Right, and it wasn't meant to. Prices are high because supply growth has slowed while demand in India and China has increased, while the dollar has decreased.
Supply isn't down; in fact, now that much of Iraq's oil is flowing again, supply should actually be higher than it has been for the last two years or so.
Supply growth has been slower than demand growth.
OPEC production is maxed out (if we are to believe those thieves).
It's hard to tell really.
The explanation offered is that China is a new player in the market and that they are driving a surge in demand. I doubt it. The Chinese aren't stupid, so I can't imagine why they would suddenly develop a taste for oil at $55 a barrel. As you say, it would simply set them up for a bust if the price ever drops again.
Chinese demand is a simple fact. China is now booming, which is coincidental to higher energy prices. I would point out however, that while oil is very high in terms of dollars, that is in part because the dollar is down. Oil prices are not as high around other parts of the world in terms of local currency.
No, I think this one can be attributed to the trans-national oil cartel that can sell every drop it produces at whatever price it demands because it alone controls the supply, processing, and distribution of an inflexible-demand product. In other words, we are victims of a monopoly, plain and simple.
Thats simply not the case. The oil market is extremely competitive. If it was the case that they could sell at whateve price they wanted, why did they wait until now to raise prices, why didn't they raise them 10 years ago?
Why does a Chinese economic boom translate into higher oil prices? Are Chinese citizens buying more cars? Driving that much more? Is China demanding crude to feed its thriving petrochemical plants? When did THAT industry come into being in China? I'm sorry, but the only way I can buy the Chinese demand explanation is to believe that China is buying up reserves against a day when they want to go to war. And if they were going to do that, I would have thought it made more sense to buy it at $30 a barrel rather than $55.
why did they wait until now to raise prices, why didn't they raise them 10 years ago?
They have been raising prices by fits and starts for the past 30 years. It wasn't all that long ago that I shuddered at $1.20-a-gallon gas. And 10 years ago, gas over $1 a gallon wasn't common. So the answer is, they DIDN'T wait until now to raise prices; they DID raise them 10 years ago. And 5 years ago. And 1 year ago. And last week.
And nobody has offered a believable explanation. Some pretty transparent excuses, sure. But nothing that stands up to scrutiny.