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Interesting ideas in this thread. Is it my imagination or didn't the oil companies have the most profitable years ever over the past couple of years? How does that tie in with such low "profits" unless mainstream media misreported the numbers? Anyway, the difference in this price cycle is that the oil companies are participating in the speculator-broker market. And they will continue to do so unless a new market force is introduced or commodity participation regulations are changed.
The advantage of higher prices ? Eventually it will lead to change in use - new technologies, different consumer behavior, new foriegn policy, new and different transportation models. Most of which is generally a good thing.
The disadvantage of higher prices? Absolutely kills the middle and lower class participation in consumer economy - too much money spent on transport and heating. All those profits get concentrated in one sector of economy (oil/energy) which reduces the effectiveness of re-investment of profits. That sector would naturally reinvest profits in capital projects that benefits them exclusively. Not generally good.
It will be interesting to see what happens with pricing over the next few months and years. Oil could gradually rise towards $80-100 a barrel over the decade - simply because of third world demand. The developed countries must push their products and services into the third world because the potential ROI is much higher than in "first world" countries. The financial markets will demand that kind of return and governments (taxpayers) will underwrite the risk. We may be in for a wild "mercantile" century like the 17th and 18th century's of expansion, exploration and colonization.
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Scott
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