Oil on the march in ‘06
Get used to $60 barrels, that’ll look cheap soon
Oil flirting with $64 on Friday, was below $45 at the start of 2005
Bloomberg reports that demand numbers in the US are soaring. Records were set in December for both gasoline and heating oil. The only saving grace in January may be above-average temperatures in the NE US. But, “Implied gasoline demand jumped 1.2 percent to an average 9.4 million barrels a day in the week ended Dec. 30, the Energy Department report showed. It was the highest for the last week in December since at least 1990”.
The brief post-hurricane period of gasoline demand relaxation appears to be over.
Bloomberg quotes analysts on oil market “geopolitical risks” now present.
“If some distant spat between Russia and Ukraine over natural gas can generate” new buying in crude oil, “I shudder to imagine what cold weather, a bullish DOE report or a genuine supply problem would do to this market,” said Peter Beutel, an energy consultant and president of Cameron Hanover Inc. in New Canaan, Connecticut. “It looks higher from here, although it is certainly not for a want of oil.”
They think that inventories look adequate for now, even with the stresses on gasoline. So the current rally may not sustain.
These analysts are mellow compared to the outlook given in a piece this week by James Howard Kunstler:
The problem is that the oil supply will soon steadily diminish at a rate of at least three percent a year, and that necking down of supply is likely to be expressed in greater geopolitical friction and turmoil between the great nations who crave oil. The US entered into the military phase of this turbulence before any other nation. We used our superpower status to set up a centrally-located Middle East garrison in Iraq, under the idealistic cover story that we were removing a dangerous head-of-state and helping to set up a model democracy that would invite us to stick around the vicinity indefinitely, and thus retain some control over the deportment of other oil-rich states in the region….The world oil allocation system is now so fragile that any disturbance in one producing region can send damaging shock waves around the planet. There is no more “swing producer.” The US squeaked through the huge loss of oil production capacity this fall by taking oil from our own strategic petroleum reserves and from Europe’s. These actions kept oil prices in the high fifty-dollar-range through the holidays, giving Americans a false sense of festive security. Those withdrawals are now over. Global demand for oil is still increasing. The strategic reserves will now have to be refilled (they’re called strategic reserves for a reason). This will start oil prices moving upward again…
Kunstler thinks oil will cross into $100 territory and gasoline will strike $4/gal sometime during 2006. This will “absolutely kill” the housing bubble, according to Kuntsler’s predictions.
Meanwhile check out this APM (Minnesota Public Radio) Marketplace interview with solar business guru and environmental activist Jeremy Leggett, author of The Empty Tank: Oil, Gas, Hot Air and the Coming Global Energy Crisis. Leggett gives us three to five years before the oil peak engenders serious economic problems.
LEGGETT: This is the point at which we transition from the assumption that society is making, that there is going to be a couple more decades of growing supplies of generally cheap oil to the point where actually we realize, uh ah, that isn’t going to happen, we’re going into a world where we’re dealing with rapidly shrinking supplies of ever and vastly more expensive oil…
January 8th, 2006 at 01:55
Another Bloomberg article, mid-December of last year, mentions that a jump above $105 a barrel is possible; that there will be a peak in production earlier than expected & that post-peak decline will be more dramatic than currently assumed unless there is an increased investment in greater efficiency & alternative energy, or for that matter …greater economic support in snagging oil wherever it may be found, ANWR included.
Matthew Simmons is also projecting oil to shoot up to $250 a barrel, and that daily global oil production might drop to 65 million barrels per day by 2012, when the world currently already consumes 85 million barrels per day… Of course, allot of what we know about how much oil exists, and can continue to be pumped out, is pretty flimsy; even the G7 supposedly admits they have no idea how much oil is left.
If it’s true that the housing bubble has been what has driven about 90% of the US GDP growth between 2001 & 2005 & this “bubble” is soon to burst due to people’s increased awareness of dependance on dwindling fossil fuels & their price increases coupled with large houses becoming more costlier to heat, then we’re probably in some deep dark times; if that wasn’t already established already, lol.
Also given this soon to be released report by Nobel laureate Joseph Stiglitz & Harvard budget expert Linda Bilmes, estimating the cost of the Iraq War at between $1-2 trillion; far higher than earlier estimates of $100-200 billion…
Michael Ruppert also has a fairly new video out called Denial Stops Here, a fairly sobering hodge-podge of clips from some of his more recent talks; was quite disturbing to watch, almost as bad as The End of Suburbia.
Though, with all of this, another layer of problems coming with global climate change… What was it, Europe might be plunging into a mini-ice age, and no one gives a flying f*ck because anyone can walk out to any highway or major road and see a constant stream of cars, trucks, suv’s, tractor trailers, campers, the works.
I’d hate to say this, but there is some point when one is inclined to say that we should just get what we deserve for our collective footprint in its entirety of disgust…. sweatshop slave labour, factory farming, animal cruelty, confined spaces, Revlar H, steroids, growth hormons, toxic carcinogenic substances, water flouridation rat poison, potent dioxin-drenched waste from every city coming from multiple sources, monocropped unsustainability
…nobody giving a damn about investing in sustainable developments/improvements because they don’t know how bad it’s going to get, or believe there to be a comfort zone in the flow of the economy, frothing lobyists on capital hill coercing white slavery, idiocy of martial law, bicycle confiscations at critical masses, even taking chainsaws to break the locks; we’re f*cked up, lol. Everyone should be sickened to the core of their being… instead we get …consumer-hypnosis, media-whitewashes, nascar fananza, super bowl sunday, spectatorism, mindlessness, complete disregard….
My only hope is that this NSA/FBI/CIA/TIA/Pentagon/BS spying programs on American citizens will give way to impeachment of Bush, and hopefully a whole house of cards comes crashing the hell down with increased awareness of impeachable offenses existing all throughout the halls of power. But how long have we all been holding our breath for that wish, lol.
I’m sure just by saying this I’ve been added to some list somewhere, if not already, and could very well be spied upon. Cuz you know, a jobless poor activist in 5/6 environmental/peace/justice groups could be a dangerous al’qaida infiltrator… Either that, or a potential kamikaze that could risk life to carry out a task based on such insidious values like morality, lol. In the words of Bill Maher, “I don’t get what conservatives or rich people, whoever it is that’s agnostic about the environment; I don’t get what they don’t get about… your going to die too.”