Brace for $100-a-barrel oil

[4dsc]

http://www.newsday.com/news/printedition/opinion/ny-vpuno234712847apr23,0,5145315.story?coll=ny-opinion-print

So are American's ready for alot of sacrifice?? Maybe after another weekend of shopping, spending and wasting..


Are Americans willing to live with $100-a-barrel oil prices, which could translate into $6-a-gallon gasoline and heating oil? They may have no choice. It could happen as soon as five years from now, according to some energy experts. The price for a barrel of crude has nearly tripled in three years, from $25 in April 2003, to over $72 today.

But the more crucial question is this: Are Americans and their political representatives willing to make the individual and collective sacrifices needed to come up with viable mass-market energy alternatives to heat our homes, drive our cars and run our industries? They would have to accept the unpalatable prospect that a concerted national push for alternatives to oil will be neither cheap nor easy, and it won't generate significant results for quite some time, even when such alternatives are made to work.

[HereSince1628]

1. If gas is at $3. when a barrel is $72 why does another $30 on the brl

result in a doubling of the price at the pump? Seems like $6 a gal would translate to $144 a barrel. Where in the pricing system is the non-linearity?

[lakeguy]

2. 5 years to reach $100? i'm guessing just a tad bit less than 5. nt

[brokensymmetry]

4. I think you're right. Try something like....

a year from now. I kid you not - I fully expect crude to hit $100 within the next
12 months. If a Katrina-style hurricane hits, it could get there by September
of this year.

[Warpy]

3. Three months ago, these experts were saying crude would be $40

a barrel due to a correction in the Chinese economy. I told them they were dreaming and why.

Then Stupid started waving his dick at Iran, and the $60/bbl oil shot up to $75/bbl.

My, how things change.

The price might slide back to the $60 range, but I doubt they'll ever go any lower, and they'll slide only if Stupid shuts the fuck up, something he has never been inclined to do.

$100/bbl in 5 years may be a conservative estimate. As the world slowly switches to the Euro standard and the dollar continues to fall due to the insanity of this administration's fiscal policies, the price of oil will continue to climb.

It'll get there overnight if Stupid picks another fight with someone in the Middle East.

[phantom power]

5. A move to petro-euros seems like it would make the cost skyrocket.

The artificial petro-dollar standard is one of the few (only?) things keeping the US dollar from a major downward correction.

[Deja Q]

6. After taxes and fees, gas prices are akin to ~$95 barrel right now. Oh,

Alternatives do exist:

Putting businesses and residential closer so people walk or find less incentive to drive frivolously. I can do it. Why can't others? (and people have the fuckin' nerve to call ME selfish, egocentric, whatever... they've got sticks up their soft parts. Funny how the selfish guy is more conscientious of the rest of the world than they are; particularly as they drive Hummers and SUVs and don't realize they should be looking at the mirror first...)

A little common sense and sacrifice on us all is all that is needed.

[dcfirefighter]

7. Replacing oil with a cheap energy alternative is no solution

We're probably not far from a price point where liquit fuels can economically be made from coal. This is no solution.

Cheap energy means wasted energy. When that energy comes with a significant diffuse external cost, such as pollution and climate change, but a concentrated internalized benefit, the wasted energy hurts us all.

Cheap fuel will continue to mean rampant road building, 4 houses per acre, dispersed communities, and transported goods vs. (more) locally produced goods.

Cheap fuel isn't the economic panacea that some think it is.

Expensive fuel means that dino-power must be replaced with people-power, which means higher employment and better wages.

The key to avoiding a major economic pitfall is to realize that spatial locations are ever more important in an expensive-transport world, that spatial locations are a natural resource, and that natural resources should be SHARED by people. No one created natural resources, no one has a morally legitimate claim to them: all such titles are based in theft or conquest. Obviously, due to the rules of the physical world, two people cannot occupy the same space: we need to continue honoring such titles, but require the title-holders to compensate those they exclude.

A practical application of this would be a relatively high tax on the assessed land value of real property. Such a tax encourages the productive, rather than speculative use of such locations. The upshot being that cities & suburbs grow UP rather than OUT, and that public investment (in transit, among other things) is recaptured through increases in land values.

