First, a lot of the oil price run up was driven by specualtion, not fundamentals. Generally inventory levels track price pretty well, and inventory levels last summer were suggesting $30 a barrel oil, it was pure bubblism that drove prices to the $70s.
Second, as the decline in oil demand shows, the high prices *did* have an effect on behavior. Since a lot of the thing which consume oil are investments that ametorize over years (like cars, power plants, etc) that demand reducion effect will propogate forward.
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Date: 2007-01-22 03:00 am (UTC)First, a lot of the oil price run up was driven by specualtion, not fundamentals. Generally inventory levels track price pretty well, and inventory levels last summer were suggesting $30 a barrel oil, it was pure bubblism that drove prices to the $70s.
Second, as the decline in oil demand shows, the high prices *did* have an effect on behavior. Since a lot of the thing which consume oil are investments that ametorize over years (like cars, power plants, etc) that demand reducion effect will propogate forward.