With oil prices soaring to $109 a barrel in an election year, the White House is getting jittery. President Bush is despatching vice-president Dick Cheney to Riyadh on Sunday to urge King Abdullah to raise the kingdom’s oil output to reverse the price rise.The chances of Cheney’s success are slim: at Opec’s quarterly meeting in Vienna last week, where Saudi Arabia is a leading player, the organisation decided against raising production.
In any case, the Bush administration’s plea is based on assumptions that are invalid or outdated.
The size of oil supplies is just one factor among others that determine its market price.
An equally important factor is the capacity of refineries to transform crude oil into different end-products, with each refinery designed to process petroleum of certain density, which varies from 15 to 45 degrees, the higher figure signifying lightness.
Mismatch between the available crude oil and the type of refinery leads to bottlenecks, not to mention the total capacity of refineries falling behind the aggregate amount of crude available worldwide. There is nothing that Opec members can do about this.
Following the oil price explosion in 1973-74 - caused by the Arabs reducing their petroleum shipments to the west during and after the October 1973 Arab-Israeli war - Opec acquired the power to set prices and make them stick. But this did not last.
The mid-1970s petroleum price hike made the global economy more volatile than before. The gradual deregulation of the economy in the western nations accelerated when Ronald Reagan became US president in 1981. As a result, futures contracts arose for currencies and gold, with the New York Mercantile Exchange (Nymex) emerging as the leader. In 1981 it added petrol to its list of traded commodities.
In March 1982, due to the continued low oil output in the warring Iraq and Iran, non-Opec production outpaced Opec’s. Much of the non-Opec’s new petroleum came from the North Sea and was sold on Rotterdam’s spot market, where the price was determined by a variety of market factors.
This made it hard for Opec to maintain its reference price of $34 a barrel. In early March 1983, yielding to market forces, it slashed the price for the first time by 15% and reduced output.
On March 30, 1983, Opec’s power to determine oil price received a fatal blow. That day Nymex introduced futures in petroleum. That meant the oil price being fixed daily, determined by the give-and-take of Nymex traders, with buyers and sellers monitoring their computer screens worldwide.
A futures contract is a promise to deliver a given quantity of a standardised commodity at a specified place, price and time in the future. It is a derivative, not the real thing. There are thousands of oil transactions daily, but few of these shipments are delivered. Instead, they are constantly re-traded, based on the market price of the moment. That is, the rights to a single barrel of oil are bought and sold many times over, with the profits or losses going to the traders and speculators.
Given the current weakness in the equity markets, the falling value of the dollar, and the credit crunch caused by the sub-prime mortgage crisis in the US, speculators are putting their funds into such safe havens as gold and oil, spiking up their prices.
There is nothing that the Saudi monarch or the rulers of other Opec member states can do to reverse this situation.
Dilip Hiro is the author of 27 books including his latest, Blood of the Earth: The Global Battle for Vanishing Oil Resources.
Guardian Unlimited © Guardian News and Media Limited 2008
I don’t think bankers like the idea of going back to trade without currency, however since currency is pegged to energy and energy is running out…
Boom.
This is probably just the beginning, as evidence indicates that we are at or very near the peak of world oil production. Soon, no amount of vilification of corporations, politicians, etc. will save us from the consequences of overconsumption.
“Crude oil production by members of the Organization of Petroleum Exporting Countries rose 80,000 barrels a day in February, to 32.33 million barrels a day from 32.25 million in January, according to a Platts survey released Thursday.” http://money.cnn.com/news/newsfeeds/articles/djf500/200803131535DOWJONESDJONLINE000995_FORTUNE5.htm
Hiro mentions the “Refinery Bottlenecks” issue; however, this applies to finished products like gasoline ans diesel and has no bearing on crude oil prices. Further, there are many different “benchmark” prices for crude oil worldwide, whose prices can be found here, http://www.upstreamonline.com/market_data/?id=markets_oil
Note that the three most expensive–Louisiana Sweet, Tapis, Bonny Light–are also the lightest, the best for gasoline refining.
