Insight and inspiration in turbulent times.
Gas prices are going up again, resulting in a lot of discussion by people who don’t normally think about the oil markets, and therefore aren’t necessarily that well informed about the subject. As a certified oil-obsessive these last seven years, I thought I’d put up a “cheat sheet” with just the key graphs that would allow you to understand the major forces that affect the behavior of gas prices over time.
Rising oil and gasoline prices are of concern to many people today. I see three basic issues involved: “Stalled out” growth in world oil supply, concerns about Iran, and artificially low interest rates. In my view, the biggest contributor to high oil prices is the first one–stalled out oil supply. At this point, the interaction between oil demand and oil supply does not work in the way most people expect it would. Even if the price of oil rises, world oil production doesn’t increase by very much, if at all.
A weekly roundup of peak oil news, including:
-Oil and the global economy
-The Iranian confrontation
-Gasoline prices
-Quote of the week
-Briefs
Mainstream media outlets throughout the country are now reporting on record-breaking gas prices, the highest ever for this time of the year. Also making the rounds is the commonly cited prediction by former Shell CEO John Hofmeisterthat there is a better than 50 percent chance that gas prices will reach $5 a gallon by this summer in the U.S. This is in spite of the fact that U.S. oil production is up and oil consumption down, since 2008. What the media isn’t reporting on is the rest of what Hofmeister said in a recent peak oil themed debate he had with Tad Patzek on Feb. 14.
Until a miracle happens, scientists and some enlightened policy makers are trying to extend the age of oil, reduce greenhouse gases, and so on. But with the downside of Hubbert’s curve so close, and the financial system liable to crash again soon given the debt and lack of reforms, I don’t know how long anyone can stretch things out.
Iran’s announcement on Sunday that it was cutting off oil sales to Britain and France ahead of the EU embargo sent Brent crude oil prices soaring to a 9 month high of $124/barrel and an all-time UK high of over £78. The price of oil is now firmly back in the news alongside a rash of articles rejecting peak oil, declaring imminent US energy independence, and discussing the changing balance of geopolitical power away from OPEC…
A midweekly roundup of peak oil news, including:
-Developments this week
-Tighten fracking regulations, scientists urge US officials [report]
-Gas-Fracking Ban in Upstate New York Upheld by State Court Judge
-Exxon tempers European shale gas enthusiasm
-Canada revs up for fight over second tar sands oil pipeline
-EU tar sands pollution vote ends in deadlock
-Canada threatens EU over tar sands
-Cut all fossil-fuel use: scientists
Lee Brain, son of an oil man, receives a standing ovation and brings a crowd to tears after delivering powerful & inspirational testimony in front of the Northern Gateway Pipeline Joint Review Panel in Prince Rupert on February 18, 2012.
All this new technology seems to say there may be some hope for life after oil. For now the two biggies seem to be cold fusion and cheap hydrogen, but neither of these are as yet sure for the immediate future. It seems likely we are going to have much more efficient motor vehicle within the next 10 years and probably longer range electric vehicles. There might even be enough biofuels to run our airplanes.
When I first approached the topic of societal energy in 2004, I became aware for the first time that our energy future was not in the bag, and proceeded to explore alternative after alternative to judge the viability and potential pitfalls of various options. I have retraced my steps in Do the Math posts, exposing the scales at which different energy sources might contribute, and the practical complexities involved. My spooky campfire version of the story, a la Tolkien: The Way is Shut.
