Oil at $100 Barrel

[tamias6]

People speak of the high prices resulting in demand for higher demand for better fuel efficiency. Only problem is, all of the legislation for better fuel efficiency requires modest improvements by dates that are decades in the future. How does that help us now?

[JerseyBoy]

I really don't see why folks are being saddened by this price hike in gas. If anything it will benefit us all long-term as it pushes alternative fuels, more efficient automobiles, shorter commute times (ease of congestion on our roads), and higher density near core business areas.

Sure, some may suffer for a while to fill their Hummers and fast sports cars but can we really blame the price hike in gas for this? Shouldn't we be blaming ourselves for giving in to the "American Dream?"

[suburban george3]

$3.05 now in my neighborhood.

[Neo]

My reason for putting the "sad face" after my sentence was to express my feeling of the future problems this will cause, such as groceries and almost every other item that needs to be transported that will go up in price (lack of explanation on my part). I know it sounds sick, but I'm kind of glad America is getting a taste of its own medicine.

It is a very poor environmental choice to haul oranges from thousands of miles away just so we can have an orange for lunch. I understand that everyone needs food, but I think it is best if we support the local producers instead of an 18-wheeler box truck hauling California oranges to North Carolina. It doesn't just stop there of course, there are major issues with importing most of our goods from foreign countries because we're too cheap here in America.

We have all been brainwashed into thinking we should all be entitled to cheap goods no matter what they are and for that we all pay a price. Perhaps higher gas prices will inevitably undo some of that brainwashing.

[runawayjim]

It is a very poor environmental choice to haul oranges from thousands of miles away just so we can have an orange for lunch. I understand that everyone needs food, but I think it is best if we support the local producers instead of an 18-wheeler box truck hauling California oranges to North Carolina. It doesn't just stop there of course, there are major issues with importing most of our goods from foreign countries because we're too cheap here in America.

We have all been brainwashed into thinking we should all be entitled to cheap goods no matter what they are and for that we all pay a price. Perhaps higher gas prices will inevitably undo some of that brainwashing.

[monsoon]

A lot of the price run-up is simply due to the fact the US dollar is becoming essentially worthless on the world currency exchanges. Americans are going to start paying dearly for borrowing so much money to pay for wars and other governmental deficit spending. The rest of the world is yawning at these prices because they don't buy oil in $.

[suburban george3]

the only issue with that is people who live in the northern states cannot always support local farms because the local farms shut down for at least a quarter of the year. we just had our first frost this morning (though it might've been last week, i wasn't up early enough then). that signals the time when the farmers have to start closing up for the winter. certain types of produce don't hold through the winter and need to be shipped in.

[runawayjim]

Well, that's when you depend on home canned and stored goods to get you thru the winter. Northeastern states have had to deal with this issue and also supported the bulk of the US population prior to the advent of the automobile.

Of course, farming has shifted now to be a corporate controlled entity for the mostpart, so I doubt if the NE farms could support the local populace well. Everyone just might as well brace for ugly price hikes at the grocery store.

[swh1972]

A lot of the price run-up is simply due to the fact the US dollar is becoming essentially worthless on the world currency exchanges.

[monsoon]

True, but most companies utilize currency hedges to offset these moves, so to an Exxon Mobile, the price of oil is not as dependent on the exchange rate between the dollar and whatever other currencies are out there. A lot of the price move for oil is the result of greater demand for oil plain and simple.

[JDC]

We have all been brainwashed into thinking we should all be entitled to cheap goods no matter what they are and for that we all pay a price. Perhaps higher gas prices will inevitably undo some of that brainwashing.

[Bynocerus]

You're right; there is no shortage of oil. However, there most certainly is a shortage of excess supply. Supply constraint remains the same, demand increases, price goes up. Econ 101, day 1.

If supply continues to lag behind demand, or, god forbid, decrease in coming years, $100 oil will look very cheap.

Falling dollar doesn't help, but it's any easy distraction from the fact that BRIC is coming online in force and the planet simply doesn't have the resources to support American-style demand in the developing world.

[Southron]

If supply continues to lag behind demand, or, god forbid, decrease in coming years, $100 oil will look very cheap.

[sean]

No shortage of oil? That is part right... there is still lots of oil in the ground, but there is a shortage of cheap oil. We may have already picked most of the 'low hanging fruit' and now our economy is facing a paradigm shift as we have to now climb the tree to gather remaining fruit. The economy of oil is that it is cheap in that for every unit of energy/capital that you invest(exploration, extraction, processing and distribution), it yields many more units of energy/capital. Are any of you folks attending this thread familiar with the late Dr. M. King Hubbert, Geophysicist?

[tamias6]

According to an oil industry blogger, futures traders are now selling $200/barrel options for 2008 and $250/barrel options for 2010. It would be interesting to see how Americans would react to $6-7 per gallon gasoline. I'm sure there would be a lot of whining, complaining and pointing fingers, but I'm not convinced yet that behaviors would change much at that level.

[Gusterfell]

^I agree. Gas at $3.00/gallon is an inconvenience to most people. Gas at double that would be a serious hardship. We're already seeing an economic slowdown tied partially to energy prices. If those prices were to climb to the levels you're talking about, we'd be looking at a depression.

Sean, there is indeed no shortage of crude oil, but there is a shortage in refining capacity to convert that oil into usable products. Refining capacity has barely increased at all over the last thirty years, while demand has skyrocketed. Worse, most active refineries are kept running at only partial capacity, which acts to limit supply and raise prices (and therefore raise profit for the oil companies).

[runawayjim]

i don't think we'll see gas hit $6-7 a gallon even if it goes up to $200/barrel. the gov't will subsidize it to keep the cost reasonably affordable ($3-4/gal).

and the majority of the crude oil still available is actually mixed in with dirt and clay. the extrication of it costs more than pumping oil.

[monsoon]

.....

Sean, there is indeed no shortage of crude oil, but there is a shortage in refining capacity to convert that oil into usable products. Refining capacity has barely increased at all over the last thirty years, while demand has skyrocketed. Worse, most active refineries are kept running at only partial capacity, which acts to limit supply and raise prices (and therefore raise profit for the oil companies).

[Gusterfell]

^Yes, that is largely the case, but if that were the entire problem, American oil companies would not be raking in all-time record profits. They would be suffering from the sinking dollar along with the rest of the American economy.

Other countries have also seen significant increases in oil prices, though due to the factors you mention their increases haven't been as steep as ours. To the extent that they are "shrugging off" the issue, it is largely because their economies and infrastructure aren't as intimately tied to oil as is ours.

[WOT]

I believe futures are trading in the $200 - $250 range for 2009 and 2010.

[swh1972]

I believe futures are trading in the $200 - $250 range for 2009 and 2010.

[monsoon]

The price of oil/barrel finally hit $100 today.

[suburban george3]

The price of oil/barrel finally hit $100 today.

[Charlotte_native]

The price of oil/barrel finally hit $100 today.

[dxartist]

I suppose we should find a reason to invade another oil producing country in lieu of cutting back on our consumption.