$134.13
As I write this, that’s the price for one barrel of oil on the NYMEX crude futures market.
Not sure I have anything groundbreak to say about that besides “Wow.” But here are some relevant links about the price of oil, what it means now, and what it may mean in the months and years to come.
If you think $134.13 is high, try $200.
- New York Times: An Oracle of Oil Predicts $200-a-Barrel Crude — Arjun Murti of Goldman Sachs has surprised the markets before with his shocking-but-accurate predictions of sky-high oil prices. He thinks that much higher oil prices — think $200 oil and $6 for a gallon of gasoline — would free the United States from its “addiction to oil,” which he thinks would be a good development. The major bone of contention among oil analysts: how much of the current price of oil is tied to speculative positions held by commodities traders, as opposed to fundamental issues of supply (not growing much) and demand (growing briskly).
We have the technology.
- My friend Jon Lebkowsky points to a story discussing the possibilities of “smart grids,” systems that allow electricity users such as home owners to regulate how much energy they use. If electricity rates are high and you’re given high-tech tools that allow you to see when and where you’re using excess energy, it’s much easier to regulate your use — not out of environmental motives, even, but simply to reduce your utility bill.
Speedball Tucker will not be driving 90 m.p.h. this summer.
- Los Angeles Times: Keep on truckin’? Long haulers yield to diesel prices — The price of diesel fuel is at an all-time high, which is leading to radical changes in the way that long-haul shippers think about their operations: “Instead of obsessing over chrome trim or the latest cab amenities to ease life on the road, truck owners and operators who are fed up with getting 5 miles per gallon are delving into long-ignored subjects such as aerodynamics, cruising speeds and tire efficiency. Engineers and manufacturers are furiously developing fuel-friendly technology. And commercial fleets are using high-tech software to calculate every aspect of their drivers’ routes, down to where they should fill up and where they should stop for the night.”
$200 per barrel? Bring it on!
- Echoing some of Arjun Murti’s sentiments in the New York Times piece quoted above, analyst Tom Raftery wants oil to hit $200 per barrel, because he figures it’s a necessary step along the way to developing renewable, environmentally friendly energy sources for the ages to come.
When fuel is cheap — as it has been, more or less, across much of the past 100 years — many of these considerations don’t come into play. But when it becomes as expensive as it is today, all sorts of fundamental assumptions about the way businesses and markets operate come under stiff review.
What do you expect in terms of oil prices and their impact during the rest of 2008?
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(Photo by Canon in 2D.)
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It really bugs me when the presidential candidates promise to reduce fuel prices. Cheap fuel is a major reason for many of our current problems: addiction to oil, disproportionate carbon emissions, big cars, lots of traffic, urban sprawl, poor public transportation, underinvestment in renewable energy… the list goes on. Imagine how great things would be if we spent $550 billion on renewable energy and public transit rather than screwing up Iraq. Let the prices rise!
I’m not an enviornmental nutjob, more of a conservationist/good steward kind of guy. But I don’t think this oil thing will “work itself out.” The major oil fields have peaked and are declining. It’s time for a drastic shift in how we think about transportation. For decades, we’ve puttered around sinking billions into researching alternatives (such as electric vehicles), but not very seriously. (I’ve known people in these research areas. They admitted that finding solutions to the issue was not their goal, because government research money would go away and they would be out of a job.)
Americans are notorious for ingenuity, creativity and “finding a better way.” It’s time to kick that American spirit into overdrive and solve this problem once and for all. We can’t afford to wait for $6-$10 per gallon gas and then start contemplating what to do.
And by the way, I do think a good deal of the high pricing of crude is due to the speculative market. It’s possible they’re getting into a bubble and when it bursts, you’ll hear lots of wailing.
[...] you, I’m not asking what you think the price of oil will do, but what you think it should do. When we talked about the sky-high price of oil last week, regular reader Darrin Dickey said [...]
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