Posted by
m0t0r1zed on Saturday, July 05, 2008 12:15:25 PM
oil is hitting india hard. not an economist (heheh, i repeat that a lot), but u would think that demand in rapidly expanding / developing economies is more elastic than in established nations, so the reason being touted for the high price of oil (china and india) should cut both ways. the high price of oil should put a hard brake on their growth. india imports 70% of its oil, and its oil and fertilizer subsidies are costing them 10% of their GDP.
excerpt from businessweek article:
In the past month, India has joined the list of the wounded. The country is reeling from 11.4% inflation, large government deficits, and rising interest rates. Foreign investment is fleeing, the rupee is falling, and the stock market is down over 40% from the year's highs. Most economic forecasts expect growth to slow to 7%—a big drop for a country that needs to accelerate growth, not reduce it.
sauce: India's Economy Hits the Wall
heh, 7% growth doesn't sound that bad, tho i guess in this case it's relative.
as long as china and india continue to grow at a decent clip, i wonder if that will provide more psychological support for pushing prices even higher?
i don't think drilling will help prices unless it creates a stampede by luck of timing. just guessing it might cause a short drop, but then speculators/investors/zombie pandas will rationalize that any real oil coming out from new drilling will take years or decades and push prices back up again. still, it would add to the mental stress of oil speculators / investors worried about when to jump out, heheh, and reduce the threshold needed to pop the bubble.
i really don't see the bubble popping until some major economies start tanking - or enough psychological stressors accumulate to scare off investors (approve drilling, pass regulations to tighten speculation, fed calls a meeting to do a magical dance and offering to the god of interest rates, Bush mentions opening up the SPR casually in a conversation while kissing Ahmadinejad tenderly and sweetly, demand for oil drops, china and india reduce subsidies further, OPEC does something or other or not or something, etc.). dunno. blah blah blah. why am i still even blogging anymore? ('''\(o,...,O)/''') =^.^= /\/\(';::;')/\/\