Analysts are predicting that oil could hit $150 a barrel this summer. Won't that be fun? [Reuters]
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It will hit 200 by the end of the year. But they don't want to tell you that. They give you little bits to shock and awe all throughout the year.
People are yelling for OPEC to increase production, but I don't think that's the answer. Saudi Arabia even thinks prices are too high. Pruction levels have been about the same since 2005, but now all of a sudden, there isn't enough oil so prices rise? No, it's because the economy has fallen apart in other areas.
If oil continues to rise at this level, it may actually make sense to build stuff in America again (or nearshore), due to transportation costs.
@heavylee-again: I'm not sure I understand your comment. Part of the reason for the high prices is that the economies in China, Russia and India are booming and OPEC hasn't increased supplies to keep up with demand. They don't have much incentive to do so but risk a global downturn or countries seriously considering other power sources if they don't keep prices within reach. Add a sprinkle of devalued dollar (Thanks GWB) and geopolitical strife (thanks again GWB) and you have sky-high fuel prices.
Demand is going down, actually. This should indicate a price drop, however on the speculation that the cost of oil is going up, the price jumped up $10/barrel last Friday.
NPR put it well. The announcer says he once say an Onion headline "The stock market went up 10 pts on the rumor the stock market was going to go up 10 pts." That's how oil futures are behaving right now.
I can't wait.
But actually, when it starts to hit the well-to-do and people stop buying gas guzzlers and the like, it will force industry and the government to actually look into alternative fuel sources. Better late than never.
I live near the beach, next to a resort town. I wouldn't mind gas prices getting so high that it cuts down on the number of New York tourists, and I can go food shopping without getting caught in a traffic jam.
Here is to blame
1. Federal Reserve
2. Investment Banks
3. Government Policies
OPEC is pumping enough oil to meet demand so why is oil going up, follow the money and look at the ones clammering about it.
Cue the people who say high gas prices are a good thing, but then complain about the cost of milk.
@ARP: I'm not sure I understand your comment. Part of the reason for the high prices is that the economies in China, Russia and India are booming and OPEC hasn't increased supplies to keep up with demand. They don't have much incentive to do so but risk a global downturn or countries seriously considering other power sources if they don't keep prices within reach. Add a sprinkle of devalued dollar (Thanks GWB) and geopolitical strife (thanks again GWB) and you have sky-high fuel prices.
What I'm saying is that demand hasn't gone up 40% in the past 6 months, like prices of crude barrels have. I'm saying that prices of crude and gas are being artificially tampered with and are not purely based on the supply-and-demand model.
The economy, strife, and many other factors are at play. So what I'm saying is that it's not totally fair for anyone to cry that OPEC hasn't expanded output; why should they? They're holding up their end of the deal in producing a reasonably steady supply. It's everyone else that's freaking out to make the prices jump. And I'm very curious to see if Exxon-Mobil's dozens of billions in profits dip at all.
@ARP: I don't think you can blame the devalued dolla solely on GWB. Add the trade deficite and the selling of our now defuct home loans overseas is what's created the majority of our weak dollar problems. No one wants our dollar since there's so much of it out of the country. We should be exporting our goods and need to stop buying cheap crap from China.
Its only going to get worse.
@Rippleeffect: The home loan crisis is the result of Republican policies and inattention to regulation and enforcement. Bush is directly responsible for that - government MUST strictly regulate financial markets to prevent things like this from happening.
The trade deficit is also the result of Republican policies, though in that case they had an assist from the Democrats. "Free trade" is a bipartisan thing. But yeah, the reason the dollar is falling in value is simple: wealth is evaporating out of this country. Now we just need a government that doesn't hate its people to start working on reversing that.
Fun for us areas that benefit from all your dino-bone-burning machine loving people. Albertans in Canada won't have to pay for basic health insurance as of January 1st thanks to your efforts. Thanks, world!
p.s.: there's a finite supply. While new barrel-loads get produced and enter the market, the total supply is always going down. Prices should always go up. The same will happen with fresh water when America decides that it's also an essential strategic resource.
@chiieddy: I agree. I am wondering what would happen if analrapists said that oil would hit $70 a barrell. Would people get confused enough they would go along with it?
