Who, How and Why: $140 Oil and $5 Gas
by Jay Shah
by Jay Shah
Wednesday, January 12, 2011 at 6:51am
The escalation in the price of oil is predicted by the legendary oil man T. Boone Pickens, known for his financial acuity as well as his oil expertise, and John Hofmeister, who retired as president of Shell Oil Company, to sound the alarm about the rate of U.S. consumption of oil.
In an interview with a trade publication, Hofmeister predicted that oil would rise to $4 a gallon this year and to $5 a gallon in the election year 2012. Separately, Pickens--who has been leaning on Congress to enact an energy policy that would switch large trucks and other commercial vehicles from imported oil to domestic natural gas--predicts that oil currently selling for just over $90 a barrel will go to $120 a barrel, with a concomitant price per gallon of $4 or more.
The Obama administration appears to have been slow to grasp the political implications of an escalation in the price of oil. When asked about it, outgoing White House Press Secretary Robert Gibbs referred the questioner to the Department of Energy.
Not everyone is alarmed by the incipient rise in the price oil. Republicans, who are especially close to the oil industry and its Washington lobby, orchestrated by the American Petroleum Institute, think that a great deal of hay can be made while this particular sun shines. They plan to attack the administration for spending too many resources on alternative fuels, over-regulating the industry, and keeping too many federal lands away from oil prospecting. They also accuse the administration of being too frugal with its release of drilling areas in the Gulf of Mexico and on the two coasts, as well as Alaska.
The Republicans have unlikely bedfellows in their quest to politicize the price of oil. They are joined by environmentalists who have long believed that only high prices will break America's passion for the automobile.
Environmentalists have long advocated European-style taxation to drive motorists out of their cars and onto buses and trains.
A third interest group that will take some pleasure in rising oil prices are those who are invested in alternatives such as ethanol, oil from algae and electric vehicles.
Meanwhile, the International Monetary Fund is keeping an eye on the price of oil, according to Caroline Atkinson, director of external relations at the IMF. She told a Washington press briefing that the IMF is particularly concerned with food and other commodities that are directly affected by the price of oil.
Hofmeister, who now heads the non-profit Citizens for Affordable Energy that advocates energy development in all forms, believes that the United States could increase oil production from the current 7 million barrels per day to 10 million, half of its consumption. He told an interviewer from Platt's, an energy publisher and broadcaster, that we were "essentially frittering at the edges of renewable energy, stifling production in hydrocarbon energy," which he said could lead to blackouts, brownouts, gas lines and rationing.
There are already signs that the Republican-controlled House of Representatives is planning a big push for hydrocarbon energy. An indication of this comes from Rep. Fred Upton, R-Mich., a one-time global-warming believer who has dropped that issue from his agenda. He is the new chairman of the House Energy and Commerce Committee.
In periods of high gasoline prices in the past, presidents have found there is very little that they can do. Their options are to reduce the tax on gasoline, sell oil from the Strategic Petroleum Reserve or the Naval Petroleum Reserve. President George W. Bush went a step further: He went to Saudi Arabia twice to ask the Saudis to increase their rate of production. Twice he came back empty-handed.
All of this would be good news for the oil producers and especially those troublesome players, Russia and Venezuela.
Of course, if you believe the human endeavor ends on May 21, better fuel the SUV and hit the road.
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4 people like this.
Bob Schneider T Boone has an agenda with this fear mongering, and he is forthright about it: he wants to sell more natural gas. He has stated it many, many times...what T Boone "forgets" from time to time, is the price of gas at the pump, is not just a function of the price of crude, but just as much, defined by refining capacity. The USA has NOT given a license for a new refinery since Ronald Reagan's first term in office, in about late 1982 (as I recall). Less supply of gas, higher prices...it's pretty basic.
Second: the price of crude is set in free markets, but crude IS AN IMPORT, when the dollar is weak, what happens to all imports? They're more expensive. So while Barak Obama and the Democratic Congress have been killing our current account with Debt, by exchange rates alone, the price of crude has gone up as the dollar drops. So Boone...I love you like a brother...but come on Boone, tell the whole story.
January 12 at 7:32am · Like · 4 people
Aida Solis Build more refineries, and drill, baby drill.. T Boone motive, is all about making a profit pure and simple, and I don't think he's forgotten nothing thats why he will not tell the whole story.
