Oil prices skyrocket, and this time they may never come back down

It's always "different this time.". Granted, some time in the future it really will be, though.

If there is big oil money to be made somebody will get at it, though. I don't see this particular situation in Libya as a reason to permanently raise oil prices. They'll do that by themselves, but gradually over time.

Oil has shot up hugely today, though. Very 2008-like, but it can't do this for many days in a row.

I wouldn't mind a huge spike in gas prices, it might give me a better deal on a Highlander (not to replace the Prius, obviously) . I remember in 2008 SUV prices crashed big time.

Oil is a fun topic for me. It's because we can see who's right or wrong with various predictions about it and a tangible thing we can watch, like a sporting event.

 

This will drive the value of my 14 year old Ford Explorer to approximately zero. :madgrin:

 

Never??? That is what they said in 2008, how soon some forget...

What is odd is libya has one of the most unstable (as far as U.S. is concerned) leader and seeing him leave might not be all that bad... though I guess he could sabotage fields as he leaves for safer ground to put up his tent...

 

Kind of doubt it will never come down because if you think about it: if you put the world in a global depression because of soaring gas prices, who will buy the oil?

Remember what happened in 2008 when gas prices soared through the roof? It wasn't very long after where the world went into a recession and oil(gas) dropped rapidly to a point where it was again "reasonable" ($2+ a gallon)

 

Sigh... and yet I know someone (from my post at http://priuschat.com/forums/freds-h...icial-rants-trolls-thread-25.html#post1269566) considering a Mercedes 382 hp SUV w/EPA rating of 13/18, 15 mpg combined that also requires premium...

 

While Tunisia and Egypt aren't big oil producers, Libya is a major source of oil for Europe. No matter who is POTUS or what the EU does, the successor states are not going to be friendly to the West. Instability is probably the best we can hope for.

And thus, the price of oil is going up and it will probably stay that way for a long time. The new reserves of Brazil are going to be needed in Europe. Our Congress is working overtime to insure that we are more dependent on the oil industry. Canada may get tired of sending us their oil. Mexico is running out of oil. Venezuela is having a hard time getting its oil to market. Oil shale is a 97 year old dream- to produce enough oil from shale requires more water than the West has.

 

The US should never be on the side of a brutal dictator for the cause of oil price stability. I hope the tyrants are thrown out of Libya, but unfortunately for now there is more blood of the innocents on the streets.

Only if Iran or Saudi Arabia fall do I see prices getting up to 2008 levels. If they do fall, it would be a good thing in my mind.

 

Gadhafi is a nutter and a swine but he's been in power for decades. US foreign policy will always pick the stable government that helps give it oil over something that's more dicey even if democratically more free.

Actually it's about time for another bubble and gold has gotten boring. We hit huge prices in 2008 without Libya falling so it could bubble again if it has to The entire West needs to stop supporting dictators. Gadhafi's military was using, for example, UK purchased weapons against his people . This has to stop.

 

Secure oil supplies, AND more profits from weapons. What's not to like? How unAmerican of you to suggest this is not a good thing.

 

Glenn Beck, is that you?

 

Am glad over the past 3 years my need to drive has dropped to almost zero. I put 4.200 km on the FJ last year, that is my only vehicle now. I need to leave it plugged into the Battery Minder or I'd always be boosting it

 

rofl

The 'West,' and the US in particular, LOVES dictators. But not all dictators, they have to work hard to enslave their people in a capitalist regime that keeps prices at Walmart cheap, and they have to trade commodities for weapons and give unrestricted privileges to US corporations to pillage and pollute.

 

Iran would be good, but Saudi Arabia scares me. The aging leaders are actually more moderate than those who are ready to take over, they're keeping the extreme clerics in check. A revolt there could leave the country even more repressive than how it already is.

