Supply disruptions could cause oil prices to rise, peaking around year 2010 costing $80 per barrel

On June 7th 2004, oil reached $42 for just one barrel on the New York Mercantile Exchange. Most analysts say that the price of oil will eventually return to $30-$35 a barrel. However, some say that there are too many other factors to take into consideration to know better. First, the oil producing countries around the world were producing eight percent more oil than necessary in 1991, but now it is around three percent. We are using up the oil reserves very quickly. Because India and China are growing economically, they are beginning to use more and more oil. Before we know it, there will be 2.4 billion new vehicles on the road that will use even more oil. This will probably increase the cost per barrel to around $80, which comes to a little more than $4 a gallon of regular gasoline. On top of this and many other factors that will either slow or stop production completely, a new study has told us that we could exhaust our oil reserves as early as the year 2010.

Most Americans know that we are consuming way too much, but most don’t know that we consume 19.7 million barrels per day! That’s more than Japan, China, Germany, Russia, Brazil, and India, the next 5 leading nations in oil consumption all combined. What amazed me the most was that the nations we get most of our oil from, were among the lowest oil consuming nations in the world. In fact, we consume more than six times as much as Saudi Arabia, Turkey, South Africa, & Iraq combined.


D said...

We do need to consider that yes we do use more oil than a combination of other nations but other nations rely less on automobiles than we do. The oil producing countries rely even less on automobiles than do Japan, China, etc.
Does the future estimate of automobiles on the road only encompass America or is it a worldwide estimate?

kamm said...
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kamm said...

This is a very interesting article because it is one of global importance, especially to the more developed countries. I think it is an important issue but I also think that the media and other sources blow it out of proportion. I'm not sure what source said that we could use up all of our oil reserves by the year 2010, but I think it may be one of the many "scare tactics" given to use to make us more frugal in our oil usage.

There is no question that we are using a lot of oil here is the United States, but we are one of the most industrious (if not the most industrious) nations in the world. So naturally we will continue to use more oil than many nations. Per capita, we are fourth on the list usinig 67.85 barrels, per 1000 people, per day. Singapore is at the top of the list using 156.66 barrels per 1000 people, per day, followed by United Arab Emrites and then Qatar.

I enjoyed the article!

3:12 PM

Dr. Tufte said...

Two big factors in the declining production of oil around the world are geo-political. First, Iraq, potentially one of the largest producers of crude oil has been offline essentially since 1991 (due to war, embargo, another war, and now terrorism). Also, Venezuela's production is down because their dictator has gotten rid of a lot of oil workers he had political problems with, thus decreasing productivity.

As to using up our reserves, there simply is little evidence of that. The division of known reserves by current consumption has indicated that we will run out of oil in a few years ... for over a century. The problem with this analysis is that oil reserves are not fixed - running low is an incentive to find more (just like no food in the fridge is a sign to go to the grocery store).

Gotta run ... the kids want to see Spiderman at Lin's. I'll continue this post later.