Russia cutting off oil?

[AtW]

Most Russians are also aware of GDP growth in excess of 7% p/a for the last 8years.

That's paid in full by the West - if oil was at $15 like it was during Eltsin times then Putin would not be in power or at least he would have a fraction of support.

[AtW]

I was there during the elections and it was a bit tense. What you seem to forget is that like all democracies Russia is one man one vote. It's just that Mr P is the one man with the one vote.

In whole of Russia's history there were only one honest elections when people were not that brain dead - it was in 1991 when Eltsin was first elected. Unfortunatly he turned elections of 1996 into almost a sham (sadly I voted for him) and then Putin enhanced it in 2000 (with houses blown up), and further "improved" in 2004 when he took over all major TV and newspapers, finally "elections" in 2008 he cut off all competitors and just had his guy and some puppets for extra show.

[ace00]

That's paid in full by the West - if oil was at $15 like it was during Eltsin times then Putin would not be in power or at least he would have a fraction of support.

That is precisely my point.

[BrilloPad]

Sooner we build coal/nuclear power stations the better.

[expat]

Wait until the oil runs out* and see if all this posturing malarcky turns into the real thing. We are genetically no different from when the other big wars happened. Build nukes and wind farms now! (and the Severn Estuary bird sanctuary).

i.e. supply significantly less than demand.

Supply is always exactly equal to demand. If supply decreases, then the price goes up, and the demand therefore goes down; until they reach equilibrium: with demand = supply (and a higher price, BTW).

[AtW]

Supply is always exactly equal to demand.

It's almost never the case.

Current oil (and other commodities) price bubble is in the respects the same as property one - fundamentally nothing changed to justify oil price coming up from $15 to $150 per barrel, even when taking dollar weakness into account.

It was certainly strategic mistake of the West to create this dependency in the first place. Americans seem to be suitably pissed off by all this and working pretty quickly on solutions - solar power is getting pretty big advances and I hope batteries will in the next 5-7 years too: there are some very interesting inventions in this area like nano-batteries that can recharge almost instantly.

[expat]

It's almost never the case.

Current oil (and other commodities) price bubble is in the respects the same as property one - fundamentally nothing changed to justify oil price coming up from $15 to $150 per barrel, even when taking dollar weakness into account.

A bubble is what you call it when:
1. price rises dramatically because of large demand;
2. you do not think that the price rise is justified by what you think of as the "natural" demand (normally because you think that the rising price itself is fuelling the demand)
3. you think that this positive feedback will run into limits, and then collapse.

"Bubble" is a moral judgement until it bursts, then it becomes a succesful prediction. At no point in a bubble does supply not equal demand. All that happens is that demand in the economic sense is vastly different from what you think it should be.

With oil, for example, what happened to raise the price is that demand increased. By "demand" I do not mean "what people wanted", I mean "how much oil people were prepared to buy at the given price".

[AtW]

A bubble is what you call it when:
1. price rises dramatically because of large demand;
2. you do not think that the price rise is justified by what you think of as the "natural" demand (normally because you think that the rising price itself is fuelling the demand)
3. you think that this positive feedback will run into limits, and then collapse.

Some goods have non-elastic demand - sugar, salt, petrol, drinks, smokes - this means demand does not change much when price increases - that's why all Govts love to tax them because it is very easy to predict revenues and you know people won't stop buying those products if tax is very high because demand is non-elastic.

That's why demand for oil started dropping seriously only recently when price reached $145-150 level, this is when companies (like airlines) simply started going bust.

Since we are talking about oil we have here non-elastic demand (that was indeed slightly growing), everything therefore more or less depends on supply side which was growing a bit too. The main problem for market was hedge funds and other speculators that have got (or had) a lot of high leveraged money that they used to "invest" and screw everyone up including themselves.

With oil, for example, what happened to raise the price is that demand increased. By "demand" I do not mean "what people wanted", I mean "how much oil people were prepared to buy at the given price".

Oil in large part is controlled by a non-market entity like OPEC - the market in large part is rigged by them. Demand did not increase that much to justify 10 times increase in prices, just like with houses in the UK. It's a bubble.

[swamp]

Господен Белки,

Почему вы уехаль Pуссиe?

[expat]

...snip snip snip ...
Oil in large part is controlled by a non-market entity like OPEC - the market in large part is rigged by them. Demand did not increase that much to justify 10 times increase in prices, just like with houses in the UK. It's a bubble.

Yes, of course it's a bubble inflated by cartels and speculators. Supply still equals demand. Amount of oil potentially available didn't change. Real requirement for oil didn't change. These 2 things are not "supply" and "demand".