The price of oil has jumped to the highest level in the past two years in reaction to concerns over the events in Libya. The concerns about Libya are real and there is no assurance that the flow of oil from that source will not be disrupted.
Yet in the greater scheme of things what would that mean? Libya produces some 1.7 million barrels per day (bpd). That is far less than the idle capacity of Saudi Arabia alone and it is but a tiny fraction of the 4.1 billion barrels of oil of public and industry strategic reserves held by the International Energy Agency and its member countries.The United State's Strategic Petroleum reserve alone holds near 750 million barrels of oil.
Today, in a welcome example of supplier responsibility, Saudi Arabia, through the comments of the Saudi Deputy Oil Minister Prince Abdulaziz bin Salam, made it known that Saudi Arabia will not allow any supply disruptions from the Middle East to impact oil supply. Saudi Arabia's spare unused capacity exceeds more than 4 million bpd, more than twice Libya's 1.7 millions bpd output.
World supplies are ample and well positioned to handle the additional steaming time from Saudi Arabia even should matters escalate in the Middle East, making passage through the Suez Canal problematical. The additional cost of the longer supply line would be minimal, in the cents per barrel, as compared to the near $7.00 per barrel increase being registered in today's oil market trading (please see "Risk to the Suez Canal Sets The Stage For Falsely Hyping The Price of Oil" 02.02.11).
Commentators today are repeatedly referring to the level of oil reserves held by the Libyan oil fields, projecting concerns that these reserves are in danger of being cut off from the world market. That concern is spurious to say the least. Irrespective whatever the outcome of events in Libya, it will be in the interest of this regime or successor regimes to tap those reserves as quickly as they can. Temporary interruptions are certainly a possibility; long term stoppage, hardly.
Ben S. Cohen: Gadhafi and the LSE: A Cautionary Tale
Your thesis of cornucopia has been inextricable with the assumption of "spare capacity".
from theoildrum.com:
"Jeffrey Brown, a Dallas-area petroleum engineer, questions the assumption that the Saudis can meet the world's needs.
He notes that Saudi production has declined in three of the four years since it peaked at middlecade (2005)– including an 11% plunge in 2009. At the same time, Saudi oil consumption has soared, making it the 15th-biggest petroleum consumer as of 2008, according to U.S. government data."
Just trying to keep you current.
:-)
I guess our highways are so safe, that not enough people are dieing on them. But it doesn't phase the legislature in this state that gas prices are so high. As a matter of fact, they have even raised gasoline taxes in this state to add to the increase. Nebraska has one of the ten highest gasoline taxes in the U.S. They seem to have a see-if-I-care attitude about speeding. The 75 MPH speed limit along the interstate is actually 81 MPH due to "Officer Discretion." Speeders are rarely stopped until they are 7 MPH over the speed limit. This is partly because they don't have enough patrolmen (outside the 2 metropolitan areas of Lincoln and Omaha) to enforce the speeds along I-80, except during special statewide "projects." They would much rather stop vehicles that look suspiciously like drug traffickers, which is their forte. But they don't care if you're using lots of gasoline ... it adds to the local economy.
It's pure rampant speculation and ANY excuse for a price change works. Logic is never part of the equation any more. It hasn't been for a long time.
If anything it's past time to reform the commodities market.
Also, no time like the present to work on switchovers and redesigns of standard commercial vehicles.
Maybe they should also consider fuel rationing, meaning that you basically get to buy say, 10 gallons per month at a set nationalized price, X% below retail, so that working families can get a little break from the Wall St. commodities roulette table. We don't all have Civics that can get 65MPG...but Harley Davidson and other motorcycle manufacturers may end up developing a new high-efficiency product line if this price speculation stuff keeps up.
http://www.bbc.co.uk/news/business-11417781
http://www.chinadaily.com.cn/china/2010-11/24/content_11599087.htm
Probably in this order for sources
Zerohedge
Survivalblog
DollarCollapse
Bussiness Insider
chinadaily
and "When genius prevailed" or something like that. I like the humor and pics too. Sometimes linked to stuff I can't get out of my mind.
Thanks, but this crowd doesn't think outside the box. Mostly Daily Kos, Think Progress. They won't ask themselves what is the ground truth, Is it going to be bad.