Brace yourselves, drivers. It's going to be a very expensive ride. The price of oil topped $130 a barrel this morning on the world market. Prices then ticked up again following release of a weekly U.S. Department of Energy report, which found that national oil and gasoline supplies were lower than expected last week. At the time of this writing, the New York Mercantile Exchange listed the price of crude oil at $133.58 per barrel.
Contributing to the record price: the weak U.S. dollar, greater demand for diesel fuel following last week's devastating earthquake in China as well as increased spending on gasoline by U.S. drivers, according to Thomson Financial News. On Friday, Saudi Arabian officials rejected President Bush's plea for increased oil production on grounds that the Organization of the Petroleum Exporting Countries (OPEC), the oil-producer cartel of which the country is a member, had already boosted production earlier this month and that speculation by investors was driving the surge in oil prices, up more than 30 percent since the start of the year.
London newspaper the Telegraph warns that $100-a-barrel oil prices could be here to stay—or might soar even higher, noting that long-term oil future prices have risen unusually sharply and that several analysts' predict tabs approaching $200 a barrel in coming years. Geologists and economists fear that despite seemingly plentiful oil reserves, oil production may peak and begin to decline early this century (a phenomenon referred to as Hubbert's peak after the American geophysicist M. King Hubbert). Researchers worry that a sharp spike in oil prices would follow such a peak unless counteracted by falling demand.
Investors "are starting to believe that the world is going to run out of oil," says Phil Flynn, an energy investment analyst with Alaron, a global futures-trading firm. But he says the price run-up can only last so long. "These kind of markets end like thieves in the night," he says. "You never know when it's going to end. … But have no doubt that it's going to end."
When gasoline prices hit $3 per gallon at the pump in 2005 in the wake of hurricanes Katrina and Rita, Scientific American urged lawmakers to consider raising the federal gas tax and to require American automakers to boost fuel economy standards for cars and light trucks by 40 percent over the next decade. Late last month, presidential hopefuls John McCain and Hillary Clinton endorsed a gas tax "holiday" over the summer, which professional economists roundly criticized.
In its September 2006 special issue on the future of energy, Scientific American analyzed a suite of potential energy-saving measures, including nuclear power, alternative fuels and sources of renewable energy.
Subscription Center
See what we're tweeting about
4 Comments
Add CommentSci Am should be cheering high gas prices. The only way people will drive less is if it is expensive to do so. Furthermore, you advocate carbon taxes or cap and trade schemes which will make gas WAY more expensive. Expensive gas should be the goal of the Greens. Stop complaining.
Reply | Report Abuse | Link to thisI told Ali Velshi at CNN (he's the financial "expert" that talks about oil prices every day) that there is a realistic, near-term, cost-effective (ROI = <2 yrs) concept that will reduce oil consumption by 85 Billion gal/yr. Did you know that during the OPEC embargo, a 7% decrease in oil production resulted in a 400% increase in oil prices? Oil price is extremely dependent on "perceived demand". This concept will go a LONG way in curbing the pricing pressures on oil. But, the bad news is that people will be getting strong and trim instead of fat. Check out a fascinating concept at http://watercooler.cc
Reply | Report Abuse | Link to thisNo, no, no. You don't get it. What they mean is expensive gas for YOU. Not them.
Reply | Report Abuse | Link to thisNote how SA is just like every other liberal. High prices: Increase CAFE so more people will die in car accidents (there's a direct correlation).
Note what wasn't in the recommendation: Drill for more oil. Build more nuclear power plants. Lift the embargo on coal gasification and oil shale (which are economical at about $80 a barrel). Coal and oil shale deposits alone in the U.S. and Canada can produce enough oil to power the United States and Canada for about 500 years.
The greens should be proud of themselves. Blocking oil exploitation is putting humanity back in the oxcart.
Reply | Report Abuse | Link to this