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And to "Reverse (or seriously mitigate)" "demand increasing faster than supply" you're saying we need to increase supply like an SOB.Most importantly, even though it would not effect the immediate supply of oil, it would heavily impact the futures market. Right now oil is in high demand not least because people see demand increasing faster than supply. Reverse (or seriously mitigate) those expectations, and you can expect to see an oil sell-off, which would cause the price to tumble.
What happens when the demand from China increases beyond those means to increase supply? We're right back where we started - trying to show supply is increasing as fast or faster than China's demand is increasing.
In other words, we have to produce enough to keep up with China's demand.
(Yes, I used "China" as a general source for "increase in demand" - it was less cumbersome than using "China/India/3rd world countries")
So what are you trying to say now? That volitility is NOT caused by the small difference between supply and demand? Or that volitility is NOT in large part a function of the small difference between supply and demand?that is not accurate - and it is not what I have claimed. China's demand is part of current oil prices. China's demand was not appreciably higher 6 months ago:
http://1.bp.blogspot.com/-v4dXXMBhC...1600/Screen+shot+2012-02-27+at+7.32.46+AM.png
The price of gasoline at the pump swings much more wildly than mere Chinese demand - because it is not a product of simply Chinese Demand. As democrats are constantly pointing out (though misdiagnosing), the futures and commodities market plays a massive role in price variations. Perceived future supply vice demand increases or decreases off an assumed baseline, prices swing higher and lower at a greater variation than that produced by shifts in relative demand. Prices are swinging high right now because investors see that future supply will be artificially constrained, and disproportionately vulnerable to political instability. Change that perception, and they will swing low.
Or are you saying the oil companies are lying when they say the price at the pump is dependent on the price of oil?
Or are you saying what I said several pages back, that one crazy Muslim's hot air has as much of an affect on global prices as anything else?
Ed:
As for your graph, straight line that thing then we'll talk about it. Care to guess what the straight-line graph will show?
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