Gas price in 10 years...

[why2not]

I was playing with some numbers for work today & noted that the price of regular gasoline has increased an average of 13.6% from Feb '99 through Sept '07. *

I also know that most experts predict this rate of increase to accelerate as the world demand continues to grow & supplies continue to shrink.

But if you just hold it steady at that 13.6% per year, that means in 2017, a gallon of gas will cost more than $10.

*Source: Energy Information Administration - US Dept of Energy

[Ngchen]

That is interesting. However, it is also interesting how I hear the futures contracts for oil that are 10 years out aren't really much more than the price of oil now. So either (1) the traders who buy and sell oil are getting something VERY wrong, or (2) we are simply living through a temporary price spike. If you're convinced that (1) is the case, then you can make a huge fortune by buying 10 year oil futures at today's price.

[Steve Hamlin]

There's somewhat a middle ground where both things hold true -- substitution of "something else" for gasoline.

Any way 'round it, I ride now because I want (and so I can ride then, should I have to. . .).

[mwrobe1]

Year Price Per Gallon (Adjusted for Inflation)
1950 $1.91
1955 $1.85
1960 $1.79
1965 $1.68
1970 $1.59
1975 $1.80
1980 $2.59
1985 $1.90
1990 $1.51
1995 $1.28
2001 $1.66
2002 $1.31
2003 $1.52
2004 $1.79
2005 $2.28
2006 $3.03
2007 (so far) $3.26

http://www.howstuffworks.com/gas-price.htm

I don't know...I think you might be a tad high on your forecast.

[Helmet Head]

Year Price Per Gallon (Adjusted for Inflation)
1950 $1.91
1955 $1.85
1960 $1.79
1965 $1.68
1970 $1.59
1975 $1.80
1980 $2.59
1985 $1.90
1990 $1.51
1995 $1.28
2001 $1.66
2002 $1.31
2003 $1.52
2004 $1.79
2005 $2.28
2006 $3.03
2007 (so far) $3.26

http://www.howstuffworks.com/gas-price.htm

I don't know...I think you might be a tad high on your forecast.

But in 2017 the price could easily be $10/gallon, and a similar table might show that today's (2007) price in 2017 dollars to be, say $8.

At the rate the dollar is diving relative to, well, everything, $10/gallon within five years would not surprise me.

[dobber]

What I find amazing is that despite the supposed tightening of supplies, I've yet to see an "out of gas" sign at a station or hear of a interruption in commerce due to feedstock shortages.

Lots of manipulation and hype going on in the markets. The +33% jump in oil prices is based on speculation and driven by money pouring into commodities in search of a quick return. As soon as someone says "boo" or in this case recession, prices will drop as quickly as they've risen.

Long term, pricing will return to a $50 range as more hard to get at oil and alternative energy sources come into play.

[RobertHurst]

What I find amazing is that despite the supposed tightening of supplies, I've yet to see an "out of gas" sign at a station or hear of a interruption in commerce due to feedstock shortages.

Lots of manipulation and hype going on in the markets. The +33% jump in oil prices is based on speculation and driven by money pouring into commodities in search of a quick return. As soon as someone says "boo" or in this case recession, prices will drop as quickly as they've risen.

Long term, pricing will return to a $50 range as more hard to get at oil and alternative energy sources come into play.

I don't buy that. What we see in the oil markets, I believe, is the truth slowly dawning on a clueless world. All the major oil companies pulled less oil out of the ground this year than they did last year. The easy pickins are all used up. There is a consensus growing among independent experts that total global oil production will decline from here on out. There is also alarm that there will be less oil available for global markets than even the steep backside of the production curve would indicate, due to oil producing countries consuming more of their own diminishing production, and exporting less.

Alternative energy is great stuff. But how does it compare to sticking a spigot in the ground and having energy pop out? That's basically what we've been dealing with during the Petroleum Era. A freaky situation that we should not assume could be matched with alternatives. There is a tendency to think the Market will take care of everything automatically; I contend that this notion of the Market itself is a product of the Petroleum Age when near-free energy just spat up out of the ground.

Remember also that one can make money by correctly betting the price of oil will fall. It's a two way street. At any given price there are an equal number of buyers and sellers.

