Oil prices are as close to immune to the effects of supply and demand in the short run as you will get. The oil industry is an ogopolistic, vertically intergrated industry, from oil exploration and extraction to refination to retail gasoline sales. As of 2004,
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The five largest oil companies in the US (ExxonMobil, Chevron Texaco, ConocoPhillips, and Royal Dutch Shell) control 48% of domestic oil production, 50% of domestic refinery capacity, and 62% of the retail gasoline market.
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There are collusive practices and control of the downstream process facilitates the collusion between the oil majors. Even so, it isn't much to worry about, imo.
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The traditional end of an oil price boom does not come from an increase in Opec's output but a recession in the oil consuming world. High oil prices will cause inflation in due course which will cause interest rates to rise and profits to fall and stock markets to crash along with house prices. That would cause an economic collapse in China and slash oil demand reducing prices to something more in line with what consumers can handle.
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Now we see why china wanted a piece of US big oil. Price will come down eventually, either through macroeconomic forces, or by a preventative strategy among the oil majors. The question is, will they be satisfied with the latest round of profits to stop or will greed keep them from lowering prices forcing the market to do it for them? What we do know is that it will happen, China's growth will stall - as there is already evidence of - and prices will come back down.
My brother thinks its funny how he sees 20% returns in his portfolio and I have returns of 6% in mine. I ask him what he's invested in and he says oil and construction. Those are the two sectors I've decided to stay away from. They'll come back down, but since I don't know when, I'm not going to put my money there.