Comment 27949

By A Smith (anonymous) | Posted December 20, 2008 at 12:26:40

Ryan, I guess only time will tell who is correct on this issue, but given the fact that sizable oil fields have recently been discovered in Brazil and Cuba, I tend to think there is more oil out there than the experts believe.

If you are correct and this is not the case, your call for alternative fuels and more efficient lifestyles will win the day. That's okay too, but I think the market would handle the job of this changeover from oil perfectly well, regardless of government policy.

Either way, the market will ultimately tell us who is correct. As it stands right now, you are losing and we are winning. As the economy starts to grow again and if oil prices jump back up, I will begin to give your theory more consideration.

Keep in mind, however, that in the last 8 quarters, U.S. GDP growth has averaged only 1.8% annualized. Therefore, even as the economy has been very slow, oil prices have risen from around $60 a barrel to over $140. This contradicts the idea that growth is the cause of higher energy prices. Since GDP growth is all about increasing productivity, there is every reason to believe that higher economic output will bring oil prices down.

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