Leading the nation with the best supply-demand balance is the Hartford metropolitan area, with less than a two-year supply of vacant office space.

The supply-demand balance has turned.

"It's very hard now to look at the supply-demand balance," said Mehdi Varzi, president of Varzi Energy, a consulting firm in London.

Demand Response (DR) is a set of actions taken to reduce load when electric grid contingencies threaten supply-demand balance or market conditions occur that raise electricity costs.

The agency's plan also entails improving the supply-demand balance by an additional 500,000 barrels a day through conservation.

But with the bond market having anticipated the current slowdown, a deteriorating supply-demand balance may now limit the effects of improving economic fundamentals for bonds.

When the world is short of spare production capacity, the market is sensitive to even small changes in the supply-demand balance.

"Saddam Hussein knows the supply-demand balance will work in his favor," said William L. Randol, an oil analyst for the First Boston Corporation.

As we learned in the 1980's, conservation and increased investment can eventually change the supply-demand balance.

The supply-demand balance then reverses; supply outpaces demand (sellers predominate), causing prices to fall.