Tuesday, January 13, 2009

The Price of Oil

60 Minutes aired an interesting piece the other night talking about how this past years high oil prices were not the result of "Supply and demand" as everyone was being told, but rather the result of financial speculation from Wall Street. I thought I would post the video here in case you might have missed it.


Watch CBS Videos Online

Also see the ExxonMobil and BP annual statements on the Energy Market (thanks to Mel for the links!)

5 comments:

Bryan said...

Wow.

I suspected something was up (beyond supply and demand), but I had no idea investment banking firms had such a prominent role (I assumed it was solely oil fat cats lining their own pockets).

Reminds me of a conversation I had where one of my friends asked the question "Why must our society be held hostage by a bunch of people in funny coloured jackets who just yell 'Buy buy buy, sell sell sell'?"

(he's British, hence the u in color).

and for weirdness' sake, my word verification is "amenders" which I find amusing as I had to re-enter the wv because I decided to edit my post.

BrianR said...

The problem with some of these assessments of what causes commodities price fluctuations is that they will emphasize single-factor explanations ... speculation had a huge influence, but so did the weak dollar, and supply-demand always has an effect. A global recession has reduced demand, which certainly has an effect. But, trying to quantify the relative contributions of these multiple factors is the real challenge.

ReBecca Foster said...

You have a good point about the weak dollar Bryan R. And I know from experience that when you do not have any money, you reduce the amount you drive, and for me that has resulted in almost never going out (since I can work from home). I have probably spent half as much on gas over the past 3 or 4 months as I normally would.

I also posted link in the blog story to the BP and ExxonMobil annual statements (which I originally intended to do and forgot).

Jazinator said...

Very interesting though not very suprising. Any way that can make money will be found and that money has to come from somewhere. Why not the little people pay for it?

ReBecca Foster said...

Hi Alessandra. Thanks for your comments. I would post them, but there is a link for an ad at the bottom and I do not post comments with advertisements. Thanks for reading.