[Marxism] Supply and demand?

[bauerly at yorku.ca]

If we accept that supply and demand are driving current oil prices and that the
increase in consumption of China and India are behind the increase in demand. 
Than how does one rectify that with this:
"a year-on-year drop in U.S demand of 1,103,000 barrels/day. Huge. Roughly equal
to the production of a super-giant oil field, or a small producing country like
Qatar, Indonesia or Azerbaijan....A 1.1 million barrel/day drop in US demand is
gigantic -- literally enough to wipe out all growth in oil consumption for the
entire world, which at the moment is running at about 0.9mbd. (The current IEA
forecast for 2008 demand growth is 0.89mbd. Source: July 10 OMR).....There is
simply no way for China and India (who combined have average annual growth of
around 0.5mbd) to overcome a 1.1mbd drop in US consumption. They simply can't
grow that fast."

Its not only increase in demand you say but declining supplies.  How then does
this drop in demand not bring about a commensurate drop in price?  Can someone
on the peak oil side please produce some data to show that supplies are
decreasing fast enough to counteract this drop in demand and maintain an
elevated price.

There has been some decrease in price but there has also been an increase in
production.  More to the point there is a huge retraction of investment capital
from long oil positions.  This may take some time but it appears the bubble is
deflating.

Brad