From Pajamas Media:Do you think $140 a barrel is insane? Last week the president of OPEC Chakib Khelil predicted $170 a barrel by summer’s end. More sobering, this week the U.S. Energy Information Administration forecast world energy use to grow fifty percent by 2030.
If that pans out, it would mean the world will need to burn more than 120 million barrels of oil that day. We have it, but can we afford it? Nope, and that is why the oil domain is crumbling.
Hundred of thousands of hybrid cars are being disgorged from Japan to Europe, deeply cutting gasoline use. Those who dismissed solar energy a decade ago as esoteric now embrace it. Fly over entire countries like Israel and Cyprus and much of southern Europe, all with plenty of sun but no oil, and watch millions of solar panel reflectors stare back at you.
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My Comment: I am of the school that oil prices will remain high for the near future. Demand is there and it is growing, and production in Non-Opec countries and Iraq will take a long time to reach levels that will have an impact on price. But the trend is to develop alternative fuels, and only a massive drop in the price of oil today will deter this develop. But for the present .... this is not going to happen.
High oil prices have destabilize world economies, increased poverty and hunger in developing nations, and have forced governments and countries to make alliances or negotiate contracts with regimes that are very unpleasant to deal with. High prices have also filled the coffers of sworn enemies to the West, and have embolden oil producing countries (Iran and Venezuela) that have expressed expansionist goals and objectives. Peace and mutual respect between nations is being replaced by political expediency and short term goals without appreciating long term consequences.
When alternative supplies come online, Iraq oil production is increased to levels that approaches Saudi Arabia's production levels, coupled with an economic slowdown .... the price for oil has the potential to drop to levels that were prevalent 6 years ago($15 to $20 per barrel). Such a price drop would be devastating to the governments of oil producers that are now dependent on high oil prices. Iran, Venezuela, Russia .... the work force of these countries are dependent on government payrolls and subsidies. If these governments lack the resources to provide for their workforce .... the instability that will result will be severe. The decision making process for countries like Iran and Venezuela have not been "stable" for the past decade. If put against a wall where their wealth and power becomes threatened .... I will leave it up to the reader to pounder on what they may do.