Robert

[Roody]

Year Price Per Gallon (Adjusted for Inflation)
1950 $1.91
1955 $1.85
1960 $1.79
1965 $1.68
1970 $1.59
1975 $1.80
1980 $2.59
1985 $1.90
1990 $1.51
1995 $1.28
2001 $1.66
2002 $1.31
2003 $1.52
2004 $1.79
2005 $2.28
2006 $3.03
2007 (so far) $3.26

http://www.howstuffworks.com/gas-price.htm

I don't know...I think you might be a tad high on your forecast.

Take a closer look at your figures. Other than 1980, prices were fairly constant until 2005. In the last 3 years, the price has taken a relatively large increase each year. Is this a glitch in the market (like 1980) or the beginning of a long-term trend?

[Speedo]

See the well documented, and very spooky article on Peak Oil (http://en.wikipedia.org/wiki/Peak_oil) in Wikipedia.

Speedo

[why2not]

Year Price Per Gallon (Adjusted for Inflation)
-snip-
2002 $1.31
2003 $1.52
2004 $1.79
2005 $2.28
2006 $3.03
2007 (so far) $3.26
http://www.howstuffworks.com/gas-price.htm
I don't know...I think you might be a tad high on your forecast.
It depends on the base assumptions. If you assume (as many "experts" state) that world wide supply of oil outpaced worldwide demand until 2002/2003, at which point demand outpaced supply... then looking back to 2002/2003 makes the most sense.

If you think that we're not really consuming more oil than we're supplying... that China's/India's economies are not consuming more oil in the last 5 years, that (oil consuming) plastics are not being used at an inceasing pace in new products where metals/woods would have been used, then it does make sense to look all the way back to the 60's.

I personally believe the former. Looking at your inflations adjusted costs since 2002. The price has went up 2.5X in 5 years. Projecting this trend forward 10 years ($3.26 x 2.5 x 2.5) puts a price of gas at $20+ in 10 years. Even higher than my forecast.

Again, it depends on the assumptions. If you believe that the last 5 years are a temporary blip & we'll either find new oil, figure out cheaper ways to get hard to reach (expensive) oil, or invent technology that will reduce dependence on oil, then continue believing that a gallon of gas will cost about $1.80 (inflation adjsuted) in 10 years.

Personally, I don't believe that gas will be $20+ in 10 years. I don't believe that China/India could sustain their current pace of growth at that cost. In addition, at that cost the marketplace will drive for new technologies (think fuel injected cars following the spike in the late 70's/early 80's).

I would personally put it at around $8 in today's dollars in 10 years.

[genec]

What I find amazing is that despite the supposed tightening of supplies, I've yet to see an "out of gas" sign at a station or hear of a interruption in commerce due to feedstock shortages.

Lots of manipulation and hype going on in the markets. The +33% jump in oil prices is based on speculation and driven by money pouring into commodities in search of a quick return. As soon as someone says "boo" or in this case recession, prices will drop as quickly as they've risen.

Long term, pricing will return to a $50 range as more hard to get at oil and alternative energy sources come into play.

Remember the '70s? There were lots of OUT of GAS signs then.

[genec]

I was playing with some numbers for work today & noted that the price of regular gasoline has increased an average of 13.6% from Feb '99 through Sept '07. *

I also know that most experts predict this rate of increase to accelerate as the world demand continues to grow & supplies continue to shrink.

But if you just hold it steady at that 13.6% per year, that means in 2017, a gallon of gas will cost more than $10.

*Source: Energy Information Administration - US Dept of Energy

Of course if gas continues on this trend, other sources of energy will be tapped for propelling the car... even now GM is introducing several hybrid vehicles, a couple of which are direct plug in chargeable... and offer ranges of about 40miles on that simple charge... something that would probably satisfy many motorists' commute needs.

[mwrobe1]

Take a closer look at your figures. Other than 1980, prices were fairly constant until 2005. In the last 3 years, the price has taken a relatively large increase each year. Is this a glitch in the market (like 1980) or the beginning of a long-term trend?

That's just the thing...we don't REALLY know if its a long term trend...all is speculation.

[Brian Ratliff]

Take a closer look at your figures. Other than 1980, prices were fairly constant until 2005. In the last 3 years, the price has taken a relatively large increase each year. Is this a glitch in the market (like 1980) or the beginning of a long-term trend?

