General Discussion
In reply to the discussion: If gas goes to 5.00 per gallon [View all]Spider Jerusalem
(21,786 posts)Higher fuel prices are an inevitability given that there is a limited supply of oil, given that oil production has been flat since 2005, and given that demand continues increasing, mostly due to growing demand from China and India. Oil is at around $120 a barrel (Brent crude: $118; Alaska North Slope, $120; Louisiana Light Sweet crude, $122; West African Bonny Light crude, $120). You can ignore the reports on the news that oil is at $100 a barrel; it isn't. That's West Texas Intermediate, which accounts for c. 300k bbl/day of the US's 5.5M bbl/day production; the reason it's trading much cheaper than any other grade of crude oil in the world is because there's an oversupply at the depot in Cushing, Oklahoma, with limited pipeline facilities to move it out. It's not only not a global benchmark, it's not even a useful benchmark for the US oil market. And the last time oil was trading at this level the average US price per gallon of gasoline was around $3.50; any economic recovery is perforce going to increase demand and thus oil prices (as we saw in 2008, when crude oil peaked at $147 a barrel). This is the result of peak oil, of constraints on supply and of demand being greater than available supply. It's not part of any plan at all.