According to Reuters, the price of crude oil hit a new high yesterday. This is causing me confusion. The last time oil prices were this high (adjusted for inflation), every major economy got the snot kicked out of it (in 1979 and for a while afterwards). Or so I kind of recall, since I was 12 at the time. Anyway, I'm pretty sure that things were tough, and that it was all Iran's fault.
But since we are higher now than in '79, why are economies not buckling under the higher price of oil now? I understand that demand is more elastic than it was in the 70's, but still.
There does not seem to be a consensus on why oil prices keep going up. I've been reading up on Peak Oil, and while the math seems pretty solid, I have no way to figure out where on the curve we are. A lot of people are saying that the price is being driven by speculators. Now I'm thinking: if that is true, and if supply is still ahead of demand and it's going to stay that way for the next couple of years, how does one exploit this? I guess I could short oil companies, but a more direct way would be to short the heck out of oil futures. How do you do that? What kind of credit do you need to start mucking about with commodities?
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TDameritrade.com
The reason we are not seeing 70's style meltdowns in America is because we use far less energy to make stuff, we have more services than energy intensive production, and that the price has not been a sudden shock, but a relatively slow one.
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