I have heard that peak oil has already hit. We are at the peak now, meaning that we are not finding new, significantly large sources of oil to increase production over last year. I believe there is a petrolium institute report that says as much, but without using the words "peak oil".

This is important, not because there isn't oil left in the ground (there is) but because the supply is leveling out as demand continues to increase. Once the source supply (I'm trying not to get it confused with the pumped supply (the amount of oil actually taken out of the ground), which is adjusted to exactly provide for the demand) and demand curves cross, then prices will spike. I suspect that in a decade, we'll be in the midst of feeling some "pain at the pump" as we collectively grope around for some new technologies to replace oil products.

Don't be surprised though if you find that it isn't renewables which get the call. There are lots of problems with all renewables, even wind and solar; all associated with the lack of ability for these to provide power on demand and a similar lack of ability to efficiently store large amounts (MW-hrs) of electrical energy. I suspect that, as the price of petroleum goes up, we'll all start running our cars off of liquified coal, which can probably be run through stock internal combustion engines with few changes, or we'll be using electricity generated by nuclear generators. Ethanol is another viable technology, but I suspect that it is impossible to provide the nation enough energy by planting the US over with corn fields or any other crop capable of ethanol conversion.

Along those lines, you should all be getting behind hybrid cars. Of all the technologies, hybrid car technology is the logical stepping stone to transitioning from a fleet of IC powered vehicles to a fleet of electric vehicles (either fuel cell or battery/grid connected powered). Hydrogen has a ton of problems, including the simple one of the lack of a path to get from an IC engine to a hydrogen engine, and similarly from gas stations to hydrogen stations.

Or perhaps, just perhaps, we'll start building cities differently and bicycles and other human powered vehicles will make a comeback in a dramatic way. (I had to add this, it's a bike forum after all ;))

[JusticeZero]

Hybrids seriously concern me, particularly because of the batteries. I'm concerned that there may soon be a crisis as the battery packs start hitting the end of their lifespan en masse, requiring expensive replacement and disposal. Also, they're still a gasoline powered car, and not THAT much more efficient; there can be a thought of "Oh, we're safe, we have a hybrid!" when in reality they are just as vulnerable.
Hydrogen storage is problematic, but no worse than gasoline really; hydrogen fires are pretty safe, apparently you can walk through a hydrogen fire and not come out much worse the wear from it, and it disperses fast because it rises so quickly. The main issue is just that you can't actually see it burning. We've been fueling vehicles with LPG for years, and that's more dangerous than hydrogen.. and LPG was just an advance from propane, which has been used for decades without comment and is much more dangerous than LPG. Most people around here have a big tank of one of the two leaning against their house, in forest fire country. The Hindenburg disaster wasn't a hydrogen fire, it was a fabric fire; it was the envelope burning, not the gas.

[edzo]

didja know that the usa has 3 times the amount of saudi arabia's oil, locked in oil shales, and that shell oil company has a way to extract that oil at 30 bucks a barrel. in situ ? it is true. we'll be able to wean off oil
and smoothly transfer to alternate sources with less worry than is being broadcast to the masses. the costs will go up then level off and then creep up. technology is moving ahead faster than you realize. in the meantime big oil companies are not asleep at the wheel. there are gigantic untapped reserves still in the ground, and it won't be strip mined out. it'll be pumped out, with the same footprint [or smaller] than current oil wells. it will happen

[OH306]

I miss how this topic has anything to do with bicycle advocacy or safety. You're just trying to agitate the monkeys in the zoo. This thread should live in the Foo Forum.

[JohnBrooking]

OH306, I think the point is more bikes = less demand for oil.

[Speedo]

didja know that the usa has 3 times the amount of saudi arabia's oil, locked in oil shales, and that shell oil company has a way to extract that oil at 30 bucks a barrel. in situ ? it is true. we'll be able to wean off oil
and smoothly transfer to alternate sources with less worry than is being broadcast to the masses. the costs will go up then level off and then creep up. technology is moving ahead faster than you realize. in the meantime big oil companies are not asleep at the wheel. there are gigantic untapped reserves still in the ground, and it won't be strip mined out. it'll be pumped out, with the same footprint [or smaller] than current oil wells. it will happen

By any chance, do you line your helmet with aluminum foil to keep the aliens from reading your mind?