NYMEX crude futures are mostly past $100, and all were earlier today, http://futures.tradingcharts.com/marketquotes/quickquote.php3?sel=Crude+Oil
Gasoline is over $4 in Hawaii and in parts of California. Diesel is over $4 there and elsewhere around the country. Very recently, the CEO of Pilgrims Pride, the largest US chicken manufacturer, said “Our company and industry are struggling to cope with unprecedented increases in feed-ingredient costs this year due largely to the U.S. government’s ill-advised policy of providing generous federal subsidies to corn-based ethanol blenders,” which has caused the closing on numerous CAFOs and loss of thousands of jobs. The current low prices for meats will rise sharply as the recent supply glut created by the closing of many feedlot operations is replaced by higher prices for lesser of same. This will be good for pasture fed livestock operators, but bad for those relying on low cost meats, which constitutes a significant segment of US populace.
If you have a big car get rid of it for a small one or hybrid used if you can’t afford new…walk when you can…buy a bike and ride it where you can…form neighborhood trips to the supermarket so it is one trip not many…car pool to work…
While some people feel powerless about oil prices, others are trying to get us all out of it but have been repeatedly scorned at with contempt. The BRAIN-DAMAGED electorate, liberals and conservatives alike, just cannot accept the fact that hemp’s 25000 industrial uses plus the fact that it replaces petroleum 100% and doesn’t need any to grow. Losers will worry about the prices. Alongside, some of the losers will badmouth hemp as “marijuana” despite the facts that prove otherwise. Winners on the other hand will get their butts off the couches and fight to legalize the cash crop, hemp, that made America victorious in WWII and can very well get us out of dependence on foreign oil and bring us more quality jobs in manufacturing. Now who’s ready to be a winner?
I see RIVERMAN 101 has posted his identical and idiotic post on several threads here. Is Riverman Dougwagner in disguise?
The most important factor is that Americans knowingly and purposefully have refused to restrain their use of gasoline. I have no sympathy for the American people on this issue. They are reaping what they have sewn.
Common Dreams, you’re posting articles in which the authors link to other articles which in fact are not articles at all like the authors thought, but instead are advertisements to get you to buy financial instruments, to join in the speculative crap shoot fun and games on the backs of millions of wage slaves.
Global capitalism is anti-security, putting the livelihoods of people everywhere at great risk. vulnerable to the whims of speculative capital. Localism of course ends speculation capital. Are you surprised? Now let’s not pretend that we have one and only one panacea solution - localism is a large component of the solution which includes other components.
hemp4victory, you’re attempting to sell hemp as a panacea that covers all bases and it’s simply not true. Hemp has been found to be lower on the list of top oil producing plants so it’s not going to replace fossil fuel but it may supplement other sources (we want diverse sources, not monoculture) when grown for its many other uses and this is an excellent example of the production method we have to go back to, the method that was in use since the beginning of civiclization and in still in use around the world, the method that was chucked in the garbage by, guess who, the Milton Friedmanite idiots of the “good ol radical capitalist USA”.
That method is to use all components of the resource, like the natives did with the buffalo. If you aren’t inspired by the idea of utilizing 100% of the resource, or if you are wondering why this is such a “big deal”, and very likely you’ve been taught by the likes of Rash Limbaugh to harbor raw contempt for such ideas, then you should see a shrink or somebody with a clue, because the cultural rejection of industrial efficiency in the United States is a large component of the generalized outcome of US style “laissez-faire” capitalism that is destroying the biosphere, including 1/3 to 2/3 of species over the next several decades, millions of human lives in Iraq and elsewhere, and the public institutions in the US that put the nation on the map, i.e. the constitution, the democracy, rule of law, etc, not to mention the spirits of millions of people, and their livelihoods.
price of oil- pre-iraq war: $36 per barrel (thank bill clinton)
price of oil- post-invasion: $109 (thank george w. bush)
heckuvajob.
