Re: [Marxism] Supply and demand?

[Marvin Gandall <marvgandall@xxxxxxxxxxxx>]

Bauerly writes:

All of you claiming peak oil or decreasing supply need to address two
fundamental issues.  First, answer Sartisans figures that do not show
declining
oil production.  Second, how do you explain the rapid increase in gold,
silver
and food, when there clearly is no supply shortage of these commodities?
========================================
The issue is not supply in itself, but supply relative to demand. Oil
production may be steady as Sartesian shows, but it is not sufficient to
cope with accelerating global demand from China and other emergent
economies, even in the face of contracting demand in the OECD countries.
Hence the sharp rise in the oil price, not discounting geopolitical
tensions. The price is being set not only by private firms and speculators,
but also and perhaps primarily by the big state-owned producers like Saudi
Aramco, Gazprom, Petro-China, National Iranian Oil Company, Petrobras,
Petronas (Malaysia), and Petroleos de Venezuela (PDVSA) who between them
control most of the currently exploitable reserves.

No one would dispute there is speculation in commodities, even excessive
speculation as financial markets overshoot in relation to big price turns in
either direction induced by economic factors. But you and Sartesian assume
that investors in derivatives are having more of an effect on the oil price
than traders of the underlying commodity, without having provided any
persuasive data that supports this assumption.

In any case, even those inclined to see oil prices "collapsing" as a result
of a falling off of a US-led global downturn and the flushing out of the
speculators don't see prices falling much below $100 a barrel, still well
above the price of oil prior to the entrance into the market of China and
other new oil consuming countries over the past decade since the Asian
crisis - especially over the past half decade.

Food prices, it would appear, are similarly rising in relation to increased
demand from the developing countries and, to a lesser extent, from the
diversion of corn to ethanol in the US.

The opening of the vast new global markets would also explain the greater
demand for gold and other precious metals by urban middle- and working-class
consumers in India, China, and elsewhere. These commodities are also
uniquely in demand as a hedge against a global inflation precipitated by the
decline of the USD and the corresponding across the board increase in
commodity prices.



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