Speedo

[dobber]

Remember the '70s? There were lots of OUT of GAS signs then.


Exactly. This time, no real shortage, just more expensive.

[dobber]

By any chance, do you line your helmet with aluminum foil to keep the aliens from reading your mind?

Speedo

Actually there is some amount of truth to his somewhat zany statement. The oil shale in the west is estimated to hold at least 3x the known reserves of Saudi Arabia. The problem has been how to extract the kerogen/ petroleum product effectively. Until recently, the thinking was that of strip mining, trucking, separation, refining, etc, etc. The resulting crude was rather low grade.

Shell Oil has spent upwards of $200MM in search of a solution, they've filed a number of patents and have recently revealed a much improved method which allows them to extract a high grade crude directly from the shale. The method involves the insertion of heating element into the shale, liquefying the kerogen and drawing it off (oddly enough, about 10 years ago I was part of an effort to manufacture some ceramic dome elements that the customer said was being used for below ground heating via microwave / oil recovery). By controlling temperature, they get high grade crude. Bonus points allowed for a process which leave a minimal footprint.

http://en.wikipedia.org/wiki/Oil_shale
http://en.wikipedia.org/wiki/Mahogany_Research_Project
http://www.rockymountainnews.com/drmn/news_columnists/article/0,1299,DRMN_86_4051709,00.html

[rschulze]

The world is probably going to be a big smoldering hole ten years from now so what's the difference?

[dobber]

The world is probably going to be a big smoldering hole ten years from now so what's the difference?

Your such an optomist, the worlds suppose to end in 2012.

[Steve Hamlin]

Shale oil (and Canadian sand oil) aside, there's means to turn America's abundant coal into fuel for fuel burners. Gassified coal was powering the Luftwaffe and the Panzers toward the end of WWII. Supposedly, Patton gassed up his tanks with the stuff to roll into Berlin.

[Brian Ratliff]

^^^
And we have lots of coal left.

[Speedo]

Actually there is some amount of truth to his somewhat zany statement.


I knew about the oil shale reserves, it was the "and that shell oil company has a way to extract that oil at 30 bucks a barrel." that pushed me over the edge. Everything I've read indicates that oil shale won't be a player until the price of oil has become high enough (through scarcity) to make it worth while.

You shouldn't have looked back in time so far for news. Shell seems not to be moving forward quite so aggressively.

http://www.rockymountainnews.com/drmn/energy/article/0,2777,DRMN_23914_5588887,00.html

That's fairly timid for a company with a $30 per barrel fix in their pocket!

Speedo

[dobber]

You shouldn't have looked back in time so far for news. Shell seems not to be moving forward quite so aggressively.

http://www.rockymountainnews.com/drmn/energy/article/0,2777,DRMN_23914_5588887,00.html

That's fairly timid for a company with a $30 per barrel fix in their pocket!

Setbacks are just a part of the process of moving forward. Given the collapse of the previous shale boon, I'd be inclined to approach things more cautiously. Deep sea drilling was considered higly risky in the past, now we're regularly venturing further and further out.

[richardmasoner]

Remember the '70s? There were lots of OUT of GAS signs then.

This time, we're importing refined distillates (mostly gasoline but also diesel, kerosene and so forth) from elsewhere because Americans are willing to pay more for the gas than farmers and fishermen in Indonesia are. Stations at the end of the distribution pipeline like North Dakota ("http://www.jamestownsun.com/articles/index.cfm%3Fid%3D56258%26section%3Dnews&cid=0&sig2=RNvHm_Ub3BG-ZD5jxD9AxA) saw diesel shortages lasting for several weeks this autumn.

One drawback to importing all of this fuel is that we'll be asked to provide famine aid next year to several Pac Rim and African nations in 2008 because they didn't have the fuel to plant and irrigate their crops. Unfortunately for the poor brown starving people, all of our spare grain will be diverted to ethanol production to fuel our cars. :(

The gas shortages in the 70s coincided with oil production peaking in the United States which happened *just* as OPEC embargoed the US. This time around, production has also peaked in Mexico, Venezuela, most of the Middle East and the North Sea and will soon peak in Canada, Russia and Saudi Arabia. We may be in a pricing bubble now, but fundamentally prices are rising because it's getting increasingly difficult to extract more of a declining resource out of the ground.

