Some folks are reeling after yesterday's brush with significant arbitrariness (if there is such a thing) as oil prices briefly hit $100 a barrel in trading before settling slightly lower. The significance of $100-a-barrel oil has often been debated, with environmentalists and others coming down on all sides of the issue. Some greens get all freaky. Some rejoice since it could lower consumption. Others think it's no big deal. But there it is ... $100. Now, if you'll excuse us, the odometer on our office stationary bike is about to hit 11,111 miles and we've got a party to plan!
Hawk, Stock, and Too-Smoking Barrels
Oil hits $100 a barrel 1
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GonzoDon Posted 5:58 am
03 Jan 2008
So what happened? Bloomberg.com notes:
Higher prices have been cast as vindication for a theory that the world has reached the maximum rate of oil production as explorers fail to discover major new fields to replace aging deposits being tapped in countries such as Saudi Arabia, Kuwait and Iran.
While Saudi Arabian Oil Minister Ali al-Naimi and Exxon Mobil Corp. President Rex Tillerson have said oil supplies will last for decades, energy traders are increasingly debating the amount of available crude.
Investors who back the peak-oil theory, such as Boone Pickens, a Dallas hedge fund manager and former oil executive, have led the price rally of the past two years. Pickens, chairman of BP Capital LLC, correctly predicted in 2004 that oil prices would top $60 a barrel in 2005 and in early 2006 said oil could reach $90 to $100 a barrel within two years.
We may or may not be at Peak Oil in 2008. However I do firmly believe the days of $45/bbl oil are gone, forever. Probably $55/bbl oil, too. Possibly $65/bbl oil. If, as some suspect, global oil production capacity is basically at it's all-time peak (the fact is it hasn't increased now for 3 years running!), then $300/bbl oil easily could be right around the corner.
I'm neither freaked nor rejoicing about this. I am watching with fascination. The world is dancing on the edge of a possible global economic implosion, and we are still arguing about trivia like whether California should be allowed to demand fuel efficiency standards that are more aggressive than EPA's (the latter of which represent a leisurely saunter into the future in the coming years after GW Bush has become but a dim and ugly memory.)
One thing I'm absolutely sure of, though: 20 years from today, people will be wondering What the hell were they thinking in 2008?. We have a chance now to aggressively build intercity rail transit, to re-zone and redesign our cities for mixed uses, and to stop subsidizing unsustainable suburban sprawal, for starters.
Instead, we are re-arranging deck chairs on the Titanic. I suppose we might as well enjoy a good view as we go down.
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