In the wake of oil’s recent (Friday 6/6/08) $11.33 surge, when it hit a record high of $139.12 before retreating a little, America’s leading auto industry e$139.12 before retreating a little, America’s leading auto industry expert, David Cole, the head of the Center for Automotive Research, fears the price of oil may soon plummet.
David Cole says, “We have seen this before. In the late 1970s the price ran up to previously unimaginable heights and once it reached a peak it came crashing down, way below the levels before prices started to rise.”
Even as many analysts predict oil reaching $150/barrel, many also agree that as fast as prices rose, they could soon come crashing down.
Tom Kloza, the chief oil analyst with the Oil Price Information Service, believes such a move could come, but seems a ways off. Kloza says, “I think that prices could certainly give up chunks of their gains.”
While industries from aviation to package shipping, to transport and beyond are calling for cheaper oil, David Cole sees nearly as much economic disruption in a price drop as in the recent price run up, noting that, “in the late ‘70s all the investment in alternative fuel technology cease and that led the auto industry to the mess it is in today.”
From an economic perspective the price run up in energy (oil and gas) are an economic bomb that has to be dealt with.
A collapse in oil prices of some kind would certainly be a welcome relief to the economy.
David Cole says, “We have seen this before. In the late 1970s the price ran up to previously unimaginable heights and once it reached a peak it came crashing down, way below the levels before prices started to rise.”
Even as many analysts predict oil reaching $150/barrel, many also agree that as fast as prices rose, they could soon come crashing down.
Tom Kloza, the chief oil analyst with the Oil Price Information Service, believes such a move could come, but seems a ways off. Kloza says, “I think that prices could certainly give up chunks of their gains.”
While industries from aviation to package shipping, to transport and beyond are calling for cheaper oil, David Cole sees nearly as much economic disruption in a price drop as in the recent price run up, noting that, “in the late ‘70s all the investment in alternative fuel technology cease and that led the auto industry to the mess it is in today.”
From an economic perspective the price run up in energy (oil and gas) are an economic bomb that has to be dealt with.
A collapse in oil prices of some kind would certainly be a welcome relief to the economy.
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U.S. oil analysts see 55 BILLION barrels of oil AT HAND NOW within the continental United States! That counts some 20 BILLION barrels in shale oil, another 31 BILLION barrels in oil on federal lands, like ANWR and another 4 BILLION barrels from Montana's Bakken formation. And that's just currently known supplies! It's more than likely that there's far more shale oil and oil sands available within the United States, to say nothing of the HUGE supplies we know just off our own coasts. Consider that Canada has more oil available in oil sansds than all of Saudi Arabia has oil. That's why Alberta is currently booming...and that's why the price of oil may be set to come down, in light of all this available supply.
6 comments:
hiya JMK..A collapse in oil prices of some kind would certainly be a welcome relief to the economy...true but when do we STOP cowtowing to Saudi for all of this!!!
I called my DEM Senator Casey today. I asked his staffer if he was supporting or drafting any legislation to allow more drilling. He said "no" because Casey felt it was not a long-term solution. I told him we don't need as long-term solution. We need a "right now" solution.
That's when he hung-up on me.
Add to that Saudi Arabia said they were increasing output and I think it's gonna come back down to earth.
VW
Hi Angel!
I know many American Presidents (including Bush) have gone to the Saudis to increase production, but we still get the bulk of our imported oil from Mexico, Canada and Venezuela.
It isn't the Saudis and OPEC resposnible for the current price rise in oil - they produce appx 40% of the world's oil.
The path to energy independence is human energy....getting our government OUT of the regulation of energy companies.
There's pleny of oil (55 billion barrels) right off our coastlines, a minimum 31 Billion barrels on unused government lands, like ANWR and at least 20 billion more in shale oil and we have a large and, as yet, undocumented supply of oil sands!
Tapping our own reserves would go a long way toward our own energy independence.
Don't you hate it when your elected representative knows less about a major issue than you do, Roadhouse?!
Casey's either a liar or an idiot on this matter.
I'd like to give him the benefit of the doubt and err on the side of "idiot."
The PRICE of oil is set in the Mercantile Exchanges, where commodities brokers and various speculators/investors bid on the price of oil.
These folks DON'T SET the price of a given commodity, they bet on the price going up or down based on numerous factors, mainly supply and demand, but also weather, wars, etc. that impact that supply and demand.
Currenly oil's been bid high precisely because the global supply has been swamped by NEW global demand - mainly from India and China.
Our starting those projects would SIGNAL a major increase in supply and give those commodities traders a reason to bet on the lower long term price of oil.
Add to that the dictum, that it's always better to take the available long term production over not increasing production at all, because "you can't do it this minute."
All this points to the basic and irrefutable fact that Bob Casey (sad to say) is an idiot.....either that, or he's towing the Liberal hierarchy of that Party's line, which is a blatant LIE.
That's correct VW, the Saudis DID increase production by 300,000 barrells per DAY after Bush's visit, but added (CORRECTLY) that "they are powerless to bring down rising gas prices."
They're correct in that, they ALONE can't reduce gasoline prices, we HAVE to do our part!
We NEED more refineries and we NEED to increase production of our own HUGE (over 100 BILLION Barrel) known supply.
As both Mr. Cole and Mr Kloza note, even though the price run-up on oil may not be over - we MAY see $150 per barrel or more oil by some time in July, by August or September, we may see that price plummet, as energy companies RESPOND to INCENTIVES! There is a big payday for finding and developping new oil supplies and new ways of getting oil from previously unusable sources.
The question is, how much mileage will the Dems get out of this issue BEFORE the price drops?
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