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If oil hits a high 90-100$ there will be no apetite for cars. they can still develope a public transportation system. It will cost them as much as paying for the oil.

So China and India demand will probably grow but not as much as espected.

Regarding elasticity of oil. this is exactly my point, nothing is gonna happens until an inelastic break-down happens. So, the moment demand diminishes it will diminish a lot. Think about all the redundant demand in the US, or int he possibilities of India and China not to develope a huge private transport system...

It could go the other way and make China, Japan US and Europe  go through a huge recession.. but it can also be a mild recession or just a change in the priorities in the development of China and India, together with a reduction of the deman in US of around 30% and in Europe of around 10%.

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Sun Jan 22nd, 2006 at 12:29:40 PM EST
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But that's what we were saying for $50 dollar oil, and $60 oil, and demand growth did not even slow! Not only is demand not going down, but its rate of increase has not even gone down!

We'll need much more brutal prices changes to have an impact on oil consumption.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Sun Jan 22nd, 2006 at 02:54:52 PM EST
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No if the demand is inelastic. It means that for certain prices there is almos no change in demand, or even increase, and then, suddenly, at a certain price the demands breaks down. Just as an inelastic material could do when a certain tension is applied.

I really hope that this will be the dynamics. But I could be wrong

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Sun Jan 22nd, 2006 at 03:25:45 PM EST
[ Parent ]
This is a great image... The oil market is strong but brittle.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Sun Jan 22nd, 2006 at 03:29:59 PM EST
[ Parent ]

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