Wednesday, May 28, 2008

Ever seen a hyperbolic curve?

I'll bet you have, and they're usually somewhat impressive - after all, we think, that's an awfully steep climb. So its interesting to see, except when it's a chart showing the price of oil compared to total production. Then, a hyperbolic curve is the last thing you want. Oh, well. Here it is, anyway.

Production has "peaked," that is, they're pumping just about as fast as they can pump, but demand is not anywhere close to peaking - there are still billions of people who want to live a basically middle class lifestyle that includes a car. Since the chart can't move much more to the right as more and more people demand their fair share of the oil, the only place the dots can move is upward - that's the price, class.

Nowhere to go but up, unless something drastically changes. Demand destruction put in place by goverment fiat, or maybe widespread unemployment, or possibly a terrorist attack...? What will it take? Stay tuned, class. You have a front row seat for the end of the economy as we know it.

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