Reason Magazine - Oil Price Bubble?Of course, since it's an election year...Oil prices climbed to their highest level ever, reaching over $108 per barrel this week. And Americans are feeling this price spike at the pump, with gasoline averaging $3.22 per gallon. An analysis released by the investment firm Goldman Sachs suggested that oil prices might soar to $200 per barrel. Does this make sense?
Not really. Although U.S. crude oil inventories have fallen, gasoline inventories are at their highest since March, 1993, notes Tim Evans, an energy futures analyst at Citigroup's Futures Perspective. World oil production was up 2.5 percent in the first quarter of 2008 over the same period in 2007 while world oil consumption rose by just 2 percent. In fact, world production is projected to be 3.3 percent higher in the second quarter and 4.1 percent higher in the third quarter than the same periods a year ago. On the other hand, world demand is projected to rise by just 1.6 percent over the next six months.
Reason Magazine - Springtime for Stupid IdeasThe bubble will pop. Gas prices will go down. The screaming from the left about the evil oil companies will be ignored for a time, unless a Democrat gains the Presidency in November... after which the oil companies will see higher, punitive taxes placed against them for daring to make a profit.In the realm of energy policy, there are a great many bad ideas and a very few good ones. The usual practice of presidential candidates is to 1) sift through all these proposals, 2) separate the wheat from the chaff, and 3) keep the chaff.
This year, the two parties are competing to show who is most eager to discard sound economics and long-term prudence in favor of appeasing aggrieved motorists. Barack Obama and Hillary Clinton are pandering with a proposal to punish oil companies with a windfall profits tax. John McCain has targeted the same group by urging a federal gas tax holiday from Memorial Day to Labor Day.
I understand their proft margin is 8 to 9%. Google's was 25.33%. GE? 13.1%. Bank of America? 22.59%.
Hmm. Maybe they AREN'T greedy, rapacious capitalists? By the way, care to guess what Wal-Mart's net profit margin is?
3.51%. Evil, ain't they?
When the bubble pops - it should get interesting...
J.
Comments (2)
I can hardly wait until the Bakken formation comes up for drilling... and the enviro folks go nuts. The US needs expanded production and, most of all, expanded refinery capacity. We cannot continue to live with a mid-1970's architecture with a few upgrades here and there. Off-shore drilling is far, far safer now than it was in the 1970's, and with far fewer environmental problems. There is plenty of oil as witness the parts of the shelf just in cuban territorial waters having so many overseas organizations drilling there and profitably.
Energy is a long-term problem, and encouraging a permanent shift away from terrestrial energy sources to something far more dependable is already happening... in India. Their first project is to beam satellite solar power down to an island dedicated for that as a receiving station. I believe the basic construction has started and the space based part goes up in the next year or two.
Done not by the US.
Not by China.
Not by Russia.
Not by Japan.
India.
You tell me which of these nations is taking a long-term interest in a permanent energy source...
Posted by ajacksonian | April 25, 2008 9:08 AM
Posted on April 25, 2008 09:08
I'm sure they''ll find some endangered species - perhaps the North Dakota Rock-Hopping Sand Flea - that will need to be 'protected', and used to stop drilling.
(Shakes head.) We've got to do something - at least India's got a clue.
J.
Posted by JLawson | April 28, 2008 7:18 AM
Posted on April 28, 2008 07:18