I personally think we'll hit $10/gallon by about 2009 or 2010. I expect Bush to come under tremendous pressure to release oil from the Strategic Petroleum Reserve during the 2008 presidential race, while Congressional candidates will talk about imposing price controls.

Extracting oil from shale requires a lot of heat energy, which requires fuel. Burning natural gas (another rapidly decline fossil resource) to extract oil may not be the best use of that energy.

OPEC petroleum is priced in US dollars, which means every nation buying oil on the world market must purchase that oil in American greenbacks. That's how the USA can afford to have the service economy we have -- we print fiat paper money to buy goods from China and Malaysia and India, who use the money to buy oil from Saudi Aramco, which uses the dollars to buy (mostly) U.S. Treasury instruments.

The dollar, however, has undergone tremendous devaluation over the last three years. The dollar is at historic lows against the Canadian Dollar, the Euro and even the Mexican Peso. Did anybody know that the Canadian Dollar is now worth more than the US Dollar? C$1 buys US$1.07 today. That's up from 65 cents five years ago, and from the beginning of this year it's up from 85 cents.

[wahoonc]

Exactly. This time, no real shortage, just more expensive.

Depends on where you are, there have been some spot shortages in the upper Midwest, primarily the Dakotas. There is about to be a spot shortage of LP in the Carolinas due to a fire and damaged LP transmission line (glad my tanks are full!) The infrastructure that produces and carries the gasoline (and other energy sources) in this country and most of the world is old and pretty fragile. I have read several articles on The Oil Drum (http://theoildrum.com/) that indicate we could well be less than a couple of days away from shortages at any time due to a multitude of reasons ranging from political unrest, to terrorism, to weather, to a crappy supply chain. Don't forget we IMPORT over half of the oil we consume. Dunno where you where during Katrina but it did not take long for the lines to form in the Southeast to get what little fuel was available. My work requires me to travel with a heavy truck. I always keep one of the tanks full, that way if the excrement impacts the rotary oscillator I will at least have enough to get home. And if that doesn't work I always have a bike with me that can serve as my lifeboat.

Aaron:)

[dobber]

Depends on where you are, there have been some spot shortages in the upper Midwest, primarily the Dakotas. There is about to be a spot shortage of LP in the Carolinas due to a fire and damaged LP transmission line (glad my tanks are full!) The infrastructure that produces and carries the gasoline (and other energy sources) in this country and most of the world is old and pretty fragile. I have read several articles on The Oil Drum (http://theoildrum.com/) that indicate we could well be less than a couple of days away from shortages at any time due to a multitude of reasons ranging from political unrest, to terrorism, to weather, to a crappy supply chain. Don't forget we IMPORT over half of the oil we consume. Dunno where you where during Katrina but it did not take long for the lines to form in the Southeast to get what little fuel was available. My work requires me to travel with a heavy truck. I always keep one of the tanks full, that way if the excrement impacts the rotary oscillator I will at least have enough to get home. And if that doesn't work I always have a bike with me that can serve as my lifeboat.

Aaron:)

Spot shortages due to infrastructure failure is different then shortage due to feedstock. Weren't the midwest shortages due to a flooded refinery? The shortages in the Southeast after Katrina were due more to hype then an actual shortage. With the entire Gulf infrastructure knocked off line, I still had fuel in the tank and natural gas for my furnace. And I live at the end of the chain in Northern NY.

I'm not saying that the supply / demand equation isn't tightening, just that the hype is typically more than reality.

[Speedo]

I'm not saying that the supply / demand equation isn't tightening, just that the hype is typically more than reality.

$96/barrel is pretty real.

I'd be the last one to actually try to predict gasoline prices in detail, and even the experts shy away from predicting a date for peak oil. But it's a finite resource, discoveries of new fields have long fallen behind our consumption, and we have an infrastructure for delivering liquid fuels for our vehicles. The alternatives are (take your pick depending on the resource) not as economical, unproven, not ready to be delivered on a mass scale, or environmentally unfriendly. There's a lot of work to be done, and resources spent, to get to the point where any of the alternatives are anywhere near as attractive as oil.