…and riverman…
i too have come across that same post in reponse to other articles.
if you’re going to cut and paste, you could at least be sure to edit it so it’s appropriate to the article.
this article makes no mention of john edwards… or any edwards, for that matter. hillary? no… she’s not mentioned either.
please remove your head from bill o’reilly’s ass.
rtdrury–Since hemp4victory didn’t post any links, I assume your baseless assertion–”Common Dreams, you’re posting articles in which the authors link to other articles which in fact are not articles at all like the authors thought, but instead are advertisements to get you to buy financial instruments, to join in the speculative crap shoot fun and games on the backs of millions of wage slaves”–is aimed at me. I have done nothing of the sort. I commented on the content of Hiro’s item and provided more information backed by links for proof/authentication. That the premise of Hiro’s item is correct is important as the flood of hot money into commodities–not just oil–is going to fuel a very nasty inflationary spike that’s going to hurt lots of people who have no means to hedge against it by doing the same as the hot money. Yes, it’s Capitalism, and yes, its sucks. But that’s the current paradigm, and pretending or wishing it were otherwise is no different than putting one’s head in the sand.
Little Georgie could release the oil in the strategic reserve bringing down the price of oil. Buying it back when prices are low, there by making a profit for the government. But then the Saudi Royal Family might not hold hands with him.
Georgie when are you gonna realize that you are the president of the United States, and not the vassal of Middle Eastern dictators.
Fools! To quote Princess Leia, “The more you tighten your grip, Tarkin, the more star systems will slip through your fingers.”
Oh Blast the moderators because I provide too many links as evidence of my assertions. I’ll break my comment in two.
First:Oil price is based on GLOBAL demand. Although Bush has said he intends to fill the SPR, there’s no movement in that direction as this inventory report shows, http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/weekly_petroleum_status_report/current/txt/table1.txt with the SPR having just under 700Mbbls. You’ll also see that 14.645Mbbls went to refineries. Quick math shows us the SPR has just under 48 days at that rate of usage, PROVIDED the SPR contained oil that refiners could readily use: As per a recent GAO report, “around half of disruption-vulnerable U.S. refineries are incompatible with the light and medium crude currently held in the SPR. Running the wrong type of crude would result in about a 5% reduction in U.S. refining throughput, a significant loss during a supply disruption. Five percent is pretty bad, and certainly blunts the impact of any SPR release, but that’s for total refinery throughput. One refiner cited in the study claims that using exclusively SPR oil in its heavy crude unit would result in 11 percent less gasoline and 35 percent less diesel.” http://commontragedies.wordpress.com/2008/02/28/gao-blasts-doe-on-spr/
Second: China, OTOH, is filling its SPR and is expanding its facilities, which has certainly added to the price rise. See this for background, http://www.theoildrum.com/story/2006/11/14/223031/35 and India is planning one too, as explained at the bottom of this link, http://www.eia.doe.gov/emeu/cabs/India/Oil.html
As I’ve said before, oil price and thus transport fuel prices are not going to fall; they are going to rise even if we have a deep recession because global demand will suck up whatever US corps decline to buy.
It would appear that Dubya, Cheney, & Co. have finally figured out that their putative partners, the House of Saud, have decided to cash in as much as possible during what appears to be the waning days of their allies’ term in the White House. In fact, it would not be a surprise if the Saudis are laughing all the way to their Swiss banks.
hemp4victory,
The liberals are no different from the conservatives on most anything. They’ll settle for HillaryCare despite the fact that it’s no different from RAYGUNcare. As for hemp, since it replaces petroleum all the way as I found out doing a simple google search on hemp, it’s pathetic that the liberals are putting this in play. Clinton didn’t do anything to put solar, wind, and geothermal in play. There are plenty of alternative renewables including hemp which require no petroleum but our goddamn motherfucking government for the past 28 years ain’t even trying. Congratulations to you for trying to save us from the peak oil hell while the rest of the people sit like a bunch of DUMB DOGS !