January 12 at 8:21am · Like · 3 people
Sharon Heck Neal Thanks for tagging me on this, Jay. I don't have any suggestions to the subject of the fuel dilema. There's so many variables that I can't keep it straight nor throw a suggestion out there as to what we need to do. I do feel as though higher prices would force us out of our cars, but to stay in a 10 mile radius of home (even for shopping) would be a huge culture shift for us. I am use to owning a car, buying gas, heating & cooling my home, using my laundry dryer, not thinking twice of readliy having hot water - etc. on my meager salary. I saw all the motor scooters & bikes, buses, trains, solar water heaters on roof tops, hanging laundry out to dry, air conditioning being too expensive to use and not being able to own a car when I was in Tel Aviv. NO FUN! Our dollar is on the verge of totally tanking. It's getting to where no other country will accept it. Not many can comprehend what upcoming inflation is going to be like. I'm lost on this one.
BTW, impressive profile picture!
January 12 at 9:23am · Like · 1 person
Modi Pinak @ Jay....Is all this for real? Is the fuel crisis in the US as humongous as your Govt. makes it out to be?
US controls the world's supply of fuel either by occupation of such territories that throw up oil or through business concessions in regions like the Saudi Arabia, Kuwait, the Emirates and of course Iraq!
Further, the use of Dollars as the only currency for settlement of Oil Bills, and the creation of the Petro-Dollar has further strengthed the US's position in controlling fuel/gas prices across the globe.....!
The perception here is that this is all like "crying out WOLF, WOLF"!
January 12 at 10:45am · Like
Kalpathy Ramachandran jay,i accept with mr.bob.when the doller price is down ,all r affected!but with respect to india it is a poor managemant.when during indra' time,our oil price was more than the world prive,and we had lot money in 'oil pool'!but her unrealistic socialist approach,subsidies on others,taking money from oil pool.made this problem!wht all this khan's family is bothered abt the price rise,since they r not affected!more over,they r waiting for the elections in 5 states to b over!
January 12 at 11:38am · Like · 2 people
Md Israel I wish we were producing our own oil so as not to keep us dependent on the Middle East only feeds the coffers of jihad, which the Saudi's fund. Also, we need to give incentives to auto manufacturers and buyers of non-gas dependent vehicles.
January 12 at 7:52pm · Like ·
The escalation in the price of oil is predicted by the legendary oil man T. Boone Pickens, known for his financial acuity as well as his oil expertise, and John Hofmeister, who retired as president of Shell Oil Company, to sound the alarm about the rate of U.S. consumption of oil.
In an interview with a trade publication, Hofmeister predicted that oil would rise to $4 a gallon this year and to $5 a gallon in the election year 2012. Separately, Pickens--who has been leaning on Congress to enact an energy policy that would switch large trucks and other commercial vehicles from imported oil to domestic natural gas--predicts that oil currently selling for just over $90 a barrel will go to $120 a barrel, with a concomitant price per gallon of $4 or more.
The Obama administration appears to have been slow to grasp the political implications of an escalation in the price of oil. When asked about it, outgoing White House Press Secretary Robert Gibbs referred the questioner to the Department of Energy.
Not everyone is alarmed by the incipient rise in the price oil. Republicans, who are especially close to the oil industry and its Washington lobby, orchestrated by the American Petroleum Institute, think that a great deal of hay can be made while this particular sun shines. They plan to attack the administration for spending too many resources on alternative fuels, over-regulating the industry, and keeping too many federal lands away from oil prospecting. They also accuse the administration of being too frugal with its release of drilling areas in the Gulf of Mexico and on the two coasts, as well as Alaska.
The Republicans have unlikely bedfellows in their quest to politicize the price of oil. They are joined by environmentalists who have long believed that only high prices will break America's passion for the automobile.
Environmentalists have long advocated European-style taxation to drive motorists out of their cars and onto buses and trains.
A third interest group that will take some pleasure in rising oil prices are those who are invested in alternatives such as ethanol, oil from algae and electric vehicles.
Meanwhile, the International Monetary Fund is keeping an eye on the price of oil, according to Caroline Atkinson, director of external relations at the IMF. She told a Washington press briefing that the IMF is particularly concerned with food and other commodities that are directly affected by the price of oil.
