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June 15, 2005

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But the point is that price is determined by both supply and demand, and both factors are always changing. You don't have to believe in Peak Oil Theory to believe that there is a finite supply of oil. As the supply of oil decreases, this will affect not only the price, but in turn will also affect demand. Worldwide demand will undoubtably be different at $100/barrel than at $40/barrel.

Hi Half Sigma
I am surprised that the world demand for oil is only expected to increase by 50% over the next 20 years. With all those billions of people in India and China driving cars, the demand for oil could just take off in next twenty years. This could cause a huge increase in the price of oil and then a rapid switch to alterative energy sources. I think the next twenty years might be interesting for energy sector.

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