Atlantic Canada's Small Business Blog

I am "CA" Atreya (PMP, MBA), the author of this blog. I help businesses in Atlantic Canada achieve their BHAG successfully. You may subscribe to this blog using a feed reader (RSS). Note: We have moved the blog to a new domain to better reflect this blog's objectives.

Given the price of crude today, I wonder what the peak oil theorists will say today. They say that the demand is weak. Hence the low price of oil. People have not stopped traveling. They have not stopped driving cars. Airlines are still flying. So how did the demand taper off?

I think the answer lies in speculators and hedge funds. They are no longer buying (using debt) futures and forwards as they used to. Did this cause the increase in demand in the first place? Did these funds create an artificial demand? I find it quite hard to believe demand for crude from actual users (i.e. those individuals and businesses who actually take delivery of the asset in a forward or a futures contract) just slid off the cliff in less than three weeks.

As end users we sure were taken for a wild ride over the last year. Peak oil? What peak oil? The price of oil sure does not seem to reflect supply and demand. It just reflects what users across the chain are willing to pay to purchase it.

It will be interesting to see where crude bottoms out and what happens on its way up.

• Rationality, business sense and labor unrestWe are living in one of the most unsettling periods...
• Once upon a dollarHow would you react when you notice a bunch of...
• Musings of a supply side economist"The current crisis is unprecedented!" "Governments globally are reducing interest...
• The Atlantic Gateway Challenge for Atlantic CanadaDr. Mary Brooks (William Black Chair of Commerce at Dalhousie...
• Why AIG should file for bankruptcy?If I were an American International Group Inc. (AIG) employee...