Will the fluctuation price of crude oil slow the world economy and cause markets to crash…?

…globally?
Is the price of crude oil truly a "supply and demand" problem or is it backlash from the Middle Eastern countries to punish those that participate in the further exapansion of the western way of life and culture? Will the ever-rising price of crude oil cause global panic? Will the introduction of alternative fuels and energies in 2012 cause a crash in the price of crude oil leaving supposed "oil rich" countries high and dry so to speak, with a smaller market for their oil supply?

4 Responses to “Will the fluctuation price of crude oil slow the world economy and cause markets to crash…?”

  1. Corine Says:

    Is the price of crude oil truly a "supply and demand" problem Will the ever-rising price of crude oil cause global panic?

    It is most definitely a supply and demand issue. We are just now seeing the USA react to the high price of gasoline. Just as no one can predict the bottom of the housing market, no one could predict at what price level consumers (demand) will change. It appears $4.00 a gallon was the price where the quantity demanded of oil shifted. Keep in mind, speculators on the open spot market help artificially inflate the price of oil.

    We have seen this before back in the early 1970’s with OPEC’s oil embargo. I am only speaking about the USA here, but what happened back at that time? The consumers of oil (gasoline) changed their habits–they bought fuel efficient vehicles. That in turn led to a decrease in the demand for oil. The price came down as some of the OPEC nations even colluded (cheated OPEC) by offering to increase the supply and lowering the price of crude oil. History does repeat itself and we are seeing it now. As a matter of fact, I just read that SUVs are being rejected by dealers as a trade in vehicle for consumers purchasing a smaller, fuel efficient vehicle. What will happen to the price of SUVs with the decrease in demand? Well, they are already dropping price. Not much demand, and a huge supply.

    Since no other country is immune the laws of supply and demand, we should see similar decreases in demand globally. Thus, the fear of any global panic will subside.

    Is it backlash from the Middle Eastern countries to punish those that participate in the further expansion of the western way of life and culture?

    This is more of an opinion, than an answer, as no one really knows, but I do agree with your assessment.

    Will the introduction of alternative fuels and energies in 2012 cause a crash in the price of crude oil leaving supposed "oil rich" countries high and dry so to speak, with a smaller market for their oil supply?

    That is a highly doubtful result. However, alternative fuels will be factor, I just don’t think it will be available in an economically viable sense until well after 2012. This technology is very slow to develop, and the world of politics and our own big oil companies well prolong the efficiency of these alternative fuels. We tried ethanol. We see now that was a mistake. So much more trial and error is due before we can have a viable economic solution through alternative fuels.

    This is a slow process. The price of oil will determine the quantity used (demanded) after factoring in the substitutes alternative fuels such as coal fired electricity generating plants. The price of oil could fall to a point where it is cheaper to use oil as a source of fuel rather than coal. The demand will still exist, the price/cost will just be less.

    There may be a slight decline in production, but that is far into the future. There will always be a demand for oil, as long as there is a supply oil. It simply feeds too many industries.

  2. Anjaree Says:

    The answer is YES. But the oil price is subject to speculation.It’s not go up and down because of production. The real problem is the exchange rate system which is used as a weapon to fight against each other.

  3. meg Says:

    The price of oil is up because of the increase risk of a supply disruption so both users and speculators will pay more for a guaranteed future delivery of oil.

    Sudden changes in oil price always produce economic problems but more in some couturiers than others. Counties with a high tax on gas are somewhat protected because the price of oil is a smaller fraction of the price of gas. However now most people were already expecting the price of oil to increase as the economy recovered so this will cause less of a problem that it would have had it happen at another time.

    What ever is developed for alternative energy will only replace oil slowly and oil has other uses besides fuel so there will be not sudden crash in the oil markets

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