<html><body> <DIV>Query how likely is a US recession on a scale sufficient to reduce demaand by 1/3 ( which would still leave the price of oil at $ 50 a barrel,  still high by historical standards) and wouldn't such a reduction be temporary. SR</DIV> <DIV> </DIV> <BLOCKQUOTE style="PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #1010ff 2px solid">-------------- Original message -------------- <BR>From: Doug Henwood <dhenwood@panix.com> <BR><BR>> <BR><BR>> Oil prices are high in part because of supply/demand fundamentals, <BR>> but there's a large speculative component too. I couldn't put a <BR>> number on it, but it's probably at least $25. A US recession would <BR>> reduce demand enough to change the S/D balance slightly - but it <BR>> could be enough to prompt a collapse in prices. It doesn't require <BR>> Saudi Arabia's intervention. <BR>> <BR>> Doug <BR>> ___________________________________ <BR>> http://mailman.lbo-talk.org/mailman/listinfo/lbo-talk </BLOCKQUOTE></body></html>