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Energy Prices: What’s Supply Got to Do With It?
Cadie Thompson, CNBC
Oil and gas prices keep on soaring, so are supply and demand the real reasons they continue their climb? CNBC asked the experts for their take.
… “I think we are seeing a global battle for resources and I think it’s becoming very, very visible at the gas pump because supply simply can’t keep up with the rising demand…the prices are what they are because of the margin, the thin margin of supply and demand.”
-Paul Hillard, CEO of Badger Oil
“I use the term practical peak oil in that, in terms of global resources, there’s more that could be developed, but access is limited and with limited access we are very, very close to where we get to the practical peak.”
-Tom Petrie, Merrill Lynch Vice Chairman
(2 July 2008)
Videos at original.
Senate Hearing on Energy Information Administration’s Forecasts for Oil (video)
U.S. Congress, Energy Policy TV
Washington, DC – Guy Caruso, Administrator, Energy Information Administration (EIA); Chaired by Senator Byron Dorgan (D-ND)
The Subcommittee hears testimony on the Energy Information Administration’s (EIA) forecasts for oil and gasoline prices, and discusses the factors considered when these are made.
Part 1 of 2
(25 June 2008)
The first part consists of senators giving their opinions on the price of oil. Sen. Dorgan seems to attribute the price rise to speculators. Sen. Domenici emphasizes the need for the U.S. to open up areas for drilling, so that the country can make the transition to something beyond oil.
The Commodities Bubble
Sameer Dossani, Foreign Policy in Focus
For those following economic trends, the past 18 months are notable primarily for two reasons. First, the U.S. housing market, long seen as overvalued by alternative economists and even powerful economic institutions including the International Monetary Fund (IMF), finally went from boom to bust. Over the span of a few months, housing in some markets depreciated by as much as 30%, and some economists estimate that losses may ultimately reduce value by as much as 50% in some cities.
Second, the market for commodities, especially food and oil has been growing at an alarming rate. While the per-barrel price of crude oil has been rising since about 2005, the upsurge in food prices has been even more rapid. Rice, the world’s largest staple crop, has more than doubled in value since January of this year alone, with wheat prices not far behind.
Economists are citing many reasons for the upsurge in grain prices, including increased demand in developing countries, especially India and China, as well as poor harvest due to adverse weather conditions in some places.
While changing consumption and production patterns due to things like global warming and the wasteful consumption patterns (particularly in the developed world) may be a worry, in most of the world grain stores are still more than sufficient to handle these fluctuations. With the exception of East Africa, where there are genuine shortages and a genuine danger of famine, the rise in global food prices can’t be explained solely in terms of supply and demand.
(28 June 2008)
Dealing with Gasoline Prices
Dale Allen Pfeiffer, Mountain Sentinel
Why prices are rising, what isn’t being done about it, and what it means for you
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What is going on?
Oil prices surge to $100 per barrel, $120, $130, with no end in sight. And analysts are now talking about $200 per barrel by the end of summer.
Gasoline prices have reached $4 per gallon in the US. And now they are saying we may see $6 per gallon by summer’s end. Some analysts are saying gasoline prices will eventually reach $12 to $15 per gallon.
What is going on? Is this peak oil with a vengeance?
Yes and no.
There are three reasons why oil prices are skyrocketing, and peak oil is only indirectly involved.
The peak oil gene is out of the bottle, at least so far as investors are concerned. They only have a partial understanding of peak oil, but it is enough for market speculation to drive prices out of sight.
Oil production has not peaked. It is constrained and it can no longer keep up with growing world demand, but it has not peaked yet, so far as we can tell.
World oil production is approaching peak. It is no longer increasing as it once did. What is perhaps more important, there is no more spare capacity left in the system.
… What are We to Do?
Whether this current period of oil speculation ends in a price crash or not, eventually declining oil production will kick in, and it will drive prices toward the high end of the above tables. At some point you will be faced with the choice: do I eat today or put gas in my car?
Here is my suggestion: sell all of your vehicles. Buy a subcompact, along with one or two motor scooters, and bicycles for everyone in your family. Use the motor scooters and the bicycles for most of your commuting. Use the subcompact only when your family is traveling long distance, or when you need to transport something.
Beyond this, we must push for the development of a real mass transportation system.
(8 June 2008)
