The Bad News at the Pump

[robertpaulsen]

The Bad News at the Pump
The $100-plus Barrel of Oil and What It Means
by Michael T. Klare

On Monday March 3, the price of crude oil reached $103.95 per barrel on the New York Mercantile Exchange, surpassing the record set nearly 30 years ago during another moment of chaos in the Middle East. Will that new mark prove distinctive in the annals of world history or will it be forgotten as energy prices drop, just as they did following their April 1980 peak?

When oil costs are plotted over time, the 1980 oil crisis — prompted by Ayatollah Khomeini’s Iranian revolution — stands out as a sharp spike on that price curve. Both before and after that moment, however, oil supplies proved largely sufficient to meet rising global demand, in part because the Saudis and other major producers were capable of compensating for declining Iranian production. They simply increased their output substantially, dumping a surplus of oil onto the global market. Aided by the development of new fields in Alaska and the North Sea, prices dropped precipitously and stayed low through the 1990s (except for a brief spike following the Iraqi invasion of Kuwait in August 1990).

Nothing similar is likely to happen now. For the present surge in prices — crude oil costs have risen by 74% over the past year — no such easy solution is in sight. To begin with, we face not a sudden spike, but the results of a steady, relentless climb that began in 2002 and shows no signs of abating; nor can this rise be attributed to a single, chaos-causing factor in the energy business or in global politics. It is instead the product of multiple factors endemic to energy production and characteristic of the current era. There is no prospect of their vanishing any time soon.

Three factors, in particular, are responsible for the current surge: intensifying competition for oil between the older industrial powers and rising economic dynamos like China and India; the inability of the global energy industry to expand supplies to keep pace with growing demand; and intensifying instability in the major oil-producing areas.

more...

http://www.commondreams.org/archive/2008/03/11/7604/

[liberal N proud]

1. $3.19 to $3.45 here today

I don't know anyplace else I can cut cost, driving or anywhere else.

They have us over a fucking barrel and they are not using any of the oil as lub.

[gatorboy]

2. Oil Czars: "It's out of our hands!"

"Now excuse me while I count this month's record profits..."

[winggirle]

3. Lately....

it's 110.02 per barrel for oil and it's the U.S. Dollar is very competitive against the Euro and it's more than a battle at the pumps for Americans.

[jimshoes]

4. Boy, nothing helps the economy like

$4.00 a gallon gas. Unless you're a bicycle repairman.

[ExtraGriz]

5. 3.25 in maine..lowest grade.

i only put in $25 at a time....i'm not really looking forward to summer gas prices, prob see 4.00 a gallon.

[tapper]

6. Local economist seeing bubbles...

I was listening to the radio driving home tonight, and a local economist was being interviewed, and was insisting that the oil prices were being driven up by speculators, that it's just another bubble, and when the speculators get scared, they'll leave, the price will drop $40-50, and we'll see gas back to $1.50 or so.

Don't think I totally believe him. Some speculation - oh certainly. (Somewhere, here or elsewhere, someone mentioned the price in Euros was up about 20%, which suggests that the price increase isn't entirely due to the dollar's fall.) But add in the factors you mention with more demand and lack of increasing supplies, etc ...

hmmmph.

An optimistic economist. Also thinks we aren't in a recession, and won't be. (Predicted 2nd quarter would be negative, but then pick up 3rd quarter, back towards 3% yearly basis.)

yeah. right.