Pretty much nonsense. Oil prices are determined by many factors and one is the threat of war or invasion. Bush could do a lot to decrease the cost of oil by stopping the hostile threats against Iran and Venezuela. Oil went from $23.31 from the date of the invasion and occupation of Iraq, to over $110.00 today. The cost of war is estimated to add about $30 above the cost of oil itself. Hence, there are a number of things that can be done, and one is to stop the insane imperialism of the U.S., conserve energy, reduce the use of the many things that are a waste such as plastic bags. OPEC also certainly can manipulate the cost of oil, and it is rather silly to think otherwise. One obvious thing they could do would be to begin pricing oil in Euros rather than dollars. That alone would increase the price of oil by about 18%. A rather silly article, and not clear why Commondreams would include it.
For someone who lives in a rural area in northern California, way up in the redwoods, regular gasoline is up to $3.79 a gallon and diesel has topped out at $4.19 a gallon…and thats too much and my bank account can’t handle it…someone please lower the prices of the oil…usually I wouldn’t bitch, but this is ridiculous.
Anything that makes oil and meat more expensive is good for the world. These two are enormous polluters and bad for health. Never in the evolution of man has meat been so plentiful in the diet. This is a drastic departure from the natural state and will cause problems, as it already has. Burning oil in such large amounts is also a drastic departure from the natural state. Both these things need to change. So let us not be unhappy about this, there is a bright side. The US has to change, but it won’t unless money is involved.
The higher they raise the oil/gas prices now, in addition to ripping off the American consumer, the more dramatic ‘visual effects’ it will portray when they start drastically dropping prices in the fall. And just in time for the elections,thereby, making it a ‘non-issue’ at least, or making Repugs ‘looking good’ at best.
We all know the theory of supply and demand and it’s impact on prices.
The simplified version of course is that as demand increases while supply remains stagnant or declines, the prices rise. This is the myth behind peak oil as the reason for higher prices.
It is true of course, that supply, or at least the capacity to pump and refine the oil from proven reserves has been stagnant, or at least not increasing at the same rate as supply. And it is true that demand is increasing. So yes, prices should increase. End of story? No.
The key is understanding why our capacity to pump and refine oil from proven reserves is stagnant, and not keeping up with the rate of increasing demand which has been well forecasted for over a decade.
The peak oil theorists will tell you, it is because we are running out of oil. Right. Not. In the 70’s, we (global) had proven reserves of 650 billion barrels, today it is 1.3 trillion barrels. As oil prices increase, more reserves become available, since they become economically viable at higher prices. This does not include the estimated reserves, which are not proven, but which are much higher, and for tax reasons, oil companies tend to understate these reserves. So thats not it, and besides, these numbers would hardly have caused oil to rise 20% in 1 month, the fundamentals do not change that rapidly. If anything, expected lower demand due to the expected recession should cause prices to drop. Of course, the dollar decline is a factor, but oil prices are increasing far faster than the dollar is declining.
So what is it? To understand this, you have to put on your BIG Oil Man hat.
Lets say you have an oil field, it has 100 billion barrels of reserves, and you produce 2 billion barrels a year, which at todays prices makes you 200 billion a year in revenue, and costs you 40 billion to produce, and after taxes, gives you 120 billion and some change. This gives you all the pizza and beer you want, and a few nights out with an Emperor Club hottie. Life is good.
You figure out you can do this for the next 50 years before you run out of oil, unless you can find more oil, and thats expensive, and if you find it, oil prices will drop. Thats fine of course, since thats about when you plan to retire, so no need to look for more oil, you are happy with production and price.
But now, this year you have orders coming in asking for 3 billion barrels a year, and projections are for even 5 billion a year within 10 years. Doing the math in your head you figure that you will be out of business in 25 years, but so what, early retirement sounds nice. But then your remember your wife married you for better or worse, but not for lunch. Also, you have to spend more money to invest in equipment to pump and refine that much, and higher more people, sounds like a lot more work and less profit per barrel. Nah!