You have faith that we will technology our way our way out of the problem, but consider that drawing attention to the problem is "hype".

Speedo

[dobber]

You have faith that we will technology our way our way out of the problem, but consider that drawing attention to the problem is "hype".

Speedo


$96 a barrel, a 33% increase in a matter of weeks based on what? A presumed tightening of supplies. A presumed clash between Turkey, Kurds & Iraqis? Saber rattling with Iran.

It seems we go through this cycle every couple of months. Wasn't it just last spring that the stockpiles of oil and gas were at record levels? Did we suddenly start using a lot more over the summer?

I'm glad to see attention being brought to bear on the problems regarding energy, I just see the actual cost of energy to be driven more by speculation then reality now days. The plunge in the dollars value isn't helping either.

[RobertHurst]

$96 a barrel, a 33% increase in a matter of weeks based on what? A presumed tightening of supplies. A presumed clash between Turkey, Kurds & Iraqis? Saber rattling with Iran.
...

Also, reports from major oil companies that they are extracting less this year than last, and less last year than the year before.

If you are convinced oil will go back to 50$ you could make a killing by shorting the contract.

Robert

[dobber]

Also, reports from major oil companies that they are extracting less this year than last, and less last year than the year before.

Of course. Didn't OPEC actually reduce production this year based on fears of over supplying the market? Last years extraction would have been impacted by the loss of capability due to Katrina & Rita.

Oils jumped $3 today. Because today is different in what way then yesterday?

[mwrobe1]

Oils jumped $3 today. Because today is different in what way then yesterday?

The market sets the price. :) I'm not saying its logical either...but its reality...hell look at the stock market and the housing market...lots of emotion, perceived value, and other intangibles that mix into good ole supply and demand and produce a price for something that buyers of that something are willing to pay.

Does it REALLY cost $90+ to produce a barrel of light sweet crude? No.

Is a 800 square foot shack of a home in Orange county California worth $800,000? No.

Google/Yahoo/Ebay stock? Please.

[dr. nate]

Hmm...I'm thinking Mad Max.

[why2not]

I miss how this topic has anything to do with bicycle advocacy or safety. You're just trying to agitate the monkeys in the zoo. This thread should live in the Foo Forum.

As the OP, I was actually thinking that high gas prices would become the ultimate advocate for cycling. As the price at the pump increase to actually impact people, cycling may become a more common form of local transportation.

I remember hearing last year that a study showed it would take $6/gallon to significantly change driving habits because most people are locked into 85% of their driving (dictated by distance from work/stores to residence) & they wouldn't change those factors until it became painful.

I guess I didn't tie that in very well, why didn't you all read my mind??!!??

[noisebeam]

I'm more concerned about clean water 10-20yrs. from now than energy.

Of course lots of energy and high priced infrastructure can help supply salt-free water. In that case water will be available, but will cost more than gas.

Al

[Mos6502]

I'm sure most people'd probably go back to the coal fired steam coach before settling for a bicycle...

It's a real shame that people consider 20+ mile commutes to work an acceptable practice.

[noisebeam]

It's a real shame that people consider 20+ mile commutes to work an acceptable practice.
It's perfectly acceptable if done on a bicycle!

Al

[mwrobe1]

I'm more concerned about clean water 10-20yrs. from now than energy.

Of course lots of energy and high priced infrastructure can help supply salt-free water. In that case water will be available, but will cost more than gas.

Al

At least in the southwest and southeast U.S., you've got reasons to be concerned. I can't believe the situation in the Atlanta area this year. It seems as if some folks better start getting used to brown lawns...or rock gardens. And people better stop moving into Phoenix. The infrastructure has not caught up to the growth out there.

If you don't mind the cold...we got water o'plenty out by me. :D

[noisebeam]

If you don't mind the cold...we got water o'plenty out by me. :D
Sure, but everyone in the dried up places can't move there (and similar places)

Al

[richardmasoner]

Didn't OPEC actually reduce production this year based on fears of over supplying the market?

