January 02, 2008
To get the new year started, oil topped $100 a barrel today for the first time ever.
You gotta love all the rationales analysts come up with. CNN:
Oil prices kicked off the first trading day of 2008 by hitting a new high of $100 a barrel Wednesday on violence in oil-rich Nigeria, the prospect of more interest rate cuts, a halt in Mexican imports and the expectation of yet another drop in U.S. crude supplies.
Whatever. Or maybe it's the obvious: there's no longer enough oil to go around. Demand exceeds supply, so prices rise to the point where enough people are priced out of the market to make supply and demand equal again.
Someday soon we'll look back with nostalgia at the days when a barrel of oil was only $100.
I wonder if Kunstler's assumption that everyone was just struggling to get to the end of the year and collect their bonus, then flee the building, is correct.
I feel more that everything possible will be done to keep the lid on until after January 2009. Given events and reports like the next article, it's a question as to whether that is possible.
Posted by: Derek at January 2, 2008 07:13 PM
Jon FYI, the most gasoline you can refine out of a barrel of light sweet crude is 20 gals. At $100 a barrel, the implied wholesale price of gas is $5 gallon. With transportation and retail markup that's $6 gallon at the pump. The reason we haven't seen it yet is: (a) big US oil companies have some domestic production, about 50 percent of their supplies, although that's declining rapidly, and (b) they have production sharing agreements in certain exporting countries like Libya, Nigeria, and Qutar. Wait and see what happens when Venezuela goes offline later this year.
Posted by: Wolf DeVoon at January 2, 2008 10:30 PM
But gasoline is only one product that can be derived from a barrel of crude. According to the first apparently credible source I found, the California Energy Commission, gasoline is only about half the total volume produced. If the other products are comparably priced, then the "implied wholesale price" would be about $2.50 per gallon of gasoline.
I don't believe US oil companies are subsidizing our gasoline. They are taking advantage of the price, just as we should expect them to.
Posted by: John at January 3, 2008 11:42 AM