Oil Price Rise Fails To Increase Oil Production

An article in the New York Times questions the conventional economic theory that increased prices will give more oil. As oil prices have reached near 120 dollars/barrel no significant decrease in demand and no major increase in production have occured.

“According to normal economic theory, and the history of oil, rising prices have two major effects,” said Fatih Birol, the chief economist at the International Energy Agency in Paris. “They reduce demand and they induce oil supplies. Not this time.”

Full article available from: http://www.nytimes.com/2008/04/29/business/worldbusiness/29oil.html