil prices.
So is Butterfly right that production is rising in tandem with demand? |
great now you are confusing growth rate of supply and demand, with quantities of supply and demand, you can't make that shit up
The growing supply of oil (note, it doesn't say rate) match growing demand. Is demand served by supply ? yes, is demand growing faster than supply, probably, but as long as supply serves demand, everything is fine. A growth rate is NOT quantity, and is irrelevant in the price equilibrium of demand and supply. That's what you are failing to understand, and you keep barking at the wrong tree.
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Originally Posted by bkkandrew So are the cars 'real' or 'imaginary'?
Will they produce 'real' or 'imaginary' demand for oil? |
See my post above, you are confusing growth rate and quantities. As long as all those cars are being served, there is no problem. Forecasting price based on growth rate is exactly the problem here, and explain the speculative moves we are seeing on the oil market. At the current rate, the "insignificant" downfall could become significant in the FUTURE. But speculators forget about price elasticity and how demand and supply reacts and adjust to higher prices. This will lead eventually to a revision of the growth rate and lower expectations of future oil price. And this is probably what we are seeing already.