World Must Brace For Oil Beyond $150

Reuters:

Oil's meteoric rise since the start of the year to nearly $150 has distressed consumers and policy makers the world over, but the stark reality is prices are likely to rise higher still.

For two decades, prices were relatively stable, but then they rose seven-fold from a trough below $20 in 2001. Since breaching the $100 mark on the first trading day of this year they have risen around 45 percent.

Read the whole story: Reuters

Comments

[BlackbirdHighway]

I'm all for opening up new areas for drilling, provided we have a plan for what we're going to do after.

Right now, our only plan for once those areas are depleted is to go find somewhere else to drill. If that's all we have going forward, then I say NO, absolutely NOT, no more drilling!

[Paul]

The problem is that the money we are spending at the pump goes to Exxon and the others and they get to decide how to invest it.

Guess what? They're gonna take that money and drill for more oil.

But if we used those billions to build mass transit instead, we would not need to worry about the price of oil or how to make the car payment, for that matter.

We need to break the single-vehicle/gasoline transportation paradigm.

Mass transit is the future - gasoline-powered cars are the prison of the past.

[RoseMerry]

What angers me the most is the Republican drumbeat for "energy independence". Do you really think if the U.S. even produced twice as much oil as it needed, that the oil companies would not sell it at the world price? It does not matter if the oil comes from West Texas or Iran, the price will be the same. Most of the Alaskan oil is going to Asia, even as I type.

All concessions to the oil industry, any lax in environmental policy is only going to add to the oil company profits. U.S. industry is not in the least patriotic - or they would not be exporting jobs as fast as they can.

Do NOT buy the lies. AGAIN.

[BlackbirdHighway]

Between 1996 and 2000, about 4% of Alaska oil was shipped to Asia. Since 2000, none of that oil was shipped overseas.

Not that it matters, if China needed to pay $200 a barrel to get the oil it wants, it will, and the rest of the world would then have to pay $200 too.

[AlteSoldier]

I still wonder what Cheney and his oil exec friends discussed at their ENERGY SUMMIT?

[gevan]

Why a $150 limit? If demand is as inelastic as it would seem to be for the forseeable future, the sky is the limit.

[londubh]

$200 is the next benchmark. But the thing is it really shows how much the dollar has been devalued over the last 8 years. Thank you, Mr. Bush.

[957]

Wow the doomsday scenario some of you are predicting makes me glad that me and my red-neck friends have plenty of ammo and know how to grow potatoes and skin a buck, and so you city folk stay away from us. But judging from the full parking lots in every fast food wal-mar/ target/ fleet farm/ bait shop/ gas station and grocery store this weekend around here and all the fancy suv's parked in them I don't think you city folks are are to concerned the economy is going in the tank you seem to just complain but still drive the gas hog 200 miles dragging your four wheelers and boat behind it.

[TurgidCaterwauling]

Do you honestly think that abandoing SUVs for micro-cars will solve this problem? As soon as demand drops, big oil will cut back on production, effectively keeping prices where they are.
I'd love a vehicle that gets a 100 mpg, but I don't think for one minute I'll end up with more money in my pocket. It continues to be about naked greed.

[Coyote2]

too cynical by far. 957 has it right: time to get acquainted with the hillbilly relatives. bring-em presents while you still can.

[gakabani]

The economical collapse of America will lead all of us to rethink this republic of ours. Energy issues have been forgotten and the MSM only has contributed to alienate the American people from the real issues. Nuclear energy is no longer an option but a necessity.

We are truly a pathetic nation!

[Kassandra]

Nuclear power is NOT the answer. Do a little research and see how very much fossil fuel it takes to start one of these up. And then, it takes 15 years to bring one online and then, you have to have somewhere to store the garbage which has a half life of 10,000 years.

Limited minds produce limited solutions.

[Coyote2]

hi sweetie. Love your moniker. I used a similar version for a short time until banned. You understand the curse of Cassandra, don't you? Cursed by Apollo to speak the truth and the future, but no one believes you. Does the 'K' keep you safe from Apollo?

[wadenelson1]

''Let us rid ourselves of the fiction that low oil prices are somehow good for the United States,''

Richard Cheney

[BerkeleyHills]

Our economy is grinding to a halt as energy prices climb past the contingency plans contained in the Plan B's, C's and even the D's of even the most well managed and prescient companies. We enjoy no leverage in Iran, Iraq will, eventually, ask us to leave and we will not be allowed to play in the Caspian. Saudi Arabia will not ramp up production because we have no inducements for them beyond American dollars. When oil rises to $175.00 a barrel, energy costs will no longer be an economic concern but a clear and present danger to American security.

