Oil Reaches a New All-Time High. Again.

Glenn Swanson
by Glenn Swanson
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oil reaches a new all time high again

While some people remain relaxed about the price of gas, few will take comfort in the fact that the price of a barrel of oil reached $129 for the first time this morning. According to the AP [via CNNMoney], even after Saudi Arabia promised to pump an additional 300k barrels of crude oil a day, the price spike continues over "concern about global supply." Energy trader Nauman Barakat says he's seen "no news that would have caused the jump," but notes that strong demand for distillates used to make diesel (and heating oil), have been pushing up the price for those fuels. As for "Big Oil," Steve Austin at oil-price.net says governments in oil-producing countries "are demanding higher prices from oil conglomerates for tapping into their onshore reserves and sometimes even excluding them in favor of domestic expertise." Despite the large profits reported by Big Oil, Steve figures things look bleak for Big Oil. "In the 1970s, 80% of the world oil reserves were controlled by Big Oil companies, but now those numbers are reversed, with local government-owned oil companies holding 80% to 94% of the block." Steve's bottom line: "Clearly Big Oil's business model is due for a revision." After reaching the record high of $129.31 earlier this morning, the current price of oil (as of this writing) is $128.42… and rising.

Glenn Swanson
Glenn Swanson

Glenn is a baby-boomer, born in 1954. Along with his wife, he makes his home in Connecticut. Employed in the public sector as an Information Tedchnology Specialist, Glenn has long been a car fan. Past rides have included heavy iron such as a 1967 GTO, to a V8 T-Bird. In between those high-horsepower cars, he's owned a pair of BMW 320i's. Now, with a daily commute of 40 miles, his concession to MPG dictates the ownership of a 2006 Honda Civic coupe which, while fun to drive, is a modest car for a pistonhead. As an avid reader, Glenn enjoys TTAC, along with many other auto-realated sites, and the occasional good book. As an avid electronic junkie, Glenn holds an Advanced Class amateur ("ham") radio license, and is into many things electronic. From a satellite radio and portable GPS unit in the cars, to a modest home theater system and radio-intercom in his home, if it's run by the movement of electrons, he's interested. :-)

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  • Menno Menno on May 20, 2008

    Everyone is forgetting one additional little factoid. Oil is priced in US Dollars (for the most part) worldwide (the exception being Iraq just before it was invaded, and recently Iran - possibly just before being blasted out of existance). US dollars have lost 70% of their value between 1979 and 2007. Other currencies have retained more of their value compared to the US dollar, especially recently, and therefore it is AMERICANS who are feeling the highest price increases for oil, worldwide (except for countries which have currencies directly pegged to the US Dollar such as Panama, Belize, etc.) For example, the Euro started out at a value of about 85 US cents when it was created (if memory serves me right) and is now at $1.56 (approximately). Therefore, due to the Euro buying nearly twice as many dollars as it did a few years ago, the tripled price of oil is not felt as acutely by the Euro zone, but the full force of the 300% price increase in oil is felt by Americans. Look at this chart. And the comments below it. http://bespokeinvest.typepad.com/bespoke/2008/03/golddollar-rati.html Now, mentally turn the chart "upside down" and you'll see that the value of the dollar vs. gold is plummeting. So - let's recap briefly (because I've got to get to bed and get up and go to work). Historically, for decades, when talking in US Dollars (the recent worldwide currency of choice), -Canadians paid 150% to 200% of what Americans did for gasoline -Britons and Europeans paid 300% to 400% of what Americans did for gasoline Much of the difference in price was taxation, still is. Now, -Canadians pay about 20% more than Americans -Britons and Europeans pay about 100%-120% more than Americans See? Much of the price increase is actually aimed at Americans (possibly to try to reduce the amount of energy we use, in order for the rest of the world to have a better chance of getting in on the action/improving their standard of living). OPEC just said that oil "will be" $200 a barrel. So I guess, it will be-soon.

  • Areitu Areitu on May 21, 2008

    At this point, OPEC could sneeze and the price of oil would go up again.

  • Stein X Leikanger Stein X Leikanger on May 21, 2008

    Yesterday's high is now a new low, as oil just went past 130/barrel. What about the "long crude estimates" - those stating what the price will be years from now? Peak Oil is beginning to make an impact there, as well. The price has surged in the past few days, and we're looking at USD140/barrel in 2016. As these long prices are always very conservative compared to the trading prices (well, almost always) they're taking some time to catch up to the reality on the ground. Check out Bloomberg for the details: http://www.bloomberg.com/apps/news?pid=20601087&sid=a_jM0ghSxR.s&refer=home

  • Anonymous Anonymous on May 21, 2008

    IMO none of the experts knows why this is happening. Quite frankly I don't pretend to understand it either now. "Concern about global supply" sounds more like a conclusion based on the rise in oil prices with no visible reason behind it not a reason. Energy trader Nauman Barakat says he's seen "no news that would have caused the jump," seems to be a very telling quote; telling me that the experts are all just guessing as to why the price of oil continues to rise.