For the first time in the history of the oil business crude oil settled at over $100 a barrel Tuesday at closing. Price per barrel raised $4.51 for the coming month of March. There are several factors for this: Exxon and Hugo Chavez's dispute over assets, the falling dollar, an oil refinery fire in Texas and OPEC's expected production cuts. Do those factors really warrant an almost $5 increase per barrel? Most of the price jump is speculation on the future of the oil business. The OPEC nations must come to terms that America and other Western European nations have made great strides in gaining energy independence and the usage of 'greener' energy sources.
The most significant cause for the ever increasing oil price is the 'peak oil' theory. The 'peak oil' theory states that at some undefinable point (some analysts say it has come and gone during Q4 of 2007) that the world's oil production output, like any nonrenewable resource, will eventually reach an all-time high and afterward gradually decline. This however, is not a new theory, in the 70's it was predicted that the U.S. would reach its peak. Most analysts will agree that this was true but disagree on the cause. The U.S. hasn't allowed any new refineries since the 70's nor have they allowed any drilling in our largest oil fields located in Alaska.
'Peak oil' scare has been around in some fashion or another since the mid-19th century, when people were making patent medicine from crude oil that bubbled to the surface in Pennsylvania an advertisement for Samuel Kier's Rock Oil cautioned buyers: “Hurry, before this wonderful product is depleted from Natures laboratory!”
With new oil fields being discovered at an exponential rate it is hard to see a peak in the near future. Russian scientists have discovered enormous fields in the arctic which it plans to start drilling in the near future.
Even new discoveries in America's own backyard have put a damper on the peak-oil theory. The field is in the Gulf of Mexico and expected to have at least 10Bn barrels of oil which would make it larger than their current largest oil field in Cantarell.
Why then is the price stil going up and the peak-oil theory still in circulation? International coproate greed doesn't help, the great robber-barons of our age have positioned their lobbyists in every major government the world over. The U.S. Department of Energy, has asked the The National Petroleum Council, an oil and gas research group to hire the oil industry's own Lee Raymond, the former chairman and chief executive officer of Exxon and the famous recipient of a $400 million plus retirement package, to investigate claims of peak oil and production cuts.
The other two prominent reasons for oil's out-of-control increases is the U.S.' declining dollar. The base price of the dollar has fallen drastically compared to the Euro. OPEC has even discussed abandoning the dollar in favor of more 'viable currencies'. The dollars' decline should squarely be placed on our elected officials: from both sides of the Isle. Rampant government spending, a trillion dollar war in the middles east, government waste and corruption, the inability to balance a budget, the use and practice of earmarks and the ease and access congress has to printing money backed by nothing but an assumed debt against our GDP. Until congress gets its books in order the dollar will continue on its downward trend. The other reason for the oil scare is the environmental concerns. Oil companies are gorwing increasingly nervous that one day in the near future a new technology or process could drastically reduce the world's reliance on fossil fuels. The U.S. specifically, needs to deregulate its domestic oil policies, depend on more nuclear and natural sources for energy (dams, windmills, solar power, et al) and get its dollar in order. Once those steps are taken with at least a half-hearted movement it will greatly decrease the effect of high oil prices on the American populace.
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