It has been a long time coming. After a big move in 2007, the markets hoped that oil would stay put in the $90 range. OPEC has been pumping at the same rate for most of the year; so have Mexico, Venezuela and most big African producers.
The theory was that demand would drop off in big consuming nations like China and the U.S. because the economy's growth has been slowing. But there are no figures to show that this has happened.
Oil moved above $100 for the first time today. As Joe Lazzaro had already posted, political trouble in Nigeria and Pakistan were partly to blame. Concerns about U.S. supply during a cold winter contributed.
According to MarketWatch, "US crude inventories have likely fallen by 1.8 million barrels in the week ending Dec. 28, according to a Dow Jones Newswires survey of analysts."
Those are the easy answers, though. The harder facts are that oil-producing nations are keeping more of their crude to build their own infrastructures and support growing numbers of cars and trucks within their own borders. Crude is getting harder to find and it is more expensive to drill, especially in deep water. The appetite for oil in the U.S. is not going away. In China, the government underwrites that cost of gas and diesel to keep the economy moving, so cheap supply is provided by the national treasury.
It is not the short-term price of oil that should trouble the market. It is what is likely to happen over the next ten years.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
1-02-2008 @ 1:56PM
Eddie said...
Merry Christmas, Big Oil!
BOHICA, consumers.
1-02-2008 @ 2:26PM
Michael Smith said...
Black Cocaine...and the cartels are laughing all the way to the banks.
1-02-2008 @ 2:59PM
rational said...
Yada,yada,yada......big oil, big oil....folks the companies don't set the price of oil. besides we americans are so energy spoiled. it is a finite resources with unlimited demand. you use it, it's gone forever simple economics 101
1-02-2008 @ 3:21PM
DocWho said...
We had our chance for energy independence beginning with the lessons of the seventies, but like all things American stupidity, egotistic blindness , and pure greed won out ! Bring on those multimillion mcMansion, those gas sucking suv, etc. etc.
1-02-2008 @ 3:23PM
Ray Larson said...
I live in OKLAHOMA. We are second largest state producing and refinining oil. Every well owner here feels $100.00 a barrel is cheap!
1-02-2008 @ 7:15PM
JIM said...
god only knows how much bullshit we are being fed . I think the big oil companys lie to us all the time just like the repubs.
how are we ,the man on the street supposed to know how much oil they are using in china accept to listen to people that play the commodity markets> and you think they really know how much difference it makes if they have a little skirmish in algeria. opec and the big oil companys make billions a year, just check out dubai.
1-03-2008 @ 11:22AM
fed up said...
Get Bush out of office and the prices will go down.. The economy has fell since he has been in office. Why get oil from pack. when they were dancing in the street after 911??? " Death to the americans" they said. WHY??? Get Bush out of office he has made a mess of eveything. It will take a woman to clean it up as always.