Arnold Kling  

The State of the Oil Market

Ambiguity and Disagreement... Erikson, Althaus, and Why I'm ...

James Hamilton see hope.

these numbers convince me that we are likely to see a significant increase in production in 2008, and an economic downturn would surely produce a drop in demand. I'm standing by the assessment I offered last month: for the time being, oil prices have peaked.

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Rue Des Quatre Vents writes:

Professor Kling,

There's a new article up at Technology Review called the "Price of Biofuels". I'd like to know your thoughts. Here's the link.

Anonymous writes:

I do hope that the numbers are correct and we will see a significant increase in oil production and a drop in demand. The US has already started to rethink factors that bring them to the pump: the car they are driving, the number of miles they are putting on their car daily, and maybe thoughts of biking or carpooling rather than driving to destinations. I used to hope that people would wake up and start looking towards alternatives to gasoline to lessen our dependence. We have seen a crop of biofuel stations popping up all over the country over the past couple years. So far, I don’t think that demand for gasoline has really decreased.

I read an article this past Saturday in the New York Times that discussed the effects that biofuel production is having on the globe. “A New, Global Oil Quandary: Costly Fuel Means Costly Calories” by Keith Bradsher, explains the stress that biofuel demand is creating. What is happening is that fields once used to grow food commodities are now being used to produce corn and palm oil trees to produce biofuels. This is creating a demand for the food with a supply that can’t catch up. Bradsher says, “From India to Indiana, shortages and soaring prices for palm oil, soybean oil and many other types of vegetable oils are the latest, most striking example of a developing global problem: costly food.” So in some third world countries that grow their own food and simply need oil to cook the food, families have started changing their eating habits by eating raw vegetables because they cannot afford to buy cooking oil. I think it is rather disturbing…..that we may need to find substitutes for gasoline, but will inevitable create another crisis in the process.

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