Why Oil Prices Will Tank

This seems to happen historically in markets, even with oil. Why do people think it will be otherwise? Somehow I doubt it's because people read Hume.

It's just another manic commodity, with highs and lows , just like the speculators who play guessing games with the future. Our future.

no but you see gold will be different because

Krugman says otherwise. http://www.nytimes.com/2008/05/12/opinion/12krugman.html

i'm not so sure about this. the other market similar to this that comes to mind is diamonds. supply is tightly controlled in order to facilitate desired price levels. the assumption of this article is that someone in opec is going to decide that $x a barrel is worth a firesale to cash in. i just don't see this happening; why not keep riding the train for $x+50 a barrel?

Even if oil prices stayed at the levels they are at today, the market will find another source of energy to replace oil, and in time, the value of oil will fall due to that replacement. One way or another, these prices cannot continue to infinitely continue to rise because there is a market breaking point. People just won't be able to afford buying food and driving to work. So, they'll carpool with 3 others they work with (assuming they all still have jobs). Right there, demand for those four users on their daily commute is cut by 50% or more. If they all lose their jobs because the cost of energy is causing cutbacks, then they all reduce their consumption even more drastically, one, because they don't need to drive as much, and two, because they can't because they need to hunker down through the hard times and save on expenses. Granted, I am painting somewhat of a 'crash' scenario, but that's were energy markets are headed if they price themselves so far out of what the market can bear. If there is no need for so much oil, no consumers that need to drive to work, there is NO market, full stop. Sure, China could binge on cheaper oil at that point, but who are they going to sell their consumer goods to at such a large profit? Their own populace? Not yet, I think. No one in OPEC has to go firesale for this correction to happen. The only thing that they have to ask themselves is whether they want the oil market to have a soft or hard landing. Want a hard landing, keep pumping up that bubble. Want a soft one, let some air out fairly soon.