COMMENT What is behind the ever-increasing price of crude oil? Most economists and energy experts argue that even the current sky-high price is justified by fundamentals, namely the high growth in demand by emerging markets, in short “China”. The one important fact usually adduced to support this position is that supply and demand seem finely balanced as inventories are not increasing.
But this argument is wrong. The observation that inventories are not increasing is irrelevant since there is a very convenient way to store oil that is not measured by inventories data: just leave it in the ground!
