the $4 increase is probably just the start... Ivan caused oil prices to rise by $10 within a few weeks....it will depend how extensive the damge is and how soon it can be repaired.....$80 per barrle isnt out of the question within a week or 2...at some point we'll see quite a sharp decline in demand...when oil prices rise demand is initially inelastic, but with time demand becomes quite elestic
I would expect some airline liquidations at $80, that will increase supply
At $90/bbl, it'll finally be equal to the inflation-adjusted 1980 price.
I'm not so sure the Federal government will refrain from intervening with subsidies, bailouts, etc. Couldn't such interventions get in the way of corrective market forces? (at least for a time)
I would expect some airline liquidations at $80, that will increase supply.
This would be an example of the above. If the entire airline industry gets in trouble, I can't imagine our compassionate government not stepping in.