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Thursday, 17 March 2005

Crunch Time

Well, ladies and gentlemen, it looks like we're finally there:

Despite a pledge by OPEC ministers to increase oil production, don't expect much of a break on oil prices. With crude oil prices hitting a record $56 a barrel Wednesday, OPEC ministers meeting in Iran have been grappling with a problem they haven’t confronted in the cartel’s 45-year history. In the past, OPEC tried to cool overheated prices by pumping more when supplies got too tight. But most OPEC producers say they’re already pumping as fast as they can. And despite the high cost of a barrel of crude, world demand shows no signs of slowing.

Oil is at a record high, and we're currently pumping it out of the ground as fast as possible. Since demand for it continues to increase, then it's pretty safe to assume that prices will rise steadily as well.

Which, as Atrios points out, is not to say we're running out of oil. We're not. There's plenty of that sweet sweet black gold to keep up sated for years. However, it does mean that we may have reached a point where the market will seek other means to fill the demand for energy. As crude prices increase, alternative energy will appear more and more attractive.

Remember - it wasn't a bunch of laws or a worldwide shortage of ponies that made the horsedrawn carriage obsolete. It was simple market forces (which also explain the 17 percent decrease in US Hummer sales in 2004).

Posted by flow Frazao on March 17, 2005 at 06:32 AM in Current Affairs | Permalink



Comments

I was thinking the boys in OPEC might switch from the Petro-Dollar to the Petro-Euro in this meeting in a charge lead by Iran and Venezuala, which is what they were actually discussing when the two heads of those countries met the week before the conference and pledge a united "front" against US Neo-Imperialism, but alas it was not to be. A re-tethering like that would be fun to watch much like a watching a huge car accident happening infront of you on the road while you are driving at speed that you aren't sure how it's going to effect you, but you know it will and badly. There is no combination quite like fear and excitement. "WWIV: The Re-Tethering," Out Summer 2005.

Posted by: Snoop Kenny Ken | Mar 17, 2005 8:03:53 AM



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