Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Well I think both of you are using a different meaning of the word "glut".

I mean that when conditions change over the short term, whether from Iraq coming on line or a recession or whatever there will be more supply than demand. This may be short lived, but it will be a "glut" at the moment.

Speculators don't care what happens after tomorrow, tomorrow is when they place their next bet.

We have a "glut" of ethanol in the US, even while we could actually be using more. Why? Local conditions - feedstock price rises, poor distribution facilities, over building in the short term and perhaps other factors.

Remember the oil companies have a vested interest in creating a "glut" when alternative fuels start to challenge their dominance. You can drive a small firm out of business relatively quickly by lowering prices below their cost of production. You don't even have to do it globally, just in the region in which they operate.

This technique is why we have seen little innovation over the past 50 years. Every time something appeared on the horizon (say electric cars) fuel prices suddenly dropped and the technology was abandoned.

I think we all agree on what will happen over the long term, but that doesn't mean things won't happen in counterintuitive ways along the way.

Policies not Politics
---- Daily Landscape

by rdf (robert.feinman@gmail.com) on Wed Nov 7th, 2007 at 12:02:21 PM EST
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