The Price of Oil is Falling, Right?
by Michael Graham Richard, Gatineau, Canada on 08.13.08
Don't Celebrate Too Fast
The price of oil has been falling in recent days, and some people are already bringing out the party hats and daydreaming about Hummers. We think that a more sober look at the situation is needed, and thanks to the nice people at The Oil Drum Europe, we have this great graph (above).
Historical Data: Recent Crude Oil Prices
It shows at least 6 different instances during the past 5 years when the price of crude oil dropped by similar percentages to the current drop, but most importantly, it shows an overall trend of 30% yearly increases in price. Nobody can know exactly how big the current drop will be or what the future will hold, but looking at this kind of hard historical data can certainly help put it all in perspective. See also: Offshore Oil Drilling Will Still Not Lower Gasoline Prices, Hidden Oil Subsidies: We Need to END Them
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Damn, look at that trend.
Wow, you guys must really be celebrating. You posted daily if not hourly articles about it when the price was going up. Not a word since it started going down again. But finally! An article that allows you to acknowledge it is going down without admitting it could be real.
I'm as happy as anyone to see high prices driving cars off the road, but that's hardly a reason for such wildly skewed reporting.
sarah, they aren't saying it's real, just that it happened a bunch of times recently too and that nobody talked about it either.
But because $ amounts are much higher now, the same % in drop looks bigger.
Besides, with the fact that people are driving a lot less and buying smaller cars, it's not surprising that prices are going down, especially with the US dollar being a tad stronger recently and the end of the summer vacations nearing.
nothing special in this drop (yet), and that's kind of the point.
Don't forget that Beijing has half their cars off the road on any given day.
I've used mass transit exculsively for my entire career. It's just good sense. No one is 'celebrating' economic misery, we're merely pointing out that you'll feel better, and be a bit richer if you worry about the state of the environment.
Sarah, I thought point was yes prices have gone done in the short term, but year over year we are still gaining and rather quickly at that.
I agree with the author, it is hardly time to break out the party hats and usher back cheap oil. If anything, it's only a time to catch our breath before the real pain begins.
Unless you ride you bike of course :)
Sarah,
Screw these naysayers! Go out and buy that cut rate Hummer! Happy days are here again, and for good!
The price of gas in every other industrial nation has been almost twice what the USA has been paying for the last few decades. This was done artificially, through high taxes. The result?
1. Small cars with good gas mileage. The Brits average 38 MPG, while the Japanese average 45. In the US, we average 22. When gas goes up, the pocketbook takes less of a hit.
2. Investment in public transportation. When people drive less and take more public transport, the infrastructure is in place to handle it.
3. An increase in overall awareness of energy conservation. This has resulted in a much greater percentage of non-fossil fuel energy production in other industrialized countries vs. the US.
The main point of the story remains true. This is but a brief respite in the ever widening gap between the demand for oil and the supply of it.
There are too many unknown variables with oil to make a long-term determination of its economic benefit. OPEC constantly manipulates its numbers so we really don't know the production - only the consumption. Add wars and natural disasters and you've got a complicated recipe for a volatile fuel. This is why one needs to "get off the sauce" - to make the future something more measurable and predictable (besides the environmental benefits, of course). This graph is just a $ cost per gallon - it doesn't show the $ cost in repercussions from its continued use - a far greater number and without the dips.
Business Week did a article on how our fuel has been artificially cheap for a long time and thee has been a lot of negative results like obesity and polution to name a few.
The real price of gas will stimulate clean efficient cars, alternative fuels, electric cars, cycling,dense living even better national security. I cheer high gas prices.
It's pretty disturbing when $3.60 gas instead of $3.95 gas is considered cheap by some. But anyway, this trend is disturbing. By 2010 when all the electric cars are supposed to be coming on the market, gas prices will be around $6.30. That's insane.
This is certainly not something to celebrate over. I certainly am not happy that it will cost me over $60 to fill my tank as soon as next year. What's worth celebrating is that Americans are finally starting to become aware of the folly of over consumption.
What's left out of this story: Bush's lifting of the executive ban on offshore drilling occurred right at the latest high point. The recent price drops have almost certainly been market response to expected future supply increases.
Don't believe it? Watch oil prices as the deadline (9/30) approaches for the Dems to renew the drilling ban.