Monday, April 21, 2008

New poll finds we are running out of oil

Oil hit a new record high of $117.60 in Nymex trading today and according to the newest Lundberg survey retail gasoline prices jumped 12 cents to a nationwide average of $3.50 per gallon. Gasoline prices are already up 23 percent from a year earlier and the summer driving season is just around the corner. Nymex future prices of a barrel of Wets Texas Intermediate have soared from just under $70 to recent highs in less than 12 month. In 2000 a barrel of WTI cost $20.

Prices have continued to climb higher and higher even in the face of declining demand due to a weakening economy. It is hurting profit margins of cooperations who face ever higher input cost but can not raise prices due to competition. The impact on the consumer is felt even more strongly as retail sales are approaching a negative level and consumer confidence is at a record low.

It is therefore not surprising that the oil punditry of all sorts from the pits and news stations alike are sounding the alarm bell and in the course of it pushing oil prices higher. What is surprising though is the fact that now even the public thinks that high oil prices are here to stay and that the world is running out of the precious energy supply. This is a notion, advocated by experts who believe in "peak oil", which argues that production has reached a peak level.

A new poll finds that a majority of 15 in 16 nations surveyed thinks that oil is running out and will reach a new much higher price in the future. The poll was conducted from 14,896 respondents in 16 nations --China, India, the United States, Indonesia, Nigeria, and Russia--as well as Mexico, Britain, France, Azerbaijan, Ukraine, Egypt, Turkey, the Palestinian Territories and South Korea. The nations included represent 58 percent of the world population.

On average, 70 percent of respondents in 15 countries and the Palestinian territories said they thought oil supplies had peaked. Only 22 percent believed enough new oil would be found to keep it a primary fuel source.

On average four out of five (79%) say that oil prices will be higher in the next ten years, including 55 percent who say they will be much higher.

In my opinion polls are like a still photo capturing the mood of the moment and do by no means reflect the truth. Among all this uncertainties one thing is sure: In the face of a declining dollar the price of a barrel of oil will continue to climb.

source: World Publics Say Oil Needs to Be Replaced as Energy Source

No comments: