Click through to the infographic and see the data that lends some to think that even as we see record prices for a barrel of oil, we may be about to see prices drop again soon. (We have such short memories incidentally. It wasn’t long ago that gas was $3.49 per gallon and then dropped back to about $3.)
So what does the infographic say? That oil production is up 2.5% in the first quarter of 2008 while consumption is up only 2%; that output will go up by 4.1% by the third quarter while consumption is projected to only rise 1.6%; and the US oil consumption was down 4% in January, during the biggest heating month of the year!
Of course, by the time the prices come down a new president will be in office and he (or, God forbid, she) will be able to take credit for that which they have no control over. Such is demagoguery and politics.
At least we’ll be paying less for heating oil next winter.
Dom:
you are absolutely right. You should take a look at http://www.thecapitolist.com .
It’s an interesting board that only Capitol Hill staff can post to.
-chris
It’s a nice idea for consumers, but I don’t believe it for several reasons. 1) There is limited excess production capacity in the world, and what there is is located in the Middle East. They are perfectly capable, and more than willing, to cut back production if the price falls below what they want. Frankly, they are getting even more rich with the soaring price of crude—they have no reason to allow it to fall below Euro 60. 2) China and India both have very strong growth and an almost insatiable appetite for more oil. Barring a complete collapse in Asia, demand will grow much faster than these predictions. 3) Continued environmental regulation tightening in the US and Europe, and even in Asia makes production of refined products more difficult, and thus more expensive.
I’m not saying that the era of $120/bbl oil will last forever, but it doesn’t show any sign that I can see of being a “bubble” in the sense of the housing bubble, or the over-priced stock market bubble. A stronger dollar would help us, but I am seeing a limited upside to the dollar vs the euro. I certainly hope that I am wrong.