who the fuche cares

Einstein, you are deceived.

In 2008, crude was valued at an average price of 96.91 (adjusted for inflation at 2009 dollar-value).

When the price of oil spiked in 1864, just when initial supply could not keep pace with demand and prices were skyrocketing, it was priced at    $110.11 per barrel (adjusted for inflation at 2009 dollar value).

If anything prices should have become cheaper after this initial supply shortage and we would have seen a price equilibrium with form according to your 'invisible hand' free market forces.

How as it possible, then that in 2008, oil peeked at $140 per barrel?   That should have been impossible!

In fact, prices should ONLY have come down from 1864 price as we developed more efficient ways of extracting oil.  The equilibrium between supply and demand would have resulted in ever slightly cheaper prices according to your notions of the guiding invisible hand of your free market capitalism idea: your sacrosanct notion that competition would produce efficiency and lower prices forever.

I mean, if it didn't, the whole premise of your so called sacrosanct benevolent 'invisible hand' theory inherent to your very notions of the virtues of free market capitalism would be proved FALSE, and your entire economic theory would become ILLEGITIMATE.

Well, guess what happened, Einstein.  Good news. The price of oil, miraculously, did find an equilibrium (albeit an artificially-induced one which is a different discussion) and everybody could march forward in their faith sacrosanct free market, laissez-faire economic (sic. illusionary) theory.

Yes.  In fact, the price of oil did settle between $10 and $20 per barrel (adjusted for inflation at 2009 dollar value), that is until the 70s.

What happened then?  Well, we had the oil shocks of the 70's and 80's when oil prices spiked again up to near their initial supply-shortage levels of the 1860's - the $100 per barrel mark (again adjusted for inflation at 2009 dollar value).

Well, gosh, darnit, how did this happen?  Where did that guiding principle of that invisible hand of the free market go and disappear to?  Would it come back?

Well, whatever happened, it did seem to.  Phew. Everyone exhaled a sigh of relief and went back to believing in their invisible, benevolent, guiding hand of the market theory as oil prices settled back down to between $10 and $20 per barrel, that is, until 2001. 

Something went wrong then...what could that have been, I wonder?

Whatcha think, Einstein?

Anyway, whatever it was that went wrong, all the way from 2001 until 2009, oil spiked up to, well, you know, more than $100 per barrel, he highest it had ever been in history (again adjusted to inflation at 2009 dollar values).

What do you think caused that, Einstein?

Doesn't matter!  Why?  Because oil came down a bit eventually.  It was just some sort of hicup, right?  Nothing to worry about, right?

That's what we all thought when it came down to the $50 per barrel mark.

Things were looking up.

No problem.

Right?

WRONG!

It didn't come down anywhere near the $10 to $20 range that it was supposed to.  Instead, it started rising again.

What do you think happened, Einstein?

Who cares, right?  Doesn't matter, right?

Because all we've got to do is just keep buying crap and thinks will get better, right?

Don't think.  Just buy crap.

Right?

WRONG!

I know that this IS what your 'invisible hand of the market' theory indicates we should do.

And so far, Google's and Facebook-sponsored positive thinking (sic. cult) to get the economy back on track according to that notion seems to be working.  But guess what, Einstein? 

There's just one small problem with it: it's false.

But that's just my understanding, and I'm not going to try and convince you of it.  In fact, let's assume just for the sake of argument that your fantasy-like invisible hand of the market theory is in effect after all. 

Wouldn't a continued rise in price indicate that we have reached peak oil?

Well, yes, in fact, it would, you should say.

And, yet such a rise we have experienced.  The price of oil, after going down to about $50 has stayed up around $100.

Pure logic dictates there are two possible explanations for this:

1.  Either the invisible hand theory of yours is a fantasy and the price of oil has been manipulated all along.
2.  Your invisible hand theory is correct and we've reached peak oil.

Pick one.

Okay, I'll bite.  Please explain.

All Hail Ming!

/bows to Obama

Zarf, so regarding #1 you are saying that although there was no authentically free market providing for an equilibrium of prices and rather that the 10-20 $value of oil that previous generations enjoyed was artificially low due to manipulation by OPEC; and that the higher price of $80 to $100 is the new equilibrium, as it has adjusted due to the opening of new sources of oil, correct?

Your examples of increased demand would have resulted in increases in supply to fulfill such demand.  Why has this not occurred?

1. no invisible hand of the free market
2. peak oil

3: Xeno oversimplifying economics again.

Remember, no sane person is saying the petroleum market is the model perfectly competitive market.  There are both legal and practical barriers to entry.  Oil extraction can be prohibited by national law (think ANWR) or international dispute (the South China Seas may have more oil than the Middle East, but international disputes over water rights have stalled any development).  Practically, extraction of oil requires ownership of the petroleum (so not everyone can just wake up one morning and decide they want to be an oil tycoon) and the existence of the extraction technology.

