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To: blam
I'm sorry, but I think articles like this are very misleading. All of the references to commodity prices are based on these prices in U.S. dollars. As I've said many times previously when the prices of these commodities were going through the roof, the biggest factor in the wild swings of these prices isn't supply or demand -- it's the value of the U.S. dollar relative to other world currencies.

For proof of this, just look at how much the price of oil has changed in the last 15 years. Oil was around $15/barrel in the late 1990s and has been as high as $140 in recent years. Does anyone out there really believe that the demand for oil has increased ten-fold in the last 15 years, or that the supply today is around one-tenth of what it was 15 years ago? LOL.

10 posted on 04/24/2013 8:52:22 AM PDT by Alberta's Child ("I am the master of my fate ... I am the captain of my soul.")
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To: Alberta's Child
"Oil was around $15/barrel in the late 1990s and has been as high as $140 in recent years. Does anyone out there really believe that the demand for oil has increased ten-fold in the last 15 years, or that the supply today is around one-tenth of what it was 15 years ago?"

The shape of the supply curve for oil is not linear. In fact, it is particularly curved and nearly vertical (highly inelastic in the short run) as you approach full production.

Similarly, the shape of the demand curve may be highly inelastic in the short run; people gotta drive to work.

So, it is entirely possible for the Chinese to create an additional 10% demand, and the price therefore rise 100%. Or a 50% increase in demand to cause a 500% increase in the price.

We've got curves here, not lines.

Nonetheless, one of your points is well taken: monetary profligacy masks all sorts of economics. Oil prices could be considered a speculative bubble, for example.

11 posted on 04/24/2013 8:56:46 AM PDT by Uncle Miltie (All observant Muslims want to kill you. If they don't, they are not really Muslims.)
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