So you tell the market, hey guys, I am fine with the current deal, I am only going to give you 2 billion barrels a year for the next 50 years.
Mr Market shudders. Now Big Oil Man has 3 billion barrels in oil orders offering him 150 dollars a barrel, a nice price increase. Hard to turn that away, so he takes it and says, ok, I will just work a little harder this year and retire 6 months early, in 49 years lunch will probably be at 10 AM and my wife won’t notice it is lunch.
But the market is spooked, since they already told Big Oil Man they will need 5 billion barrels a year within 10 years, but he is only investing to provide 3 billion a year, and now your forecasts say you may need 3.5 billion a year next year. And so it continues, prices rise.
The point is, given that oil is a finite resource, and you are a cartel or monopoly, it is better for you to limit supply and keep it tight, to maximize price. Now, as a flea, you don’t want to kill the dog you are feeding off of, or get the dogs master to invest in flea killer (nuclear) that might drastically cut demand, so you don’t want to go overboard.
Who is the dogs masters? Your buddies in the White House and Congress. You see, if they use their powers, they can scare Big Oil Man (OPEC, the remaining 4 sisters) enough to keep the price down, and invest in production
to keep prices low.
But wait you say, that would be interfering in free markets. To you I say, the only thing free about these markets is for the cartels to charge you whatever they want. Free markets only work when their is competition in the market place. Oil prices are high because the powers that be want them high.
IEA has a 26 member anti-oil cartel for which each memeber maintains 90 days supply of oil. We have a similar reserve which was used by Clinton to drop prices. Bush has increased these reserves, increasing the price while doing so, but has not used them to lower oil prices. Of course not, because if he ever used the Emperors Club, he would make his gal wear a Big Oil Man hat. He is in bed with Big Oil. End of story.
Of course, he might get some political dividends by doing so now, so just remember where you heard it when he does, and in the meantime don’t get too long on oil.
Don’t be concerned w/ the technical issues that affect the price of gas. Just buy a (used) 250-400cc motorbike that will get from 50-60 MPG and at least 50-60 SPG (smiles per gallon)!
Doom N Gloom is right on. Gasoline addicts are victims of their own lifestyle choices, from the rapidly depreciating dinosaurs they drive to how far they choose to live from work. Witness their addiction: car dealerships are empty, shopping malls nearly vacant, Wal Mart clerks have nothing to do, the casino floors are less populated here, etc. But the roads are just as filled with traffic and the gas stations just as busy as ever.
I don’t feel sorry for victims of their own individual behavior or these gullible consumers falling victim to sleek advertising. I laugh as I bicycle past the gas station pumps and read on the pump how much these junkies are paying. Screw them all.
They said people would cut back on fuel useage when gas hit two bucks. Then it was three bucks a gallon. Now, at $3.25 here there is still no decrease in demand. I’m hoping for gas to go to $5 or even the $8 that Europeans pay. Let the chickens come home to roost.
Higher oil prices and a severe recession will be two of the best global warming inhibitors. We refuse to reduce greenhouse gases voluntarily but if gas goes to say $8 a gallon and we are facing the prospect of unemployment, then we may become tree huggers and conserve energy ‘for the sake of the planet and our children’.
SINCE WHEN HAVE THIS ADMINISTRATION’S ACTIONS BEEN TO KEEP THE PRICE OF OIL down???
MY GUESS IS THAT DICK IS IN THE KINGDOM TO DISCUSS “TERRORISM”…again. OR AN IRAN ATTACK, NOW THAT ADM. FALLON IS OUT OF THE WAY. OR TO SELL HIM THE WASHINGTON MONUMENT AT A DEEP DISCOUNT.
HOPEFULLY, THE KING WILL SEND HIM PACKIN’.
