Building a world of
resilient communities.

MAIN LIST

 

Oil could gush to $100

But momentum is gaining for a view that sees rising crude prices as more than a temporary spike due to speculation or terrorism fears. If that's true, New Yorkers can expect to be socked for items from gasoline and heating oil to rent and groceries.

"It [$100 oil] is totally realistic within a year or two," said Stephen Leeb, who tracks oil for his own investment firm.

Analysts see demand pushing oil steadily higher despite OPEC's tinkering with output, which usually has a short-lived impact. That includes yesterday's move by top producer Saudi Arabia, which called on OPEC to boost production by 500,000 barrels, or about 2%, a day.

"That probably won't be enough to affect the tightness in supply heading into the summer driving season," said oil analyst Phil Flynn of Alaron.

Indeed, oil markets all but ignored the Saudis, as crude finished up 52 cents yesterday to $54.95 a barrel. Even at such levels, oil's still far from the all-time high of $84, adjusted for inflation, in 1981. Still, a new record could be just around the corner.

Leeb fears the massive economic growth under way in India and China is fueling an appetite for oil way past what OPEC and other producers can supply.

"There's increasing concern that there is no spare capacity, the Saudi's are not opening the spigots like they have in the past," said Rick Mueller of Energy Security Analysis.

So, consumers could find themselves longing for the $2 a gallon gasoline they're now complaining is too expensive.

If crude prices double as they did from September 2003 to October 2004 — to $55 a barrel from $26 — gasoline and heating oil figure to follow the same path they took in that 13-month period. That could drive gasoline beyond $3 a gallon, and double the average household cost for a winter of oil heat to $1,800 from $900 in 2003-04.

Higher prices would pop up in other unexpected places.

Gas-guzzling trucks deliver goods to stores. Restaurants and apartments must be heated. TV sets and medical equipment include oil-based plastics. And lower airfares could disappear as cash-starved airlines struggle with high jet fuel costs.

The Long Island Rail Road, which pushed through a 5% fare hike this month, counts $400 million in energy costs as part of its $8 billion annual budget.

"Oil is a basic commodity, it lifts prices in many ways we don't see," said regional commissioner Michael Dolfman of the Bureau of Labor Statistics.

Indeed, for 2 million New Yorkers in rent-stabilized apartments, heating oil increases help landlords jack up rents. Fuel costs make up 11% of the index used by the Rent Guidance Board to set annual rent increases. The board granted 3% to 6% hikes last April, when oil hovered below $30 a barrel. With crude at nearly twice that level, the '05 increase could be heftier.

"It's a big component of what the board considers," said executive director Andrew McLaughlin.

So, how realistic is more acceleration of oil prices?

"I don't think $100 is even a big deal," Leeb said. His long-term projection? Try $250 a barrel in six to nine years.

What do you think? Leave a comment below.

Sign up for regular Resilience bulletins direct to your email.

Take action!  

Find out more about Community Resilience. See our COMMUNITIES page
Start your own projects. See our RESOURCES page.
Help build resilience. DONATE NOW.

 

This is a community site and the discussion is moderated. The rules in brief: no personal abuse and no climate denial. Complete Guidelines.

Tags:  

Peak Oil Review: A Midweek Update 11th Feb

A midweek update. Oil prices continued to fall this week with New York …

Renewables: The Next Fracking?

As a general rule, in fact, the less direct experience a given person has …

IEA in Davos 2016 Warns of Higher Oil Prices in a Few Years’ Time

This recent forum was about how to transition away from fossil fuels, after …

Why the Wild Descent of Oil Is Cause for Concern

The signs of oil's madcap price collapse are everywhere.

It's not Rocket Surgery: Choosing an Indoor Mini Wood stove for a Tiny House

This article will focus on one item which can keep you comfortable in cold …

Peak Oil Review - Feb 8

 A weekly roundup of peak oil news, including: -Oil and the global …

California Offshore Oil Fracking Permits Halted While Federal Government Performs Environmental Review

The U.S. federal government will stop approving offshore oil fracking …