@AlteredBeast: Benny Problems?
@johnva: I have very little faith in politicians to correct our economic woes without heavy regulation. When that happens we'll begin down the path of even greater socialism. Not saying we're on the right track but look what happened to soviet russia when their government felt it could regulate their economy better than fair market trade.
Our economic practice have been completely absent these past 8 years. I think total disregard and lack of policies was the main problem. I'd love to see a very moderate push for reform, but I think that totally opposite and contrasting reform would be a bad idea. Let the market work itself out and enforce the current laws on the books, only making policies that close loopholes that allow for illegal and predatory trade.
yeah... and nafta was a big mistake.
@heavylee-again: My suspicion is that Saudi Arabia hasn't increased production because they can't. Maybe their reserves have been overestimated and the tap is, in fact, nearly dry. If I'm right, things could get interesting; the House of Saud is unlikely to survive once the oil money stops flowing.
@Rippleeffect: And who is to blame for the trade deficit and the home loan crisis? The stupid consumer who does what he or she is told, or the government policy (thanks, George) that allowed those consumers to act stupidly?
@Orv:
Forget the House of Saud. We'd see oil prices of $300 a barrel if we discovered Saudi Arabia lied about its output.
All of a sudden we'd be wondering how much oil we REALLY have...
If there's a silver lining to this, it's that, for every cent that oil goes up, alternative energies look that much more economically viable.
Still sucks to be caught in the middle, though.
conspiracy theorists predict global war over oil before it's all said and done... /scary sarcasm
@HeartBurnKid: That's why I hope this isn't a speculative bubble. If it is, and it pops, those investments in alternative energies are going to go disastrously wrong, just like they did when the price of oil crashed in the 80s. That will discourage development of those technologies for a long time to come.
@Orv: That's why the government should enact a sliding gas tax that creates a price floor for gasoline. Basically, the government should pass a tax that automatically adjusts so that gas prices can never fall below $3/gallon or so ever again. That would provide a much more protected investment environment for alternative energy technology. AND it would have the added benefit of smoothing out oil price volatility.
@Steaming Pile: Trade deficit was a problem well before W. Always try to buy Made in USA products.
imo, if we had less social programs, the government would have less of a public justification to tax us and companies more. Less pressure on companies would mean less of a desire (and need) for everything to be outsourced outside of our borders. Yes its cheaper to purchase products from china and oil from the Middle East and South America, which is why we need to create incentives to companies to keep jobs and manufacturing local.
You can't (legally) create laws that require companies keep their operations local. Quit taxing them out of this country.
This is just a huge mess that's been building up for the past 30ish years, and we can't expect the solutions to come out of one man or one administration. Though they can put the wheels in motion.
We need to use the resources we have here in this country and stop selling ourselves to the cheapest overseas busines/scountry/regime.
@laserjobs: Don't forget about the developers/middlemen, such as the Rockefellers and others who actually control the business...In 1973, Rockefeller (I forget which one) told the Arabs to raise the price of oil. In the U.S., we were told there was an oil shortage (there's never a shortage and peak oil is a myth) and our petrol prices shot up. Oil prices are not dependent on supply and demand, and prices are artificially kept high.
screw what analysts are predicting.
I'M predicting complete and total complacency!
@backbroken: @backbroken: Higgh gas prices are a good thing, but milk is getting SO FREAKING expensive.
/cued comment
Given the speed of the run-up, this has all the hallmarks of a bubble. George Soros and Lehman Bros. seem to think so - see [online.wsj.com]
Demand is increasing in the third world, but certainly not at exponential rates in the short term like the price of crude. $150 and $200 per barrel prices have the ring of "Dow 36,000" to me -- analyst hype.
@thebigbluecheez: I remember hearing an ad a few years ago that says "next time milk prices are getting to you, pour yourself a tall, cool glass of gasoline". If they tried playing that ad on the radio now, they'd make a mockery of themselves.
@AlteredBeast: Except that your trip to the grocery store will cost more, and less tourists coming to your town means less revenue for local businesses. Not really seeing how less traffic makes up for that.
Oh yeah, barrels of fun, even.
Thanks, I'll be here all week!