HEARD MUCH ABOUT PAKISTAN RECENTLY?
bush is an enemy of mankind simply for not having prioritized oil conservation (but in nearly every possible other way, too)
the great american consumer may possibly find $8.00 a gallon gasoline a little expensive when he’s been out of work for 2 years
don’t worry though, Mitt and Cheney and Arnold and your favorite pol, etc.; will still be able to afford private jets (and food) and private security
MiMiCcS–Sounds like you work for CERA. Peak Oil is a PROVEN scientific theory; like gravity, it’s based on physics. Those of us trying to inform the public about the reality and negatives outcomes of Peak Oil do NOT say we are running out of oil; we say we’re running out of cheap oil–the main driver of economic growth for the past 100 years. You could at least get that part of your story correct.
As I’ve posted here before, the original 7 Sisters–Big Oil–only control about 8-10% of global proven reserves, mostly in the US; the remainder is controlled by the National Oil Companies, like Aramco, Sinopec and PdVsa. They most ceratinly are NOT controlled by BushCo or anyone else in DC. As you allude to, oligopolistic behavior on the part of oil companies is in their best interest, but has only come into play now that oil has peaked as that is THE mechanism that would allow them some measure of control over price. You clearly didn’t reference the link I provided that shows current US petroleum inventories as that puts the lie to your next to last paragraph; nor does any IEA member maintain a “90 days supply of oil.”
Peak Oil is much like Global Warming in that both have denialists. Both are complex enough without the FUD interjected by denialists. Both are going to cause immense damage to human culture and the global body politic. The effects of both are quite visible right now, and they will worsen as the volitility in both increases.
MiMiCcS March 14th, 2008 7:18 pm
I appreciate an honest look at Peak Oil. I wouldn’t trust Exxon farther than I could throw a barrel of oil (which is 42 gallons btw…)
But I disagree. Peak oil ‘theorists’ are merely saying that daily production (pumping, converting from tar sands or heavy oil, natural gas to liquids, etc…) of ‘oil’ will one day peak, and after that decline, whether quickly, or slowly (the ‘long plateau’ possibility). *Everyone* in the oil business believes that, the controversy is over the timing. The so called ‘theorists’ think it is imminent, and the ‘cool headed business men’ like Exxon CEO’s assure us it is in 30 or 40 years, no problemo.
That figure of 1.3 trillion barrels of ‘proven reserves’ includes the tar sands of Alberta, Canada, and the very heavy oil of the Orinoco region of Venezuela. 200 billion barrels of oil in Alberta, yet they are producing only 1 million barrels/day. It will be many huge projects and at least 10 years to get that up to 5 million barrels/day. Tar sands are hard to process. And in Venezuela (400 billion barrels of very heavy crude), they are currently producing about 1/2 million barrel/day. You can’t easily pump 10 million barrels/day like in Saudi Arabia and Russia. There is a huge production difference between ‘conventional oil’ and the thick stuff.
Also, the 1.3 trillion figure includes all the fake figures of the Middle East. In the 1980’s, there was a ‘quota war’, where how much each country could pump was related to its total reserves. Surprise, surprise, the secret, unverifiable ‘proven reserves’ more than doubled in every country within a year. And they have not gone down in 25 years. Good luck with trusting those ‘proven reserve’ numbers.
I think the rate of ‘production’ of oil is crucial, and sitting on 400 billion barrels of thick oil they have to suck out with a thin straw (metaphor alert) does not help much in daily production. Why not quote the ‘proven reserves’ on the moons of Saturn ? Does 8.7 quadrillion barrels out there make you feel better ? Good luck shipping it to earth, that’s what is needed to get it included in ‘daily production’… I think Saudi Arabia would pump more if they could; once the traders realize that they *can’t* (this summer ? next summer ? 2010 ? it’s coming, count on it) then $110/barrel will look very cheap.
A few places could bump up production a little bit for a few years: hence for example the different dates of production peak in the North Sea. England wanted its money fast (free market’s, you know) so they peaked about 3-4 years before Norway (which paced itself a bit, to keep up the revenue stream). But not many countries want to knock themselves out to sell more of their national heritage quicker so that Americans can have a few more years of relatively cheap SUV motoring. They know the Oil Age is in its twilight, and prices are going nowhere but up. Why invest trillions to wipe out that national treasure in a hurry ? That’s the difference between a real, sovereign country (like Venezuela, which Washington hates) and a kiss-ass puppet country like Kuwait (which has peaked already, sadly. Maybe they pumped too fast, for their puppeteers).