Moreover, although those new extractions are occurring, they still have to deal with extraction costs.  For the past 100 years, the world has been basically running on the simplest, easiest oil that can be drilled, because it's the most profitable.  Why would you drill for 1 million barrels of oil you were going to sell for $20 a barrel if the cost of research and extraction is $30 a barrel?  Particularly when your competitors are extracting the same end resource, but at only $8 a barrel?  Anyway, once the price of oil begins to increase, it gives incentives to begin researching those more expensive extraction methods.  When oil creeps up to $90 a barrel, suddenly extraction at $30 a barrel becomes profitable.  (Note: These numbers are being pulled out of nowhere.  Just using it as a demonstration).  Supply increases.  It may not return to the original point because if extraction costs the business $30 a barrel, that business would again have no reason to keep manufacturing if the price dropped to $25 a barrel.

Long story short, the oil market is VERY nuanced in its inherent political and geographic limitations on entry into the market.  The market does what it can to shift in the direction of a competitive market (i.e., the United States researching and releasing new oil, as described in the OP, which is inherently a market competitive activity), but there's limitations.  However, this in no way means the oil market is an example of the success or failure of market economics.  OPEC is the exception, not the norm.

Banned huh fool? can you even contemplate not trolling?

The difference is that I recognize oil as an exception, not the norm.  We both agree that the free market in oil is kind of screwed up.  Hell, Flint probably agrees too.

There's one more difference, however.  You present the analysis as if it's a disproving of the theories of economics.  In contrast, I would argue it simply means the market is not a perfectly competitive market, and we can strive to make it more competitive.  Flint's stance is one which works to correct the problem.  Drilling of oil by the United States helps correct the problem because it adds another competitor into the market.  Increased competition in oil, just like increased competition in any market, is the quickest way to force a trust like OPEC to falter because it undermines their ability to profitably drive prices up by withholding exports.  Long story short, you should be on Flint's side in this particular thread. 

If you haven't noticed, nobody in this thread is defending OPEC.  You're the one that decided to pick that strawman to beat up.

An indicator?  Yes.  The primary indicator?  Not even close.

Lemme ask you... what is "peak oil"?

There's a fine line between "simplification" and "oversimplification."  Explaining a complex concept through methods which the average person can understand is simplification.  Explaining a complex concept in such a way that nuances of the concept are utterly eroded to the point where your explanation doesn't accurately reflect the complex concept... that's when a problem occurs, because it creates the impression that you don't actually know what the concepts you're discussing actually are, while at the same time reducing the actual debate to simply one of comparative slogans.

You know, sort of like how everyone here who interacts with you simply generalizes you as socialist!  They end up wrong, but people buy what they say, and your message gets degraded in the process, forcing you to waste time explaining nuances!  Moreover, it's a waste of time when we on the politics forum are interested in actually critically thinking about and analyzing these concepts.

Additionally, as someone who has a long history of engaging with you on debates of economic theory and has demonstrated on these forums more than a little understanding of the basic concepts of microeconomics, I find it slightly insulting that you feel the need to "simplify" such basic microeconomic concepts as supply and demand in your communications with me.  I'd think you've known my a bit more by now! 

Peak oil for me is when production cannot (for whatever reason) keep pace with increases in demand.  We've been at peak oil for quite a while.  Why is this even an issue.  You mean you didn't know?  It's clear from a quick google search. 

http://www.petrostrategies.org/Graphs/W … Demand.htm
http://www.energyinsights.net/cgi-scrip … 000085.htm

"According to the IEA's 2013 projections, growth in global oil demand will be significantly outpaced by growth in production capacity over the next 5 years." http://en.wikipedia.org/wiki/Peak_oil

Actually, I'd argue that oil prices are the major determining factor of costs of production and distribution of everything, and, as such, the major determinant of all prices.

My opinion is that this outpacing of demand over production is resulting from peak oil, and that this is causing rising prices while the downturn in the economy continues.  In other words, an outright depression caused by peak oil.  And as this gives rise to increasing uncertainty and tentativeness among investors, which only exacerbates the problem with the economy.

Collaborative efforts by nations to print money their way out of this 'recession' are futile.  Investors simply aren't buying it, you see, because they know what's going on.   

And the kicker is that all of this provides oil forecasters their justification for forecasts of lower future demand for oil, giving them a way to coverup of the fact that they can't increase production because we've reached peak oil.

In other words, peak oil occurs, resulting in demand outpacing production, causing the global economy to stagnate as it has been, allowing forecasters who are funded by oil producers to justify speculation that continued problems with the economy will lower demand for oil, just the justification for not increasing production that oil producers paid for.

Currency manipulation is a symptom of the larger problem of producers' inability to keep pace with demand for resources.

Except that demand is flexible according to price, and the price in the United States has dropped, and we are passing Saudi Arabia as the biggest producer of oil in the world.

With Brazil, Ecudor, Australia and many more tackling new fields (and with a major increase around the world in fracking) the advent of not enough oil is not happening.