$100 Oil? "No Problem!", Say WSJ, Economist, Financial Times, NYT, Financial Post

[hatrack]

Peak nationalism
The Economist
Oil keeps getting more expensive-but not because it is running out
---
...It would be natural to assume that ever increasing price reflects ever greater scarcity. And so it does, in a sense. Booming bits of the world, such as China, India and the Middle East have seen demand for oil grow with their economies. Meanwhile, Western oil firms, in particular, are struggling to produce any more of the stuff than they did two or three years ago. That has left little spare production capacity and, in America at least, dwindling stocks. Every time a tempest brews in the Gulf of Mexico or dark clouds appear on the political horizon in the Middle East, jittery markets have pushed prices higher. This week, it was a cold snap in America and turmoil in Nigeria that helped the price reach three figures.

No wonder, then, that the phrase “peak oil” has been gaining ground even faster than the oil price. With each extra dollar, the conviction grows that the planet has been wrung dry and will never be able to satisfy the thirst of a busy world.
Geography, not geology

Yet the fact that not enough oil is coming out of the ground does not mean not enough of it is there. There are many other explanations ...

EDIT

Oil and the Dollar
Wall Street Journal
Oil prices finally hit $100 a barrel this week, albeit briefly, but breaking through that symbolic barrier is ominous and higher gasoline prices are sure to follow. Supply disruptions in various places and surging demand in China and India are part of the explanation for this decade's upward trend in oil prices. But perhaps the biggest factor has been largely overlooked: the decline in the value of the dollar.

...We aren't saying that supply problems and an increase in relative demand haven't played a role in oil's rise. Cambridge Energy Research Associates estimates that "aggregate supply disruptions" reduced oil supply by almost two million barrels a day in late 2007, which isn't helping prices. But the high price of oil is not a vindication of theorists who say we are confronting "peak oil."

A report issued this summer by the National Petroleum Council and energy experts across the spectrum concluded that "the world is not running out of energy resources," though it conceded that "there are accumulating risks to continuing expansion of oil and natural gas production from the conventional sources." Daniel Yergin of Cambridge Energy notes that in the energy markets "most of these risks are above ground, not below ground." By that he's referring to the tendency of politicians to intervene in the energy markets in any number of harmful ways. We'd offer barriers to drilling in Alaska and on the Continental Shelf as Exhibit A and B in this country.

EDIT

Perspectives on US$100 oil
Peter Foster, Financial Post (Canada)
The trading of oil -- briefly -- at US$100 a barrel on Wednesday inevitably brought forth much thumbsucking about symbolism and psychology and tipping points. Even The Wall Street Journal suggested that the (single) trade was "heard round the world." But what, exactly, was the message?

There is no particular significance in a price of US$100, since it is as much a reflection of weakness in the U.S. dollar as it is of the balance of supply and demand. In real terms, the price is still below that reached in 1980 (which equates to almost US$103). If anything, reactions to reaching the alleged "magic number" serve to remind us of the human tendency to numerological mysticism, particularly around numbers with zeros. (Remember Y2K?)

This is not to suggest that a high oil price does not have major economic and geopolitical ramifications. The danger is that policy responses may --as ever --prove counterproductive.

EDIT

Economy and Geopolitics Decide Where Oil Goes Next
Clifford Krauss, New York Times
NOW that the price of crude oil has crossed the $100-a-barrel threshold, and then retreated slightly, what direction will it take now?

Many experts say it will go up, then down, and then maybe up again. That, anyway, has been the pattern of the last several years of volatile prices.

The arguments for even higher oil prices are well known. The economies of China and India are booming and hungry for energy.

...“Predicting oil prices continually demonstrates the perils of prophecy, because oil prices are the derivative of what happens in the global economy and global geopolitics,” said Daniel Yergin, chairman of Cambridge Energy Research Associates. Mr. Yergin said he could foresee oil prices surging as high as $150 in the next few years or falling as low as $40. John Richels, president of the Devon Energy Corporation, an international oil and gas company based in Oklahoma City, said $150 a barrel was possible, but so was $55. “We have to make investments based on our outlook over a long period of time,” he said. “It is tough.”

Central to the question of where oil prices will go is the effect of high prices on the consumption and development of alternative fuels.

EDIT

http://www.energybulletin.net/38853.html

[phantom power]

1. keep chiseling your new stone heads, guys

[baldguy]

2. Oil keeps getting more expensive

because thats how the oil cartels - headed by Bush & Cheney - want it.

[endarkenment]

3. Remember when oil hit 80 and they said 'no problem it aint' 100'?

I do.

They do have a slight point: devaluing the dollar means that 100 is the new 60. However, over the not so long term, the end result will be the delinking of 'petro' from 'dollar', the end of the petrodollar, which will be the end of our currency's reign as the fiat currency, which means that we will start to get managed from abroad by the same globalist forces that manage the economies of other nations. Basically the road we are on right now ends up in Weer Screwn. Unless of course you are a global elite, in which case you don't much care.

[NickB79]

4. Yergin strikes again

Kind of like herpes right before a big date....

[hunter]

5. They'll thinks they is dancing 'til somebody steps on their hands.

And maybe not even then.

When the price reaches $200 all they have to do is change a few numbers and print the same thing:

Perspectives on US$200 oil

Peter Foster, Financial Post (Canada)

The trading of oil -- briefly -- at US$200 a barrel on Wednesday inevitably brought forth much thumbsucking about symbolism and psychology and tipping points. Even The Wall Street Journal suggested that the (single) trade was "heard round the world." But what, exactly, was the message?

There is no particular significance in a price of US$200, since it is as much a reflection of weakness in the U.S. dollar as it is of the balance of supply and demand. In real terms, the price is still below that reached in 1980 (which equates to almost US$206). If anything, reactions to reaching the alleged "magic number" serve to remind us of the human tendency to numerological mysticism, particularly around numbers with zeros. (Remember Y2K?)

This is not to suggest that a high oil price does not have major economic and geopolitical ramifications. The danger is that policy responses may --as ever --prove counterproductive.

[Nihil]

6. Still not sure ...

... whether they are consciously misleading (i.e., have recognised the
problem but don't want to spook the common herd until they've feathered
their nest ready for the big winter) or whether they are simply stupid
(i.e., putting their fingers in their ears, hands over their eyes and
saying "Nyah nyah can't touch me" - not stupid as in "can't add 2+2" but
stupid as in "my faith tells me that 2+2 is 51 so your answer is wrong").

:shrug: