Soon oil prices will soar again ($225 / barrel by 2012)

[FarCenter]

<SNIP> (Longish article in Canadian "National Post", but good read)

The law of supply and demand states that when the demand for a good increases faster than the supply, prices will rise.

Chinese consumers are buying more than a million cars a month -- and in India when the US$2,500 Nano went on sale, more than 200,000 were ordered in the first two weeks. Adding millions of cars a month to roads will inevitably drive up oil prices.

Jeff Rubin, the former chief economist for CIBC World Markets, predicts that the price of oil will rise to US$225 a barrel by 2012. For readers who dismiss Rubin, think about this:We are in the midst of the biggest recession since the Great Depression and oil has already risen above US$80 a barrel. In 2003, few pundits would have thought US$80 oil was possible. (And Rubin's past predictions have proven deadly accurate: In 2006, he predicted oil would hit US$150 a barrel in 2008.)

Aggressively pursuing energy and fuel efficiency should be a top priority for all business leaders -- while we still have the luxury of US$70 to US$80 a barrel oil. Becoming radically more energy efficient will give a company a competitive advantage in its industry and insulate its profits from the inevitable rise in the price of oil coming out of this recession. Companies that fail to do this will be blindsided.

<SNIP> http://www.leaderpost.com/business/story.html?id=2314467

[andym]

1. Good, high oli prices are needed to help development and implemntation of alternate energy

One critical thing that holds back alternate energy is relatively cheap oil.

[DJ13]

5. Good, high oli prices are needed to bring our country to a total collapse

High prices hurt those most who can least afford them.

[Rebubula]

8. I know...

...that sort of logic baffles me whenever I hear it.

[iceman66]

11. Not good at all!

$225/barrel oil in 2012 would cripple the American economy much worse than the present recession and virtually assure Obama's defeat in that year's election.

[reggie the dog]

17. not just the American economy

[taught_me_patience]

2. We would enter a global depression well before then

driving the price back down.

[FarCenter]

3. A lot of other countries will be competing for their share

$225 / barrel will limit US consumption. However, it will not necessarily limit consumption in other countries. China and India's growing economies will compete successfully for a larger share. European countries may compensate by lowering their taxes to stabilize the price to industry.

[Zynx]

4. Having to import such expensive natural resources will devastate the Chinese economy.

Their terms of trade would diminish very rapidly, forcing their trade balance to contract and possibly go negative. China and India are not exactly in good shape on this front. The more they can grow in the absence of importing petroleum, the better for them.

[FarCenter]

6. The volume of their oil imports will not rise very much

Mainly because the 85 million barrel / day global production will not rise significantly. It may fall. Prices will rise significantly, and additional energy will come from coal, nuclear, wind, solar, etc., all of which China is rapidly developing.

Oil will be mostly used for transportation fuels and petrochemical feedstocks. It's use for heating and for stationary power generation will be very limited.

[Zynx]

19. I am highly skeptical of China's alternative energy efforts.

Also, their rate of oil importation is growing not only rapidly in percentage terms but also in absolute terms. Their alternative energy efforts will be nowhere near in place by 2012 or even 2020. Also, higher energy costs will be accompanied by an overall rise in commodities prices as energy costs are passed on to other prices and China is a massive net importer of other materials. Bear in mind, China may export $1.4 trillion a year, but they import $1.1 trillion and the prices of those $1.1 trillion are going to rise much faster than the prices of their exports, which are generally consumer goods.

[dmallind]

7. Yep - not too many Indians competing for $225 a barrel oil

Yes I know there are many wealthy and middle class Indians in a population that size. They already have cars though, so increaing demand from them is a nonstarter. The just-barelys who can scrape together for a Nano cannot and will not fuel it with oil at those prices.

[FarCenter]

10. India already has very high prices for petrol

Extremely inefficient state refining and distribution plus a variety of taxes mean that the price need not rise proportionately to the cost of crude. Plus, the prices are controlled by the government.

[BolivarianHero]

9. Good...

Venezuela gets rich and more people take public transit. Awesome.

[county worker]

14. There isn't enough public transit available now or then.

I guess we walk.

[county worker]

12. Price is determined by speculators.

Supply is manipulated to increase profits on speculative purchases. Those profits are added to the price we pay. The more the futures are traded the more the profits and the higher the cost to us. There are middlemen who buy and trade oil inventories each adding to the cost to us.

This bull shit about drilling here saving costs to us is just that bull shit. Oil is traded on the world market no matter where it comes out of the ground. "We" don't own oil, the oil producing corporations who hold the leases own the oil.


It is too simplistic to talk about supply and demand for a product who's supply and demand can be controlled by those who make money of of it.

[FarCenter]

16. Only in the short term

Speculators can run the prices up and down in the market in the short term.

In the long run, the prices will go up due to:
- the inexpensive to extract oil has been extracted, and
- you make more money by leaving the oil in the ground and letting the price go up.

[Shagbark Hickory]

13. Wouldn't be surprised in the least.

[DFW]

15. If that happens, Russia's national wealth will make Saudi Arabia seem like an empty piggy bank

Concentrated in a few super-wealthy hands as it is, Russia's oil at $225 would make for a few guys whose personal wealth
would permit them to have more power than William Randolph Hearst, John D. Rockefeller, and J.P.Morgan combined.

[Nikki Stone1]

18. Bullshit: this is the new bubble.

Thank you Goldman Sachs.

[hunter]

20. Every time the economy starts to climb up, high oil prices will kick it down.

Welcome to the twenty first century.

It's not about the speculators or anything complicated like that. Sure speculators will speculate that's what they do, but they'd lose their game more often than not if the oil was easy. Oil is no longer easy. In an incredible hundred year binge we burned up all the easy oil and now we are facing the unpleasant consequences of that.

[lib2DaBone]

21. Do you like to eat? How are we going to get food to market...

you know.. those nasty things like tomatoes and peppers and onions that travel from field to market by truck.
The Democorps and the Republicorps have forgotten one thing... if you screw the truck drivers.. no food gets to the table. Even Fascists have to eat... so they can continue their stanglehold on the working people.

I'm sure they think they can bring in Chinese truck drivers for 50 cents an hour... I'm sure they will try....