Posted on 06/26/2008 2:02:34 AM PDT by Fred
WASHINGTON — Growing global demand for oil and the fear of supply disruptions have created a "shortage psychology" that is helping keep fuel prices high, a leading energy analyst told Congress on Wednesday.
Many speculators now are convinced the world is "running out of oil," energy expert Daniel Yergin told a Joint Economic Committee hearing. "As prices go up, this psychology becomes self-reinforcing," sending prices higher still - at least, until consumption patterns change dramatically. "We are in an oil shock," said Yergin, chairman of Cambridge Energy Research Associates, a consulting firm. "Four years ago, oil was around $40 a barrel. Today, it is over $135 a barrel and there are alarming predictions of $200 and $250 a barrel."
Shortly before Yergin testified, the government released a long-term energy forecast that suggested price pressures will continue building. The federal Energy Information Administration predicted global demand for energy would grow by 50 percent over two decades.
The biggest jumps in demand will come from China and other emerging economies, which will use 85 percent more energy by 2030, the forecast said.
"Global energy demand grows despite the sustained high world oil prices that are projected to persist over the long term," the report said.
But Yergin, the Pulitzer Prize-winning author of The Prize, a definitive history of the oil industry, said tight supplies and speculation aren't the only factors driving oil prices.
The mortgage crisis has helped push interest rates lower, which in turn has led to a weaker dollar, he noted. A cheap dollar drives up the cost of foreign oil for Americans.
The best way out of this jam is to cut consumption and produce more energy, he said. Americans are now starting to change their driving behavior, he said, which may help lower oil prices.
"In our view, 2007 may well have been the top, the peak, in terms of U.S. gasoline demand," he said.
The average nationwide price for a gallon of unleaded gas was down slightly to $4.067 on Wednesday, according to AAA. The record price of $4.08 was reached June 16, the auto club said.
Yergin urged Congress to pass measures that would boost the use of renewable energy, find new oil supplies and dramatically increase fuel efficiency. But he cautioned against counting on a quick technological breakthrough, saying the role of alternative and renewable sources of energy "will grow" but "the timing and scale remain uncertain."
Well we have done this for 6 straight months to no avail.
He is absolutely right. The hysteria industry that promotes global warning and the threat-of-the-moment has created a virtually psychotic state with regard to the future. People see us as about to run out of everything and are reacting accordingly.
Do you imagine the US taxpayers will be forced to bail out oil speculators should the price of oil fall—ala stupid home buyers and bankers?
50% cut in demand when Democrats finally quit burning gasoline, instead, Democrats burn it in record amounts, then belly-ache about global warming and the environment.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
CERA have got their World Oil Supply projections so wrong for so long they have no credibility.
OPEC sells oil for $136.00 a barrel.
OPEC nations buy U.S. grain at $7.00 a bushel.
Solution: Sell grain for $136.00 a bushel.
Can’t buy it? Tough! Eat your oil!
Do you find it as strange, and regrettable, as I do that America has just simply never been able to press an advantage or go for the jugular? So many times we’ve had adversaries on the ropes and just can’t bring ourselves to finish them off.
I probably need to spend a night in a Holiday Inn Express so I can make sense out of economics of this, but it seems to me there MUST be something we have, the need and don’t have, that we can use for leverage. I just don’t get it and it’s bugged me since the days of the Cold War. We knew the Soviets couldn’t get along without American products and we went right on selling them to them.
If you like $5/gal, Thank Congress.
More useless excuses from the people who got us into this crisis.
PRay for W and Our Troops
The demand trend in the Oil Market is flat supply/rising demand. Until they get off their butts and do something about that, all this silly posturing about “shortage phsycology” is just so much verbal diarrhea
So the solution is for us, instead of buying OPEC oil, to get is else where. Like right here in the USA
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