Oil prices are already where they were at this time of year in 2008.
Of course, then we had a better economy (or so consumers and employers thought) which is what drove the demand. The fact is, we don't have enough spare capacity to support a full economy anymore, at least not in the way we use it, and anytime the economy goes up now the oil prices will spike. That's what happened in 2008 and I believe it's a good part of what is keeping our economy down now.

Some may cry speculation regarding the wild swings in 2008, but the fact was, oil was selling for well over $100/barrel for months. If there was spare capacity among the producers, that was a powerful incentive to flood the market, yet that never happened.

Back in the late 90's, Saudi Arabia stated they wanted to maintain oil prices at about $30/barrel. That would be high enough to provide a good source of income for them (it had dipped below that previously), but would still be low enough to discourage production by others of oil sands, deep water wells, and alternative (renewable) energy research. The fact that 10 years later they couldn't keep prices even below 4x that number is telling.

With a recession, prices will fall, but they will never again stay below $60/barrel for long.

 

I really think 2008 was little more than a mass hysteria. The economy was clearly shrinking and prices went up far faster than even a flat economy could possibly have held. When bubbles pop they pop big, that's why oil dropped under $40 within six months!

At some point peak oil will hit, maybe it has. And so the idea that as the economy speeds up demand raises prices seems very fair and there is a lot of that going on now. The last week is probably speculation--I mean it definitely is, the supply/demand curve hasn't changed much in the last week. But speculation isn't necessarily wrong. But probably is.

I agree with that. I'd even say $70. It really wasn't that long ago I saw my first two in front of a gallon of gas, but if I see one ever again it will probably be only for a little while. The world has just changed.

If only at least one manufacturer had spent the last decade coming out with a gas-sipping car that was reasonably large and reliable, eh?

 

That sounds good. I went from using 48 gallons/month (my 'GPM' rating) in 2005 to maybe 15 gallons/month since 2007 (changed jobs and cars). I have a recumbent bike now that is much more comfortable (and aerodynamic) than my old diamond-frame bike, so I hope to use that more this coming year (typically put on 500 miles/year on my bike, almost all replacing gas-powered miles).

 

As noted above with the reduction in supplies from established fields in the US, Mexico, North Sea, Russia and even Saudi combined with Venezuela's instability towards the producers this additional political instability will drive the retail prices up significantly in the intermediate term. I'm thinking over the next 5-10 yrs.

Combine this lack of supply in the intermediate term with recovering economies all over the world driving up demand I can see prices at the pump skyrocketing past 2008 levels.

My own personal view for my own budget is that we will never see $2.75 gasoline again in our lifetimes! The present level at $3.00+ per gallon is the lowest it will be over the next 10+ yrs. We've already indicated to the fuel marketers that that we will pay $4.50 - $5.50 per gallon and the world will not end. My own personal view is that fuel prices will range from $3.50 to $6.00 over the next several years with spikes up to the $8.00 range when things get real dicey with supply. I bought 100 shares of XLE, the energy ETF, as a personal budgetary hedge against skyrocketing fuel prices.

The world economies are simply growing too fast with respect to current petro-supplies and they ( we especially ) are too dependent on petroleum. 70+% of all our petroleum usage goes toward transportation. Only when we can find suitable volumes of alternative fuels for our vehicles will petro-fuel prices might come down again IMO.

 

Mass hysteria seems to have more of an effect on price than the 'supply and demand' of economics 101. Refineries here are operating well below capacity, and we have the highest inventories in ten years. Fear of what's happening in the Middle East seems to be the driving factor.

 

It does in the short term, it will swing things hugely but ultimately it cannot hold prices up (or down) long term.

I assume that unless something major changes, this year we'll hover in the $80-110 range. Anything over $110 in this climate is really too hot and speculatory I think. I don't pretend to have any kind of an expertise in this area, so I'm just shooting from the hip, which makes me at least as accurate as professional economists

 

I'm no expert either, but methinks you may be misunderestimating the fear factor. Fear trumps logic every time.