Friday, September 02, 2005

Economic insight of the day

My business chinese professor said that oil prices are high, not because of any change in the supply or production of oil. Instead, prices are being driven higher and higher by speculation. In other words, people think the price of oil will be higher tomorrow, so they're buying it up. This makes what my roommate Mike said make more sense, that there will be a burst of the oil price bubble, just as Greenspan warned about an eventual burst in the housing market.

SOURCE: Prof. Qi Yun Fang

UPDATE 9/3/05 9:05 PM EST: So, apparently, this insight isn't the be-all and end-all when considering the effects of an actual refined oil supply drop of 1.8 million barrels due to Katrina. See the linked Washington Post article about the oil situation.

1 comment:

rmn said...

Cool blog :)
I mean both, the mistake one too :]