What other countries are peaking ? Mexico, Oman, Indonesia, off the top of my head. Saudi Arabia hides behind a haze of secrecy (see Matt Simmon’s Twilight in the Desert) but some analysts think they have peaked.
Remember, Exxon *denies* imminent Peak Oil. They prefer to blame OPEC, political unrest, ‘inefficient’ national oil companies, lazy Iraqi’s, whatever… Once Peak Oil is upon us, nations will scramble to fight it, which is exactly what ‘Big Oil Man’ does not want. Europe, by the way, heavily taxes gasoline and is scrambling to build windpower farms and solar electric utilities. I guess Big Oil Man/Big SUV Man haven’t bought European Union politicians.
I hope oil goes to 900$/bbl it will force us to use alternatives and alternatives abound. We can satisfy all our energy needs with wind and solar, anyone who tells you different doesn’t know the industry, all it takes is political will, new technologies exist today to make non-silicon solar as well as silicon based solar. Wind is already cheaper than oil, solar will soon be by 2010. We need to get Obama elected he is our best shot at real reform, he then needs to be pushed to change his mind on military contractors and oil companies, both should be nationalized, these kind of businesses are too dangerous to be left in private hands, Blackwater, the military parts of Boeing, GE… ExxonMobil, Chevron, ConacoPhillips, Halliburton, DynCorp etc… should all be nationalized and made non profit, the CEOs and top execs fired and many put in jail for war crimes and crimes against humanity…let only companines like Google, Firstsolar, Apple, companies that don’t live off our tax dollars, etc…be private… that is the answer…also we can’t let them move to Dubai or elsewhere we have to nationalize them and keep them home only non profit…otherwise they will attack us from Dubai…we should buy out the small shareholders of the war companies and put in jail the large ones for corruption and theft…that is the answer to the oil crisis.
In almost any other industry when the cost of your raw material goes up, the first thing you do is give a little on matgin. You absorb some of the increase. You do it for customer good will, because of competiton, whatever.
Only in tne oil industry do the profits from making the finished product soar when the cost of the raw material increases. Why?
I read the oil is starting to flow pretty good from Iraq again and the government is suddenly accumulating a huge cash account. Maybe increased production from Iraq and a little conservation here and there will stabilize things for a while, but the Peak Oil guys are probably right. The US southwest is all but gone, the North Sea and Prudhoe are already in decline. Dunno about Russia, but pretty soon the only easy oil in any quantity will be from the middle east.
Whatever, its already way past time to better insulate our homes, heat them and power our cars with electricity or hydrogen from renewables or nuclear, and walk away from oil and coal (and BS ethanol).
margin, not matgin!
The death of humanity would only be a tragedy to a human, and there wouldn’t be any so there would be no tragedy at all. By all means, burn up more and more oil. As long as you don’t have children it really doesn’t matter at all. The planet will do quite alright without us,no matter how we commit suicide. To think otherwise is just presumptious.
bubbles100,
Do you need to live up there among those redwoods? If you don’t like the cost of gasoline, move somewhere where you don’t have to drive so much, or not at all. Considering how the Sequoia sempervirens is totally dependent on the peculiar coastal California climate, which could change rapidly from global warming, you are only contributing the redwoods eventual extinction anyway.
And, buminfl, 50 to 60 mpg on a motorcycle sounds good, but that’s just to transport one person. A three occupant subcompact car gets 100 mpg, a transit bus can get 350 passenger miles per gallon, and my electric motor scooter gets the equivalent of 395 miles per gallon - a lot quieter and less smelly too.
At any rate, no one seems to have addressed the main point of this article. Hiro is suggesting that most of the oil price rise was speculative in nature, plus too few refineries that can handle the heavier-weight crude - rather than supply shortages themselves.