[Kassandra]

So much for the Republicans being"strong" on "National Security".

[loki]

They are killing 2 birds with one stone here. High oil will enable Neo Cons and their supporters in DC to end all social programs except those for corporations and the wealthy.. 2ndly, it will force congress to agree to allow oil companies free access to drill wherever, whenever and how ever they wish.

The bonus is that it will help with the PNAC and Neo Con plan to control the world economically through military might . http://www.sourcewatch.org/index.php?title=Project_for_the_New_American_Century
Most of the Bush white house and the Pentagon leaders are PNACs top people. Yes, even Gates who replaced Rummy ( another PNAC) is hard core PNAC. They just figured he was less controversial and would be better to push Iran as he is not linked to the lies that lead to Iraq invasion.

[Graywolf48]

Some posters here would like to see oil hit $200 plus per barrel of oil. Be careful what you wish for, you may not like the consequences. The wealthy 1% will continue to survive quite comfortably, perhaps smaller yachts and private jets and not so many jaunts to vacation destinations. They'll also be able to afford private security guards to protect them and their property. But the middle class and working poor will be plunged into chaos and panic. Jobs will disappear, food, water and other commodities will become scarce or unobtainable, if even affordable. Violence will erupt as angry and frightened people deal with shortages of food, heating, cooling and electric power on a large scale. Right now some fire departments and police are cutting back on response units due to increased fuel costs. Gas theft from private vehicles is on the rise. Martial law could be a very real possibility. We are not in any position to shift to alternate energy sources in anything less than 5-10 years, and that's if it becomes the number one priority today. When gas and fuel oil prices approach $7-10 a gallon, our economy will free fall. What will you do when the hungry masses come for whatever food or fuel you may have? People are beginning to suffer now, $200 or more a barrel oil may mean the end of our civilization as we know it. So be very careful what you wish for.

[FogBelter]

"The wealthy 1% will continue to survive quite comfortably, perhaps smaller yachts and private jets and not so many jaunts to vacation destinations."

Um, more than likely, if a continued rise in oil results in a crash of the World Economy, which relies on the US Economy as its fulcrum, the wealthy 1% will be exiles, cowering in fortified compounds, praying to God their next supply shipment makes it through the rampaging mayhem that has swept the world and equally terrified that their hired, armed protectors don't turn on and slaughter them ...

History traces a familiar path ... round and round.

[Kassandra]

You know, that's an interesting concept.

[happyez]

I would disagree with you on people plunging into chaos and panic.
It will take a huge step to get people being active. Its a passive land, and people grumble and grumble, but to 'riot' . . . I dont think so.
Also, people tend to find other ways before going out into the street and asking for change. That takes a decisive decision (albeit a reactive one), and we are a few steps away.
When you think you are on top, you dont need to 'protest', youre number one!
I can understand the excitement of mass chaos, at least we will get change.

But think about how unwilling you (youse) are to changing your own attitudes or outlooks. Want to turn around....erm, procrastination, or seeing things in black & white, over a week?. Change is usually last resort. The willingness to keep everything going as it does beats 'going nuts' in a space of a month (if/when Iran is bombed).

My ‚¬2 worth

[FogBelter]

I seem to recall New Orleans getting pretty ugly after Katrina ... and the Rodney King verdict didn't do much for Los Angeles for a couple of days either ...

You would be amazed how the swiftly the composition of civil society would change in a crash ... and as soon as one lacks access to food they don't feel on top anymore.

[loki]

According to what I can find, a barrel of oil is 42 gallons ( a drum is 55 gal)
If oil is around 145 for a barrel, that is close to $3.50 a gallon. If what I read is true, about 65-75% of a gallon of oil is used to make gas, then my question is, just how are the oil companies making 10s of billions of dollars each year with such a small margin of profits on the oil? This doesnt include manufacturing cost, additive cost, transportations and labor cost ... Maybe I am dumb, but I just dont get it??

[drec1500Madrid]

Oil companies make money selling oil not gasoline...it costs the same amount to pump it out of the ground if its selling for $25 a barrel or $200 a barrel.

[BillZBubb]

Seven years ago, it cost about $15 per barrel to pump it out of the ground and transport it to a refinery. It was sold for around $30 per barrel. Today, with inflation it probably costs, $20 per barrel to pump and transport the oil. But the barrels are sold for $140. Do you get the idea? People selling crude are making a mint.

The other things you are omitting are inventories of older cheaper oil--oil bought a month ago but still not refined cost $120 per barrel. And you are forgetting futures contracts. Refiners paid a small amount to take delivery in the future at a set price--say $125 per barrel. Until the inventories and futures hedging unwind, the refiners are still making a great profit with gasoline near $4.

