How about those oil prices?
November 1st, 2007 | by mbhunter |A colleague who borrowed my copy of Kunstler’s The Long Emergency
The Peak refers to the top of the Hubbert curve in Hubbert’s peak theory. This peak is a peak in oil production, and occurs when a geographical area — in size up to and including the entire Earth — has been depleted to half capacity. So if one has the peak, and sees how much was pumped out up to that point, there will be about that much left in the ground, according to his theory. Since the production curve is a bell curve, production will go down.
Actually, production already appears to be going down. We’re here. Please keep your seatbelts fastened until the aircraft comes to a complete stop.
So we have $94 oil today, when just last year it averaged under $60. Part of the price is probably a Middle East tension factor; part of the price is probably a tanking dollar. But I’m pretty convinced that a part of it now is not only that production is not keeping up with demand, production is going down while demand is going up. The more I see headlines like “Crude rises over supply concerns” the more I agree that the “supply concerns” are real, here, and now.
I don’t see anything pulling gas below $2 again. Not even the election year. 
In the meantime, if you haven’t heard of the Peak Oil subject, you should acquaint yourselves with it. Then you might want to follow the subject. Things will be changing a lot, and any knowledge and preparedness is better than none at all. Reading Kunstler’s book
10 Responses to “How about those oil prices?”
By David on Nov 2, 2007 | Reply
I loved…and hated that book. I learned a ton but also am worried about the future. A big problem with our use of oil from the middle east is that we are funding both sides of the “war” – we buy oil from nations that could be helping terrorists, and we pay taxes to help pay for the military. It’s quite stupid, really.
I think it is only going to get worse, and sooner rather than later.
By mbhunter on Nov 2, 2007 | Reply
Heh — I know it’s going to get worse.
I learned a lot from the book too. Kunstler’s right, but listening to him scold America gets old really fast. I needed a scolding, but I don’t anymore. I get it.
Thanks for the comment David.
By David on Nov 2, 2007 | Reply
Unfortunately, we still need scolding. Well, you and I and a handful of others don’t, you know…
By Jerry on Nov 2, 2007 | Reply
Well… this is depressing. On top of that, it also leads much of Northern New England to a pretty high stress level when contemplating the fuel oil costs for this coming winter. It will be brutal. It gets really cold up here, and I honestly fear that some old people will die this year, unable to keep their homes warm. There needs to be some type of insurance through alternative forms of fuel available (at reasonable cost) to break the grip of Big Oil. There is a local gent here in Maine with a terrific solar system which works all winter long, but he paid a pretty penny for it and most seniors can’t manage that. Still, as was pointed out above… it certainly isn’t going to get better!
Jerry
http://www.leads4insurance.com
By pauld on Nov 2, 2007 | Reply
I haven’t read the book so take my comment with that in mind. I am, however, skeptical about the peak oil argument. My skepticism arises because I have heard ever since the late 1960’s that the world was on the verge on running out of oil. I can recall heated debates that I had in the early 1980’s with other students who were adament that we would be out of oil by the mid-1990’s. Someday the doomday arguments will be true and we will run out of oil. It is not clear to me why I should believe them now when they have been consistently wrong for at least the last 40 years.
By KMC on Nov 2, 2007 | Reply
I read the book, too, and the further away from it I get, the better I think I am. Listen, I don’t disagree with what he’s saying, necessarily. I believe we have or will soon hit peak oil. You need only look as far as the Saudi reaction to $92/brl the other day. They said they will not increase production blah, blah, blah. There’s a simple reason they won’t – they can’t.
Having said all that, there’s little to nothing individuals can do about this. This falls into that category of things that could happen (or even will happen) that are extremely bad but that I don’t worry about. All you can do is all you can do. I can’t invent an oil substitute. All I can do is continue to work, save some money, and look after my family. Peak oil or no.
By CT on Nov 2, 2007 | Reply
One thing I don’t understand is why everyone seems to think rising oil prices will mean that everyone but the oil companies will lose money. If it was gold prices, instead of oil prices rising, what would you do? Probably buy some gold and hold onto it while it appreciates in value. If you have an IRA or a normal taxed investment account, you can buy ETFs that track oil prices so that you make money when oil or other commodities make money.
I bought an oil ETF for my IRA at the beginning of the summer and its already up 30%. One slightly depressing thing about making money when oil prices go up is that its mostly bad news that drives up oil prices. When a massive hurricane ruins many people’s lives and destroys important refinery infrastructure, I feel like I’m somehow a bad guy when I make a $200 profit off of it.
By Money Blue Book on Nov 2, 2007 | Reply
I still remember the good old days when $1 for a gallon of oil was considered expensive. This wasn’t even that long ago…
Time to get a hybird.
-Raymond
By Ron on Mar 1, 2008 | Reply
Oil will never go below $85 again. In 2010 oil will be over $250 a barrel and gas will be $10 a gallon. With that you will either buy a hybrid which will still be expensive to operate or ride your bike or take the public transit. There are ways to reduce your fuel cost and see your options check out.
By Ron on Mar 1, 2008 | Reply
Oil will never go below $85 again. In 2010 oil will be over $250 a barrel and gas will be $10 a gallon. With that you will either buy a hybrid which will still be expensive to operate or ride your bike or take the public transit. There are ways to reduce your fuel cost.