OPEC (and Saudi Arabia in particular) claimed they wouldn't boost production because of over supplying the market. In the past, they had no problems turning the spigots and flooding the market with cheap oil. For some factual information, you might consider reading this article (http://www.energypublisher.com/article.asp?id=11924). It does mention political volatility as a factor in futures pricing, but the normally gung-ho U.S. Energy Information Administration (which has consistently provided wildly optimistic production forecasts) is finally saying that maybe OPEC can't keep up with demand.

Rising oil consumption and the realization that additional OPEC production may not be sufficient to arrest the inventory decline are keeping markets firm.

Global oil markets will likely remain stretched, as world oil demand has continued to grow much faster than oil supply outside of the Organization of the Petroleum Exporting Countries (OPEC), putting pressure on OPEC and inventories to bridge the gap, said the EIA Tuesday.

Oh, and note this part:

At the same time, the market is operating with limited surplus production capacity, leaving it vulnerable to supply disruptions, warned the EIA.

We've always had "supply disruptions" Dobber. This time, however, we don't have much surplus production to see us through hurricanes and border skirmishes. This "speculation" that you mock is informed by real world events that matter so much more because the extra just isn't there like it used to be.

Besides everything going on in the Middle East, did you know insurgents are now bombing oil pipelines in Mexico?

[richardmasoner]

Does it REALLY cost $90+ to produce a barrel of light sweet crude?

There is little relationship between cost and value of a product. I can spend $20 in PVC pipe and handbuild a crappy lawn ornament that I probably couldn't sell for 50 cents at a garage sale.

Oil is a commodity with inelastic demand -- most of us really need it, and we'll pay almost any price to get it because if Joe Suburb doesn't buy it, then Quishang in Hangzhou or Sanjay in Bangalore will buy it instead. At the turn of the century, oil production cost was almost nil but people still paid good money for the product.

[RobertHurst]

Of course. Didn't OPEC actually reduce production this year based on fears of over supplying the market? Last years extraction would have been impacted by the loss of capability due to Katrina & Rita.

No, the Saudis have often stated that 80$ was their threshold and that they would increase production to keep the price below that. They have not shown an ability to increase production, for years now.

Domestic oil production has been declining every year since 1970.



Oils jumped $3 today. Because today is different in what way then yesterday?

There are lots of factors at play. Richard Masoner's post above is a good explanation of the role of excess capacity, or lack thereof. Traders are on a knife edge. Any serious disruption, the price will spike. So with events in Pakistan, Iraq, Turkey, Mexico, Nigeria, Somalia, Sudan, Afghanistan, Iran, SA etc. as they are, we have little price hikes in anticipation of possibly major disruptions. The lack of excess capacity is the major new reality that dictates the price in oil these days -- it didn't used to be like that.

It's such a shadowy enterprise that nobody can really say for sure what is going on exactly.

We may see oil down in the 70s again. But 50 dollar oil is a thing of the past, and 200 dollar oil is a thing of the future.

Robert

[dr. nate]

As the OP, I was actually thinking that high gas prices would become the ultimate advocate for cycling. As the price at the pump increase to actually impact people, cycling may become a more common form of local transportation.

Motorcycle sales are up. ;)

[Roody]

In the last couple days the higher prices are finally showing up at the pump. Gas prices will probably rise quickly in the next few days. Heating oil prices might rise even more than was predicted, just as the first cold snap sets in.

Makes me glad I don't have a stinkin' car! One less thing to worry about.

[mwrobe1]

In the last couple days the higher prices are finally showing up at the pump. Gas prices will probably rise quickly in the next few days.

We were around $3.00 not 2 weeks ago...now we're in $3.20 to $3.30 land. :mad: Yeah...just in time for Christmas.

Alot more people at work were saying "Wasn't it a little cold this morning to be riding a bike?" this week. :)

[Mos6502]

Heating oil prices might rise even more than was predicted, just as the first cold snap sets in.

Hey! That's a funny "coincidence". I bet the oil execs didn't even see that one coming!

[Roody]

We were around $3.00 not 2 weeks ago...now we're in $3.20 to $3.30 land. :mad: Yeah...just in time for Christmas.

Alot more people at work were saying "Wasn't it a little cold this morning to be riding a bike?" this week. :)

"Wasn't it a little expensive to be driving a car? And at least I didn't have to scrape any ice off my windshield." ;)