What does a barrel of crude oil cost, Alex?
Crude went to a record $50 yesterday. According to the NY Times:
Fueling these gains is the alignment of three events: record high demand, historically low spare production capacity, and a set of potentially destabilizing events in some of world’s the top oil-producing regions, including Iraq and Venezuela, to name only two.
Our good friends, the Saudis, are increasing production to “stabilize prices.” Still, there’s a lot of nervousness in the world, and here’s why…
The increases [in price] come as most oil producers are producing full-out to meet record-high demand, leaving very little spare capacity anywhere in the world. Commercial oil inventories in the United States are close to a 29-year low while members of the Organization of the Petroleum Exporting Countries are producing near their capacity.
“It’s possible that prices could go substantially higher given the right set of circumstances,” said Steve Turner, an oil analyst at Commerzbank in London. “What’s unnerving the markets is that significant disruptions could come from a number of sources.” (emphasis mine)
The problem is most people have had abundant gas and oil around their whole lives (with a few ups and downs), and we seem to think it’s like air or water. But, in truth, the energy supply system is not robust; it doesn’t have a lot of slack to help it over disruptions, increasingly even little ones. It’s kind of like some huge mobile hanging from an art museum ceiling: bump one part of it and the whole thing starts to swing and wobble. And the wobbling even extends to Wall Street. Oil goes up and stocks go down, for good reason.
I’ve expressed concern about the energy thing before, and I’ve learned that I didn’t know much about it. I took it for granted. But I’m learning, and I think every American should do the same. I got The End of Oil by Paul Roberts, a book mentioned in an earlier post. I recommend—just to be an informed citizen—everybody read that one or another of the many books that are out there about the oil/energy system and its significance. It’ll give you a new perspective on a lot of things going on in the world.
The energy system and its impact is way too complex to discuss in any depth here. And my suggestion that that the ACS look at a business model that was less dependent on moving people around in physical space was maybe a little silly. I’m pretty sure that the Society and we citizens are just going to muddle through whatever happens.
But, if you learn more about it, watching the daily gyrations in the price of a barrel of crude (now reported nearly every day in the news) will be a lot more interesting.