USAn March 15th, 2008 8:57 pm
“At any rate, no one seems to have addressed the main point of this article. Hiro is suggesting that most of the oil price rise was speculative in nature, plus too few refineries that can handle the heavier-weight crude - rather than supply shortages themselves.”
I thought the main point of the article was that the Bush Administration, and OPEC, were powerless to affect the price of oil. Hence the article title: “Powerless on Oil Prices”
Hiro writes: “…speculators are putting their funds into such safe havens as gold and oil, spiking up their prices.” Safe havens. The reason oil futures are a ’safe haven’, even at $110/barrel, is that these speculators expect the price to keep going up. Even speculators that do not believe Peak Oil is right upon us, still believe that supply growth will lag behind demand growth. I would call this a ’supply shortage’.
And it’s true that there is a mismatch in ‘the available crude oil and the type of refinery’; Hiro doesn’t mention it explicitly, but you are right, the light sweet crude favored by refineries in the past is being increasingly replaced by heavier, and oftentimes sour (more sulfur) crude oil these days. And why are more countries not building refineries to handle the heavier crude ? Well, China is, since they are signing longterm contracts for heavy oil from Venezuela. But it has been suggested more refineries are not being built (and forget about blaming those darn environmentalists in the US, since Mexico or Thailand or Saudi Arabia would be happy to take the profits, if they were there) because in 10 years, when the refineries are finished, there will be less crude available. Yup, governments don’t want *you* to worry about Peak Oil, but the big corporations, who vote with billions of dollars: they are quietly getting ready. Lowering exploration budgets, buying smaller rivals to get their reserves, trying to get a piece of the action of existing reserves in nationalized oil companies, not building new refineries.
I would call that a supply shortage.
Dime-a-dozen traders look at U.S. *inventories* of crude oil, and complain that it is fine, highest it has been in years, and U.S. demand is going down, so price should be falling. They blame those whacky ’speculators’ for driving up prices, going against ‘fundamentals’.
Whacky speculators like T. Boone Pickens, legendary Texas billionaire oilman, who says global oil production has reached its peak.
Yup, I think Hiro is saying “There is nothing that the Saudi monarch or the rulers of other Opec member states can do to reverse this situation”, not that there is not a supply shortage.
Did you notice they mention Dilip Hiro’s latest book: “Blood of the Earth: The Global Battle for Vanishing Oil Resources” ? ‘Vanishing’.
That electric motor scooter is a great idea: but get ready for your SUV neighbors and highway sharers to get mighty pissed in the next few years…
Peak Oil. It’s coming, it’s close, and it will rock your world.
A massive earthquake say in the bay area could further change that equation.
If Americans insist on driving Hummers, SUV’s, F-150’s and those other big monsters, then they shouldn’t complain about the cost of gas, the whiners.
James Howard Kunstler and others following “Peak Oil” are reporting Peak Oil occurred in July of ‘06, when World oil production peaked at around 84 million barrels/day. It has stayed around that rate ever since. The Saudi’s are probably not deliberately refusing to increase production. Most likely they CAN’T, and don’t want that fact to be widely known now.
Projections of how much more oil we’ll need in the future are just that, projections. It doesn’t mean that is going to happen. It probably won’t, and the longer we live in that state of denial, the worse the coming societal crash will be. Think a Rwanda-like massacre on a U. S. scale of neighbor against neighbor over basic things like clean water, fuel (solid and liquid), and food. Without massive inputs of cheap liquid hydrocarbon energy the World cannot sustain it’s current population, let alone projections of 9 or 10 billion. Not going to happen, no way, no how. Some way - probably the hard, tragic way - population is going to contract to it’s pre-industrial revolution level of under 2 billion. We leave the youngest generation a legacy of selfishness and denial, and those who live long enough will hate us for what we have done to the World in squandering a one-time energy legacy, and devastating the environment for short-term, short-sighted pleasure.