10 September 2008

Oil below US$100 a barrel

So reports the Times.

Environmentalists will be bemoaning this and repeating their comments that it is still the age of "peak oil". Of course what has happened is demand has eased up, supply has changed little, so the price has dropped.

It's called the market.

So while the market respond, as the economics of oil exploration remain high, and demand eases off - you might ask yourself:

1. Why so many still don't understand how markets work?
2. Why environmentalists get so excited with the prospect of oil "running out" or becoming unaffordable? Why are they more excited about that, than by their being substitute fuels found?

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