Say Bye-Bye To Cheap Oil

[Yo_Mama_Been_Loggin]

By PAUL ROBERTS

For the tens of millions of American motorists patiently waiting for gas prices to come back to Earth, the news from the oil markets is not encouraging.

For the last year, government forecasters have reassured us that the unusually high oil prices we've seen since 2002 - around $30 a barrel - were temporary: As soon as global markets recovered from the mess in Iraq, oil prices would drop and gasoline prices would eventually follow.

Yet nearly 12 months after "victory" in Iraq, oil prices are at an eye-popping $38 a barrel, or about $15 above the two-decade average, and some forecasters are now offering a far less sanguine prognosis: Not only will oil stay high through 2005, but the days of cheap crude are history. These aren't exactly glad tidings for a global economy designed to run on low-priced oil, nor for a White House that gambled it could deliver low oil prices with a mix of diplomatic muscle and market liberalization.

What happened? In simplest terms, what we're seeing are the final months of a 25-year oil boom. That boom was sparked by the oil shocks of the 1970s, when sky-high prices touched off a feeding frenzy among oil producers. Eager to cash in on the good prices, oil companies and oil-rich states drilled thousands of new wells, built massive pipelines, developed fantastic exploration and production technologies and generally expanded their capacity to find and pump oil.

This surge in capacity eventually brought prices down and helped buffer consumers from subsequent oil crises. When a disruption occurred - for example, when Saddam Hussein knocked out Kuwait's huge oil fields in 1990 - the world's other oil producers, such as Saudi Arabia, simply tapped their own surplus capacity and filled in the shortfall.

Now, however, the world's surplus capacity is disappearing. Many Middle Eastern countries lack the cash to expand production. Private oil companies are struggling to discover oil fields. Worse, even as industry worries about supply, global demand is growing far faster than predicted. And as everyone knows, when supply falls behind demand, prices head for the sky. Oil-price anxieties are especially acute among big energy users such as the United States, which burns a quarter of the world's oil production and whose economy is extremely vulnerable to price spikes. Indeed, nearly every severe global recession of the last 50 years has been preceded by a jump in the price of oil.

-more-

http://www.ctnow.com/news/opinion/commentary/hc-commentaryoil0328.artmar28,0,3147257.story?coll=hc-headlines-commentary

[DenverDem]

1. It's called Peak Oil and it will change civilization as we know it.

And not for the better.

<http://www.lifeaftertheoilcrash.net/>
<http://www.peakoil.org/>

<http://www.peakoil.net/>

2. I'm Waiting for the Day

I'm waiting for the day when oil goes away.
They'll have to find alternatives
When SUVs come out to play!

Now Europe, all along, has never got it wrong,
They invest in rapid transit
Exactly like Hong Kong.

Maglev rails & bicycles, Hell will display icicles
Before the United States of A.
adopts them, not oil's price cycles

Solutions are imperative! This crunch is so ennervative!
I think we'd have a gas SURPLUS...
If we really squoze *conservatives!*

The oil and fat and grease would provide such sweet increase!
Geothermal geysers, hot air and mud!
Just waiting for release!

The grease from *'s nose would, like a firehose,
Fuel New York for 16 hours,
So, DRILL, friends... THAR SHE BLOWS!

Schwannzeichen

[Old and In the Way]

3. The train from HK's airport to downtown Kowloon is incredible.

It is a fantastic example of what a public transit system could be if we'd only make the investment here. And it's a fraction of the cost of a taxi, to boot.

[Kenneth ken]

4. Hi - welcome to DU

:hi:

this is the 2nd post I've read of yours, if they're all going to be poetic, I look forward to many more.

charming, witty, intelligent. Impressive. :hug:

edit: 8 for 8. you're good! Thoroughly enjoyable.