Wednesday, November 19, 2008

Gas at $1.91/gallon? Amazing

I filled up yesterday and paid $1.91/gallon - it cost me $18 and I was more than 3/4 empty.  That is amazing.

That said, it was not all that unpredictable.  I mean, looking at the basic economic principals answered this question - supply vs demand - what had changed since last year? I mean, why would oil prices spike - and could they continue to stay as high as they were?


Since our entire country has put searching for alternative renewable as their top priority, I do not think demand (or future demand) for crude oil increased.  Any future demand increase would be offset by the increase in usage of alternative energy sources.  So it is safe to say that demand didn't change

Obviously there was some change in the supply of crude oil that sent prices skyrocketing - but was this actual supply or perceived supply? I mean, did any country significantly threaten to decrease they oil supply to the US or other parts of the world? When I think of the major suppliers of oil I think UAE, Saudi Arabia, Kuwait, and then Iraq.  The first three countries have very good relations with the US - and they all are highly dependent on exports to fuel their economy - so no way would they threaten the largest importer of oil (the US) with reduced supply - especially when the US could easily impose their will with boycotts or sanctions. So that leaves Iraq - which certainly has had issues with producing oil and exporting it since the US has taken up the war. But their exporting capabilities were very very low to begin with - they actually have little infrastructure to export the oil - most of their oil stays within their country and the middle east.

So I guess what I am saying is, I don't understand how the ACTUAL supply of oil could have been changed all that much.  I think there was a perceived supply issue, but somehow that was blown way out of proportion and the end user consumer paid the price for over a year

Whatever this was all about - I'm glad the economy has straightened it out and I'm paying less than $2 a gallon!

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