Will the fluctuation price of crude oil slow the world economy and cause markets to crash globally?
Is the price of crude oil truly a “supply and demand” problem Will the ever-rising price of crude oil cause global panic? It is most definitely a supply and demand issue. We are just now seeing the USA react to the high price of gasoline. Just as no one can predict the bottom of the housing market, no one could predict at what price level consumers (demand) will change. It appears $4.00 a gallon was the price where the quantity demanded of oil shifted. Keep in mind, speculators on the open spot market help artificially inflate the price of oil. We have seen this before back in the early 1970’s with OPEC’s oil embargo. I am only speaking about the USA here, but what happened back at that time? The consumers of oil (gasoline) changed their habits–they bought fuel efficient vehicles. That in turn led to a decrease in the demand for oil. The price came down as some of the OPEC nations even colluded (cheated OPEC) by offering to increase the supply and lowering the price of crude oil. Hist
