My prediction. Oil will drop to less than $50 a barrel in less than five years. Airlines will make record proffits. If you watch the trend after the oil crisis of the 70's this is exactly what happened in the 80's into the 90's. The combination of Alternative fuels, new oil sources outside of OPEC's grasp being utilized, fuel efficient alternatives, lifestyle changes will not have a instant change in the economy. The displacement will be slow but's it's inertia will last for at least 15 years.

 

wow, an optimist...who'da thunk it? I am with you xj. I think that a combination of all these things will help to keep us going. I think that now is a good time to invest in alternative fuels. I'd concentrate on algae-based bio diesel and natural gas.

 

This is not really valid...in 1973 oil prices were ARTIFICIALLY inflated because OPEC instituted an embargo to punish the US for supporting Isreal during the Yom Kippur war.

Today OPEC is EXTREMELY wary of raising oil prices any more than absolutely necessary...to do so would only hasten the development of alternative sources. They know they will be riding camels and herding goats for a living again at some point in the future, but they'd like to postone the inevitable for as long as they can.

Hopefully someday fuel prices will drop as alternatives become available...but this cannot happen until AFTER we pay the high price of infrastructure development.

 

The cost of Oil was relatively stable before Katrina. Then New Orleans floods, and all of a sudden we will never see gas at less than $2/gal again. That damned hurricane was nothing more than a catalyst for pencil-pushers to artificially raise the price of Oil for good.

 

Again, I think Hubbert's discussion re: oil production peaking is exactly what we're seeing w/ oil prices. If you were an oil company and knew that oil had peaked or was very near peaking, would you invest more money in refining capacity? Of course not. Peak oil means that no matter what you do from this point forward, you will never be able to produce as many barrels of oil as you did yesterday. This is hard to understand here in the US, but on the other side of the world you've got China (1.4 billion people) and India (1 billion people) that are experiencing some exploding economies and an associated increase in demand for fossil fuels. Fossil fuels expand economies and GDP...Last year alone China increased its use of fossil fuels by 25%, they're now the second leading consumer of fossil fuels in the world behind the US. The Chinese economy grew by an astonishing 11 percent last year...yet they're arriving at the party too late as oil production is showing some definite signs that it's peaking. This demand on the other side of the world coupled w/ a peak that has occurred or is about to occur means that oil prices are gonna skyrocket. They'll only go down if we experience a severe worldwide economic recession...that would have a catastrophic impact on us as pilots.

I think alternative fuels are great, but all this talk about alternative fuels saving the day is hogwash. We're addicted to fossil fuels, we worship fossil fuels, and when they start to get more scarce, things are going to get very interesting. Alternative energy is a step in the right direction, unfortunately, we're probably taking that step a little too late in the game at this point. EVERY PILOT SHOULD KNOW WHO M KING HUBBERT IS!!! His ideas are as fundamentally sound and as important as Bernoulli's.

http://www.youtube.com/watch?v=ImV1voi41YY

 

Interesting since Bush was just in Saudi Arabia holding some princes falcon and begging for them to increase production. OPEC is still inflating the price, but give it time the price will drop.

 

Duke,
You are such a friggin pessimist jeez. If we had more refining capacity gas would be cheaper, but that's besides the point. There are other variables you don't take into account because you do not work in the oilfield and so you don't pay enough attention. Here are a few of them that are making the price unstable:

1. Labor disruptions in Algeria
2. Militants in Nigeria disrupt oil production(one of the guys from our company was shot in the head on the way to work)
3. Canada is basically shut down right because of weather

I'm telling that you don't understand the way this market works; anything can make the price jump. Will we see $2/gal gas again? Maybe, it is very possible but I'm not sure. You shouldn't be putting out these doomsday scenarios when you don't understand the nature of the business. The peak oil theory is interesting and can be true in some ways but the problem with it is that we make new discoveries all the time. It doesn't take this into account.

 

I remember in 98-99 gas went down to 80 cents a gallon in Florida. What a blessing for a poor CFI.

 

Mr. Matt...

I don't see myself as a pessimist at all. The data streams are there and all indications, based on numbers from the field, indicate that high-flow oil is peaking. Most pilots are numbers people. When I'm shooting an approach into Aspen, Eagle/Vail, Gunnison, Telluride, etc., I don't like to speculate about the weather. I like to get the weather real early so I can have an idea of what to expect (beyond the TAF) and as a crew we can brief the appropriate approach/balked landing/etc. My approach to peak oil is a byproduct of flying airplanes for a living. Hope for the best, prepare for the worst. All the data out there indicates that worldwide production of oil is at or near its peak. The fact that militants in Nigeria can be blamed for our oil prices gives you an idea of just how scarce supply is right now.

I fly airplanes because I like to fly airplanes...It's fun to fly. Its the reason most of us get involved in aviation. What I'm saying is don't get involved in this industry to get rich. I don't think wages have bottomed out yet, it's turning into a 100K dollar a year job at best(for most, not all yet). I have friends who are working in the oilfields here on the western slope of Colorado who are making more money than senior airline captains. And they've only been out in the gas fields now for a few years. If flying airplanes is the love of your life, then please do it. You'll regret it if you don't. You sound like a good guy w/ a good attitude, which is a must-have in this industry. Just make sure you have a plan B, an alternate in pilot-speak.

The Duke...

 

Expanding on Duke's numbers: There are 10.6, 12 oz cups of coffee in a gallon. Multiply that by 55 gallons per barrel gives 586 cups of coffee. At Starbucks' rate of around $2 per cup, that would be $1173 for a barrel of Starbucks coffee. Either oil is cheap or Starbucks coffee is outrageous and I need to get a life.