OIL PRICES
Getting to the Bottom of Crushing Oil Prices: Part 2
What’s driving our new oil reality—supply and demand or rampant speculation? BY KEITH REID
A 16
S WE NOTED IN PART ONE OF THIS ARTICLE, MUCH OF THE public commentary relative to the general increase in oil prices, particularly in the financial media, centers on oil price movements relative to traditional metrics related to supply and demand. Supply (both reserves and produc- tion) is seen by some to be on the verge of a plateau and soon a decline, while demand in developing nations like China, India and regionally the Middle East is expected to ramp up dramatically. Policy decisions relative to the off shore drilling moratorium, or the utilization of the petroleum reserve or climate change policy are also seen to factor into current oil prices. Of course the recent Middle Eastern turmoil is trig- gering a traditional price spike. This second part of the article takes the counterpoint, that while the fundamentals might
MAY 2011 | FUEL OIL NEWS | www.fueloilnews.com
have some impact, factors beyond the fundamentals might be adding significantly to the price of a barrel of oil, a gallon of heating oil or a gallon of gasoline.
GLASS HALF EMPTY OR HALF FULL?
Many have foretold the doom of impending peak oil over the years but somehow technology, ingenuity and drive have kept expanding reserves. In Fuel Oil News’ sister publication, NPN Magazine, a scientist opined in a 1909 article that in 40 years the world would be out of oil. Over 60 years after that date was to have arrived the world is still running on hydrocarbons. Details of the current perspective on the approach of a peak oil type sce- nario were covered in the first part of the article. However, there are counterpoints to those projections.