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Originally Posted by cab2g
well there was a bubble in 07/08. But with that being said the supply isn't increasing as much as demand internationally. And wait until we get out of this global recession. Think gas prices are high now, well I guarantee that average income will increase at a disproportionately low amount compared to gasoline costs.
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The globe really isn't in a recession right now, though. The US and parts of Europe are, but on the whole the world is doing rather well.
Try not to forget that much of the recent "demand" has been inflated by investors keeping oil in storage offshore. Yes, it is being bought up, but it is not being burned. Once the price hits a point where the investors deem it to have topped, or we hit market conditions that force them to sell (like an increase in interest rates making margin buying unprofitable), all that oil we think isn't there, which is making the markets appear to be tight will suddenly and "magically" reappear. Similar events have happened with other commodity bubbles, as wll as with the housing bubble. Oil fell from $147 to $33 in 6 months in 2008. There is no reason such a fall cannot happen again.
Longer term, shale oil, and obtaining oil through "fracking" as we are with natural gas (which, by the way has sinlge handedly caused nat gas to drop from $15 per MBTU a few years ago to around $4 today) will result in more supply 10-20 years down the road than anyone is anticipating. These unconventional production means are quite profitable at today's, and even at somewhat less than today's prices, and will be quickly coming on line in the coming decade. Natural gas will displace some of the oil demand, as will other alternatives to a lesser extent.
Long term, I don't think all the pessimism out there is warranted. People have been freaking out about running out of resources since history began. This is about the 6th or 7th time we were supposed to have "run out of oil." I just don't see a reason why millenium long norms in resource availability will suddenly change to a new chronic shortage paradigm now.