[ChrisFL]

Because you are only only thinking of the refining costs. If you produce the oil hence the term oil company your profit is pretty enormous. Saudi Aramco has a production cost of around $2.00 a barrel that is about the lowest in the world. Alberta tar sands is around $40.00 a barrel, deep water offshore is above $40 a barrel. By the way when Bush and company talk about offshore drilling they fail to tell you that every deep water drill ship in the world is booked for the next 5 years, as usual the devil is in the details.

You can make the argument that Iraq was about giving US oil companies access to more crude since their share of the world oil reserves have declined in the last decade. A major reason for this is the rise of NOC's (national oil companies). Countries basically took back control of their resources from independent world wide oil companies.

I got interested in Oil about 4 years ago for some reason and began to read books and surf the web reading about "Peak Oil"

[biwee]

Not to worry. When the NeoCon Nazis attack Iran, you will not worry about the price of oil.
Since about 25% of the world's oil passes out from the Persian Gulf, there will be no oil for America
after the strategic petroleum reserve is emptied.

[1rewd1]

World Must Brace For Screeching Halt Due To Oil Prices $150 And Higher

[kingcityguru]

Yet the Democrats do not want the high paying jobs and increased domestic supply that drilling in and around America would bring. Dems like high gas prices and high unemployment because it makes more people dependent on them ...

[Graywolf48]

You are either not very well read or a steady patron of FOX News. If we started drilling everywhere the oil companies want to drill tomorrow, it'll be 5-10 years or more before whatever oil is found can be pumped to refineries. Non-partisan economists and experts postulate that exploiting all our national oil resources, whatever amount of oil they may contain, would only drop the price per gallon at the pump about 5 cents. But the environmental damage would be extremely dangerous and unpleasant. Without conservation programs it isn't going to make a noticeable difference. If everything were opened to drilling tomorrow, offshore platforms, pipelines and support/storage facilities have to be built, this takes time and enormous sums of money and those spending it will expect huge returns. You remark about Dems wanting high unemployment and high gas prices tells me all I need to know about your intellect. The Republicans love high unemployment because it leads to cheap labor, thousands of people competing for few jobs means employers paying smaller wages and no benefits. High gas prices help no one except the oil barons and their corporate cronies, and we know who they are. Cheney, Bush and their guttersnipes. Are you a paid Republican troll?

[Destin]

I hope it hits $1,000 a barrel and forces the disbandment of our military since we wouldn't be able to afford to fly planes and drive tanks. Better yet, I hope we run out of oil tomorrow, that would go a long way to bring out some real quick peace activists in our own govt. Would be hard to fight a war with stuff that won't work. And that would be the most happy day on earth.

[BrettnCalgary]

You are wishing for the collapse of modern civilization, what's your plan for the day after?

[Destin]

Well, maybe it would force the idiots in industry to stop using 19th century (gas pumps were first used in 1885) technology to power everything. Maybe it would force them to get off their sorry asses and develop alternative energies. You do realize next year it'll be 40 years since we put a man on the moon, and the great Gods at NASA promptly sat down and haven't done a damn thing since. We lost 40 years of time just because of pure sorry people. Space shuttle is outdated beyond it's means, and they admit they don't even have a replacement for it. We already built a Skylab back around the time of the moonshot, and all we are doing is spinning our wheels by building another one called ISS. For what? Just so it can slowly fall out of orbit again? What was that about history being doomed to repeat itself by those who fail to learn from it??

[darthdarcy]

This is one of the biggest swindles in world history all due to the speculators trading "ghost barrels" of non existent Oil they'll never take possession of, it's all due to the Market Manipulation by many who once worked directly for Enron doing what they did to California now to all of America and many of our allies...

This could be stopped and turned around if our Senate and Congress weren't totally corrupted...as well as our corrupt lying President...!

[kingcityguru]

You have no understanding of the market. Period.
For every speculator going long you have one going short hoping to make money when oil pulls back. The reason it is going higher is that you have new buying on the margins from China and India and the like coupled with a declining US dollar that countries like India and China are dumping to buy things like oil that they need. Simple, but it does not fit your screed.

[Gasparilla]

I would have to agree with that. Speculation is a small part of it, but eventually the market has to exert it's influence. By the way, a liberal columnist like Paul Krugman agrees with you also.

[BrettnCalgary]

Do not forget to mention that a lot of institutional investor money has been fleeing equities for commodities, and driving up prices; this is not speculation as the people who usually whine about it would define it, but it is a most unpleasant indicator in it's own right.