It’s an all-too-common belief that if only we had authorized more domestic development of oil, our gasoline prices would be lower.
Even though we are the proverbial 8,000 pound gorilla, consuming about one-quarter of the world’s energy, oil prices are not all about us. The increasing consumption of countries in Asia, South America, Russia, and the Middle East have more than made up for the slight declines in petroleum consumption we have experienced this year. Global consumption is expected to increase another 1 mbpd this year, even as consumption declines in the U.S.
The fact is that oil is a globally traded commodity. Since the U.S. imports two-thirds of the oil it consumes, the price of domestic oil will always maintain parity with global prices. Therefore, no matter how much we drill up the remaining resources, it will not significantly change the price of fuel.
With the global supply and demand balance as tight as it is for oil, natural gas, and coal, it is highly unlikely that a slight increase in U.S. production could make any noticeable difference in our gasoline prices.
From a lengthy piece about “peak oil” at The Oil Drum by Chris Nelder, author of Profit from the Peak: The End of Oil and the Greatest Investment Event of the Century.
Another interesting point: Many oil fields are depleting; that is, their production is decreasing. Any new oil fields must make up this decrease before there is a net gain. Currently net growth of production is 1% a year. Demand is up 1.5% a year. Do the math.
“Demand is up 1.5% a year. Do the math.”
“…high fuel prices will cut into U.S. demand for oil.”
Do your research and quit telling me to do math:
http://money.cnn.com/2008/07/15/markets/oil/index.htm
“Oil fell 4.4% Tuesday, which does not even crack the top 100 price declines in percentage terms.”
That translates to 9¢ at the pump — if we see the decrease at the pump, and if crude doesn’t go back up tomorrow. The increased demand elsewhere more than offsets the down trends in Europe and the U.S.
Trust me my friend, all countries are feeling the pinch of runaway corporate theft, and are thereby curving their demand as well…
Oil falls further, extending drop into 3rd day
VIENNA, Austria – Crude prices fell for a third consecutive day on Thursday amid evidence that the high cost of oil and gasoline was slowing U.S. demand.
Do you still want me to do math?
http://news.yahoo.com/s/ap/20080717/ap_on_bi_ge/oil_prices
I’m not sure what point it is you are making Wolfboy/Wolfbox, but as of 9AM “Crude oil rose more than $1 a barrel on signs that a 7.3 percent drop in prices over the previous two days was larger than justified…”.
Update: That report is from Bloomberg at 9. At 11:30 oil is off a couple of dollars a barrel today to $132 or so. It was first at $100 in February.
You know what? I’m confused as well…
I just hate it when people say, “Do the math.”
Anyway, I enjoy your website and check in often. Keep up the great work!
From now on it’s strictly “do the arithmetic.” 😉