Oil Crests $100 a Barrel; No Respite for In Sight for Truck-Heavy Automakers
CNNMoney.com reports that the price of oil has topped $100 a barrel, for the first time ever. (Happy New Year!) U.S. crude priced for delivery in February has gone up $4.02, to reach $100 a barrel on the New York Mercantile Exchange, Inc. (NYMEX). Ira Eckstein, president of Area International Trading Corporation, says you ain't seen nothin' yet: "This market is really gonna fly.” CNN lists several reasons for the rise, including civil unrest in Nigeria and rumors of a potential cessation of Mexican supply (no reason given). And then there's the ongoing decline of U.S. oil supplies. Oh, and a “surprise fall” in US manufacturing, which could lead to lower interest rates, which could further ding the value of the dollar, which could lead investors bail out of U.S. equities and into commodities, which would drive up the cost of imported crude. No mater how you slice it, gas prices are sure to arc upwards, putting yet more pressure on a beleaguered market for gas-hungry SUVs and pickups.
This problem has nothing to do with growing demands in US or Asia or any other place. I've seem as many cars out on the street today as 15-20 years ago. The truth is that the people that is running all these oil refineries just got a little smarter when it comes to oil production and pricing.....and heres a thought, pretty soon alot of the baby boomers will soon retire this will lead to a decrease in driving activity, so lets wait and see if the price goes up or down...so stop pointing fingers at each other.
I believe the best energy policy for America is a continuation of current energy policy; that would be no credible mandatory fleet MPG requirement. I would even advocate tax deductions for new gas guzzler purchases. (A Chevy suburban gets the most, something like $10,000; a 6 cyl Accord gets the least, something like $1,000.) This should allow the D 2.8 to continue to operate with excess capacity of the wrong types of vehicles, with money losing incentives to move the metal. The longer we can keep people commuting in gas guzzlers, the faster we get to $6 gas. With $6 gas, most commuters switch to 4 cyl diesel hybrids that get 100 MPG, and the only people driving to church on Sundays in a guzzler are the truly wealthy CEOs, not the pretentiously credit card wealthy doctors and lawyers. So to break Americans from their 'God-given, God-guaranteed right to waste oil' mindset, they must first waste it feverishly. I am very serious.
casper: the oil refineries buy crude oil and refine it into other products such as gasoline, diesel, kerosene, etc. They often have nothing at all to do with oil recovery, exploration or pricing. I believe your argument would be appropriate if the discussion were about gasoline prices, however. ihatetrees: you are willing to ignore geologists and believe that economists are the authorities of record when it comes to the amount of oil that is available? The average economist is clueless: they work with idealized models of economic behaviour. The typical economic model assumes that infinite economic growth is possible and desirable (I won't argue with desirable, but the earth and its resources are finite and will collapse under demand long before we have the capability of expanding at a large scale into space). Landcrusher: nobody I has ever read suggests there is some big industry/government conspiracy about peak oil. It is mere head-in-the sand ignorance, or pollyanna cornucopian-ism. The point with peak oil is not that we're running out. There is still a shite-load of oil in the ground. The point is that when you hit the downside of the production peak, and the supply and demand curves begin to diverge, you will get a steady and inexorable rise in the price of oil. No conspiracy, just simple microeconomics. Since our society is built on cheap oil (and energy in general) something will have to give. Either society will fall (the apocalyptic scenario you refer to) or we re-arrange our society and way of living based on expensive energy. And yes, new oil fields will be discovered, and new methods of extraction developed, but we will not see cheap energy again. If we keep denying that we are in an age of increasingly expensive energy, then we will not do anything about it until too late. The longer we wait, the more likely the apocalyptic scenario is to play out.