Thursday, June 5, 2008
Oil Companies...The New Terrorist!
Since 1993 when OPEC unleashed their embargo during the Arab-Isreali war and engineered the first violent oil rise, there have been major price spikes The 2001 recession in the United States, and the terrorists attacks in September of that year which sparked fears of a worldwide economic downturn brought prices to about $17 dollars a barrel by the beginning of 2003 from a high of $30 a year and a half earlier.
The United States and global economic expansions which began in the latter half of 2002, still have not ceased, and neither have the rise in oil prices. This current price increase is demand driven, but the demand is not the only factor driving the price of oil. Oil is a limited chief raw material, we all know this, but it is limited in the sense of the amount that is available at any particular price at any particular time.
The world is not running out of oil, but it is running out of "immediately accessible inexpensive oil". It has become increasingly hard for oil producers to supplement supply by the 1. million barrels a day that us needed annually to keep up with demand . The time lag for bringing new production to market is long, far to long for the discovery of new sources, as in the Brazilian continental shelf finds to attract price.
The United States, the world's largest consumer of oil is also it's third largest producer , behind Saudi Arabia and Russia.
America has substantial untapped oil and energy resources such as natural gas, nuclear energy, and in coal in The Arctic Natural Reserve. One million barrels is what might be flowing today from The Arctic Natural Reserve if in 1995 President Clinton had not vetoed legislation to prevent drilling there. The United States also has one of the most technically advanced environmentally regulated energy sector. By refusing to develop it's own resources, the US has permitted external producers to determine marginal productions.
The world's largest oil consumer is "hostage" to some of the world's smallest. Unwilling to increase it own production, it should be of no surprise to US consumers that oil companies refuse to do so for our benefit. For the most part, oil prices are a classic supply and demand question. Demand for oil is rising. Supply is not.
Perhaps more importantly for oil prices, is the perception that future demand is stronger. India and China are current industrializes, but there are huge swath's of the world waiting for their turn to join the consumers future.
It is blindness not to use there desire for a better life, and blindness not to understand that the era of cheap natural resources is ending, if it is a future that only oil companies seem to perceive.
The United States and global economic expansions which began in the latter half of 2002, still have not ceased, and neither have the rise in oil prices. This current price increase is demand driven, but the demand is not the only factor driving the price of oil. Oil is a limited chief raw material, we all know this, but it is limited in the sense of the amount that is available at any particular price at any particular time.
The world is not running out of oil, but it is running out of "immediately accessible inexpensive oil". It has become increasingly hard for oil producers to supplement supply by the 1. million barrels a day that us needed annually to keep up with demand . The time lag for bringing new production to market is long, far to long for the discovery of new sources, as in the Brazilian continental shelf finds to attract price.
The United States, the world's largest consumer of oil is also it's third largest producer , behind Saudi Arabia and Russia.
America has substantial untapped oil and energy resources such as natural gas, nuclear energy, and in coal in The Arctic Natural Reserve. One million barrels is what might be flowing today from The Arctic Natural Reserve if in 1995 President Clinton had not vetoed legislation to prevent drilling there. The United States also has one of the most technically advanced environmentally regulated energy sector. By refusing to develop it's own resources, the US has permitted external producers to determine marginal productions.
The world's largest oil consumer is "hostage" to some of the world's smallest. Unwilling to increase it own production, it should be of no surprise to US consumers that oil companies refuse to do so for our benefit. For the most part, oil prices are a classic supply and demand question. Demand for oil is rising. Supply is not.
Perhaps more importantly for oil prices, is the perception that future demand is stronger. India and China are current industrializes, but there are huge swath's of the world waiting for their turn to join the consumers future.
It is blindness not to use there desire for a better life, and blindness not to understand that the era of cheap natural resources is ending, if it is a future that only oil companies seem to perceive.
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