[Hawthorn]

>> The cause of the glut is the same as the cause of the 1973 gas crunch, that is, inelasticity of demand <<

I'm basically with you, but I'd emphasize that the inelasticity of demand is only half of the explanation.

Remember Alfred Marshall's famous question, which was something like, "Which blade of the scissors does the cutting?"

That is, price is always SIMULTANEOUSLY determined by demand-and-supply. Always, always, always.

Moreover, when there's a relatively small shift of the supply curve, either up or down, and whether instigated by the Saudi King or by some other actors, the inelasticity of demand dictates a disproportionate swing in the price. Call it an "iron law" of prices.

No mystery. End of story.

And IMHO, Rush should be ashamed of wasting our time on such lengthy bloviating. Must have been a very slow news day, as far as he was concerned.

[abb]

Moreover, when there's a relatively small shift of the supply curve, either up or down, and whether instigated by the Saudi King or by some other actors, the inelasticity of demand dictates a disproportionate swing in the price. Call it an "iron law" of prices.

That. If you study the history of the biz, the price of oil has always been notoriously volatile. I suspect it will always be so.

After the discovery of the East Texas Oil Field in the early 1930's, prices were as low as $0.10/bbl.