Let me address a few key misconceptions about the price of oil.


It is all because of the weak dollar.

True, the price of oil rose because the value of the dollar has gone down. However, the value of the dollar is the same today (with oil at $130/barrel) as it was in the beginning on March 2008 (with oil at $103/barrel). So why has the price of oil increased $27/barrel (about 27% in 3 months) when the value of the dollar has been stable?

Drilling in ANWR is the solution

ANWR has oil predicted oil reserves of approximately 4 billion barrels. To put that number in perspective, the US consumes 20 million barrels of oil per day. The world consumes 83 million barrels of oil per day. If we drilled in ANWR, they estimate we could produce 1 million barrels per day. That is only 5% of what we consume every day. Barely 1% of the world oil supply. Oh yeah, and it would be all gone in 11 years. Do you really think that will solve our problems? Today the Saudi's announced they were increasing production by 300,000 barrels to day. Despite this news, the price of oil went up $2.30/barrel to an all-time record high. 1 million barrels a day is nothing on the global scale. It is just a short term solution to a long term problem. It is like putting a band-aid on a gushing wound, and quite frankly, I don't think that small amount of production will make a difference. Plus, you would have to be an idiot to drill in some of the most sacred environment on the face of the planet. Drilling in ANWR is not the solution to our energy crisis.

The law of supply and demand will cause the oil bubble to burst

That entire statement is so wrong. The rising price of oil defies the law of supply and demand. In May 2003, the price of oil was $30/barrel (hard to believe, huh?). In May 2008, the price of oil is currently $130/barrel. The price has increased 433% over 5 years. Demand in the world has slightly increased from 78 million barrels to day in 2003 to 83 million barrels per day in 2008. Barely a 6% increase.

Oil prices can continue to rise because there is demand for oil. The price has increased 433% in the past 5 years, yet we are consuming more oil than 5 years ago. Is oil worth $130/barrel? Of course it is! If you bought gasoline recently, you are certainly willing to pay $130/barrel. Anything is worth what you are willing to pay for it. If you continue to pay for oil when the price hits $150, $180, $200/barrel, you must believe it is worth the price.


Up until very recently, OPEC had a strategy of not letting oil prices get out of control because they thought if they drove the price too high, the world economy would crumble, and someone would develop an alternative to oil, leaving Saudi Arabia as a piece of desert atop 200 billion barrels of worthless black crap. Oil kept going up and no one has done anything about it (including the US, the worlds richest, most powerful, most technologically advanced country who is the world's largest oil consumer). So recently it seems like they have changed their strategy, and are just going to let oil prices rise, and see how much oil is really worth. My opinion is oil is worth about $200/barrel. That is gas at $6-$7 a gallon. Above that, you will start to see a significant reduction in oil consumption.


In short, the people most responsible for $4/gallon gas are ourselves, because we continue to buy gasoline and not do anything about the rising price of oil. The price of oil is only going to go up and up and up. The only thing we can do to stop it is to stop consuming a big portion of it (by developing an alternative energy) and leaving Saudi Arabia with 200 billion barrels of worthless black crap. Until we switch to an alternative energy, there is really not much we can do. Crude oil was a one time gift to mankind. It was nice while it lasted...now lets get over it.

 

opinions are like........not that your wrong flawed in a few ASSumptions perhaps .... but anyways.

I disagree with your notion that 1 million barrels per day is insignificatant. Using that line of logic EVERY well is insignificant. Thousands of wells make up our daily production, EVERYONE is important. So it only lasts 11 years.... so what. Many wells and discoveries have lasted less time. Its not like we have one oilfield out there producing all of our domestic crude. Let me put this another way. In the few years before I came back into the the airline biz I owned and ran a small corporation. When I purchased that company I asked the current owner who is Five biggest customers where and how much they brought in each month. I tallied it up and it was only about 40% of the revenue each month in the biz, when I asked he said well I have another 100 customers who make up the rest. EVERY customer counts. EVERY oil field counts..if for no other reason than to slightly lessen our needs while we do develop an alternative source......whew.

 

ANWR seems like a nice place for the ol family vacation lol
miles and miles of nothing !google earth it and you will see exactly that .

 

...and so did tech stocks, and so did housing....

 

And they all came down...hard.

 

You can think of a thousand reasons why oil shouldn't be as high as it is. Speculators, evil oil companies, tree hugging hippies, opec, bush, gore, dems, repubs...global warming. In the end though, if you don’t have a plan in place to deal personally with $200-$300 oil, and $5-$10 gas, you're only screwing yourselves. How many of you said when oil was $30 that you'd never see $40, or $50, or $100. The market is what it is. Maybe everyone that advocates the virtues of the free market capitalism should listen to what it’s telling you. If the price of oil goes down after you've enacted whatever your new budget is, well great look at all that extra money you have. If the opposite happens...well…

You should all look up peak oil. Not sayings its here, but sometimes things make you go hmmmmmmm.

 

You are wrong here - what are you comparing the dollar against? You make the statement, "the value of the dollar is the same today," how are you measuring the value of the dollar? On March 1, 2008 one Dollar was worth about .66 Euros. Recently it has hit close to .63, so if you are comparing to the Euro the Dollar is worth less and thus one reason to sell dollars and buy oil. Take the Chinese Yuan in March it was around 7.1 Yuan now it is under 7. You cannot just make blanket unproven statements that are wrong to back up your case.

As to the critics of electric cars claiming they will harm the environment - when was the last time you just threw away your battery? Especially with the high price of some of the more sophisticated lithium ion batteries - there is an economic incentive to recycling them, they are worth money.

 

There is nobody to blame except for those stupid dinosaurs. If more of them would have died, we would have more oil. Then the price would be lower due to more oil underground.

 

Priceless ! rofl

 

Jayray2,
I was using the graph from this website.
http://finance.yahoo.com/currency/co...submit=Convert
For the past 3 months, the dollar has been relatively constant with respect to the euro (at 1.55 dollars to 1 euro). I am just trying to convince some people that the falling value of the dollar has little of anything to do with the recent price jump from $100/barrel to $130/barrel. I don't like people who say "It's all because of the falling dollar, and when the value goes up, the price of oil will be back at $50/barrel."

BS. The price of oil probably will never be below $100/barrel again.

As for the environmental impact of batteries, I think people seem to forget that our gas powered cars use a lead-acid battery. Lithium or lithium-ion batteries would probably have the same environmental impact as our current lead-acid batteries. Plus you would get quite a bit of money for recycling lithium/lithium-ion batteries. I don't buy the argument that electric cars are worse for the environment. They are certainly better for our nation and our economy.