All Posts Tagged With: "oil"

Dear Dan, Your answer (June 7) to the subscriber who questioned the need for rampant growth, is just appalling and quite mad.

If we try to solve the energy problem with increased oil production, we’ll just buy ourselves some more time. But eventually, demand will exceed supply, or prices will rise so high that an economy based on cheap energy will perish from the earth.

The International Energy Agency (IEA) gave the oil market a boost when it said supply would remain tight and that the world was in the middle of its third oil shock. Thanks for the newsflash IEA. The IEA announcement did not create a super spike in oil. This leads us to believe oil may be running out of gas, at least in the short-term. Event-driven price increases are almost all played out, barring an Israeli attack on Iran.

Think back to a year ago. This week is the one-year anniversary of the beginning of the subprime crisis. A year ago this week we covered the slow-motion collapse of two Bear Stearns funds, the High Grade Structured Credit Strategies Enhanced Leverage Fund and the High Grade Structured Credit Strategies Fund. On June 22nd of last year, you could still buy a barrel of West Texas Intermediate crude for $68.85. Today a barrel of oil traded on NYMEX will cost you $135.02

There are only two real reasons the price of crude oil has gone up. The first is that more people are using the stuff. And the new users are not the same as the old users. The old users - in the U.S.A. and Europe - are much more sensitive to price pressure than the new users. Incomes in America have been more or less stagnant for 30 years. When the price of gasoline goes up, people have to take money out of other household budgets in order to make it up - or, drive less. Currently, they’re doing both.