The New Yorker’s James Surowiecki has written the best explanation I have read yet for why the price of oil is so high.
It’s not speculation, he writes, but something called “shortage psychology” among oil producers. Assuming a shortage of oil in the future, they are charging increasingly higher prices to pump petroleum out of the ground now to match the expected value of extracting it in the future. None of which, of course, will stop Washington from going after speculators in an election year and claiming that doing so will bring down prices at the pump. Read the whole piece here, it’s excellent.
[...] – bookmarked by 1 members originally found by maqbes on July 18, 2008 If You Want to Know Why the Price of Oil is High…. http://streetsweeper.wordpress.com/2008/07/01/if-you-want-to-know-why-the-price-of-oil-is-high/ – [...]