Comments (2)

Anytime anyone says supply and demand does not matter in price determination, take cover! This statement is, in the following sense, disingenous, and probably meant to distract the world from the role the Saudis themselves play in determining short-run oil supply. Even if futures markets (i.e., speculation) are driving current prices, those prices must be validated by the price that clears the current market of oil. How does that happen? The most likely way is that oil producers adjust production levels to generate the supply that validates those prices. Apparently Saudi Arabia has most of the excess extraction capacity in the world, and hence likely is the marginal supplier making those adjustments.

Current oil prices have to do with what is not talked about, let alone analyzed, in the media.

1. The free-fall of the US dollar, the reserve currency petrol is still traded in. As the value of the US dollar falls, the price of oil necessarily rises. Who in the world would accept to lose big, by trading priceless oil for worthless US dollars? (The world needs a new reserve currency, be it a basket of currencies, to replace the US dollar... with all the consequences this will bring along for the US -- post-American world!)

2. Speculation on oil having gone haywire, for obvious reasons: one can make so much money in no time, and at our expense, speculating on oil. (Speculation on oil can and must be curtailed)

Current oil prices have almost nothing to do with China's and India's current oil consumption, something that will be confirmed the moment the above measures are implemented.

As for food, here is food for thought we are seldom served at this picnic table, if at any:

"U.N. expert (Jean Ziegler, who has been the United Nations' independent expert on the right to food since the position was established in 2000) called the growing practice of converting food crops into biofuel "a crime against humanity," saying it is creating food shortages and price jumps that cause millions of poor people to go hungry." ***

Where are to be found those media heroes prepared to discuss and analyze those issues fully, instead of repeating the same worn-out clichés so nobody can even begin to understand what is going on, while our political "leaders" remain in a coma?

***

http://www.livescience.com/environment/071027-ap-biofuel-crime.html