[OhioNerd]

8. I don't think it'll reach $100/barrel.

I don't think it'll reach $100/barrel. When oil gets expensive enough to shock people, it suppresses demand on a more or less permanent basis. The last time this happened, in the late 70's, OPEC made a concerted effort to reign in the prices so as not to kill the goose that laid the golden egg. (We'd be the goose.)
I predict that oil will level off in, at most, the mid-70's per barrel.

[Dogmudgeon]

11. There is a much different mechanism behind the current Energy Crisis

The price isn't increasing as a result of political maneuvering from OPEC (in response to five decades of treating the Arab states like vassals) but from the rapidly increasing cost of developing petrochemical energy products. This is the "Peak Oil" stage which you've been hearing about. The high-volatility market has already gotten underway. Even small events can cause price increases of 10, 25, 40% at the wellhead. The destruction to the oil platforms in the Gulf of Mexico caused by Katrina wasn't enough to cause the price spike to be as large as it was under what we've come to think of as "normal" conditions, but price run-ups were inevitable given the panic in the financial world -- never mind the public market!

The world financial system is so utterly dependent on oil and its products that the spikes will only get worse. Sure, we will probably see $2/gal. gasoline again -- after it's reached $7 or $8, I'm sure -- then back to $8 or $9. This volatility alone will compel changes in the production side of the equation. But the long-term prospect for petrochemical fuel is not a rosy one. Every one of the mega-oil-fields are in decline, and IIRC, the last one discovered was in the early 1970s (the North Sea or the Alaskan mega-field, depending on the exact dates of discovery). The two largest, the Ghawar (ARAMCO) and the Cantarell (PEMEX) are in verified states of steep decline, caused by a process called water cut -- injecting gravity-fed, then pressurized, seawater to force the lighter oil out. However, this process also destroys the longer-term productivity of the well even as it "sours" the extractable oil.

But the market is demanding that oil -- and the promise of a reliable supply. If we realized all-at-once that we were "post-peak", there would be absolute panic on Wall Street. Yet the process of forcing oil out of the dying oilfields can't continue forever. In a few years, we will have to confront the problem head-on; I think that may be part of the reason why there is so little opposition to the apocalypticists now. We're going to require major commitments to development of new energy sources AND new ways of organizing our world and living our lives. Even oilmen have children, and most of those oilmen are much less craven and cynical than George Bush. The Cassandras of the world will be given a bully pulpit from which to preach, finally, sixty years after Hubbert's prophetic analyses of the situation. Knowledge can soften the blow, rally the troops, and prepare our kids to face the task of cleaning up after nearly a century of their elders' reckless partying. It will take at least a decade to tool up to build hundreds of nukes, thousands of photovoltaic device factories, and hundreds of thousands of wind and tidal plant generators.

Ultimately -- by century's end -- I think the "solution" will be to move energy-intensive industry into space where solar power is much more easily exploited. But we also need to think about 2050, and 2015, and next week, and the seven billion or more people whose lives depend on energy-intensive agriculture.

As I've said many times, this can be a death-knell for the entire human race, or it can be a challenge. The emerging Energy Mega-Crisis can be a head-on crack-up at 110 MPH, or it can be a speed bump on the on-ramp to the future. Or somewhere in between. We've weathered many crises before, and those that we will face in the coming century will test our viability as a civilization. I'm under no illusions about my future comfort, but I am committed to putting my weight behind the effort.

As a wiser man than I once said, "I Am A Member Of A Civilization." And it's the first real planetary civilization we've had. It's worth keeping.

--p!

[Oerdin]

9. Let's check the math.

CBS was saying each $1 increase to the price of a barrel of oil adds a $0.02 per gallon price to a gallon of gasoline. The price in San Diego is currently around $3.12 per gallon and oil is trading at $71.58 per barral. MSNBC has also said they expect a summer high of $3.75-$4.00 per gallon so MSNBC is effectly saying they expect the price of a barrel of oil to trade at a high of around $90-$100. I'm just not seeing how the author of the OP can claim there will be $6 per gallon prices assuming the price per barrel is $90-$100.

[Massacure]

10. But the OP uses the word "could". All bets are off with that word.

Of course prices "could" hit $6 a gallon for gas, never mind the fact that the chance is probably 0.0000000001%. I want to know what gas prices WILL do. Weasel words, you need to be aware of them.