Hofmeister, who now heads the non-profit Citizens for Affordable Energy that advocates energy development in all forms, believes that the United States could increase oil production from the current 7 million barrels per day to 10 million, half of its consumption. He told an interviewer from Platt's, an energy publisher and broadcaster, that we were "essentially frittering at the edges of renewable energy, stifling production in hydrocarbon energy," which he said could lead to blackouts, brownouts, gas lines and rationing.
There are already signs that the Republican-controlled House of Representatives is planning a big push for hydrocarbon energy. An indication of this comes from Rep. Fred Upton, R-Mich., a one-time global-warming believer who has dropped that issue from his agenda. He is the new chairman of the House Energy and Commerce Committee.
In periods of high gasoline prices in the past, presidents have found there is very little that they can do. Their options are to reduce the tax on gasoline, sell oil from the Strategic Petroleum Reserve or the Naval Petroleum Reserve. President George W. Bush went a step further: He went to Saudi Arabia twice to ask the Saudis to increase their rate of production. Twice he came back empty-handed.
All of this would be good news for the oil producers and especially those troublesome players, Russia and Venezuela.
Of course, if you believe the human endeavor ends on May 21, better fuel the SUV and hit the road.
Like · Comment · Share
4 people like this.
Bob Schneider T Boone has an agenda with this fear mongering, and he is forthright about it: he wants to sell more natural gas. He has stated it many, many times...what T Boone "forgets" from time to time, is the price of gas at the pump, is not just a function of the price of crude, but just as much, defined by refining capacity. The USA has NOT given a license for a new refinery since Ronald Reagan's first term in office, in about late 1982 (as I recall). Less supply of gas, higher prices...it's pretty basic.
Second: the price of crude is set in free markets, but crude IS AN IMPORT, when the dollar is weak, what happens to all imports? They're more expensive. So while Barak Obama and the Democratic Congress have been killing our current account with Debt, by exchange rates alone, the price of crude has gone up as the dollar drops. So Boone...I love you like a brother...but come on Boone, tell the whole story.
January 12 at 7:32am · Like · 4 people
Aida Solis Build more refineries, and drill, baby drill.. T Boone motive, is all about making a profit pure and simple, and I don't think he's forgotten nothing thats why he will not tell the whole story.
January 12 at 8:21am · Like · 3 people
Sharon Heck Neal Thanks for tagging me on this, Jay. I don't have any suggestions to the subject of the fuel dilema. There's so many variables that I can't keep it straight nor throw a suggestion out there as to what we need to do. I do feel as though higher prices would force us out of our cars, but to stay in a 10 mile radius of home (even for shopping) would be a huge culture shift for us. I am use to owning a car, buying gas, heating & cooling my home, using my laundry dryer, not thinking twice of readliy having hot water - etc. on my meager salary. I saw all the motor scooters & bikes, buses, trains, solar water heaters on roof tops, hanging laundry out to dry, air conditioning being too expensive to use and not being able to own a car when I was in Tel Aviv. NO FUN! Our dollar is on the verge of totally tanking. It's getting to where no other country will accept it. Not many can comprehend what upcoming inflation is going to be like. I'm lost on this one.
BTW, impressive profile picture!
January 12 at 9:23am · Like · 1 person
Modi Pinak @ Jay....Is all this for real? Is the fuel crisis in the US as humongous as your Govt. makes it out to be?
US controls the world's supply of fuel either by occupation of such territories that throw up oil or through business concessions in regions like the Saudi Arabia, Kuwait, the Emirates and of course Iraq!
Further, the use of Dollars as the only currency for settlement of Oil Bills, and the creation of the Petro-Dollar has further strengthed the US's position in controlling fuel/gas prices across the globe.....!
The perception here is that this is all like "crying out WOLF, WOLF"!
January 12 at 10:45am · Like
Kalpathy Ramachandran jay,i accept with mr.bob.when the doller price is down ,all r affected!but with respect to india it is a poor managemant.when during indra' time,our oil price was more than the world prive,and we had lot money in 'oil pool'!but her unrealistic socialist approach,subsidies on others,taking money from oil pool.made this problem!wht all this khan's family is bothered abt the price rise,since they r not affected!more over,they r waiting for the elections in 5 states to b over!
January 12 at 11:38am · Like · 2 people
Md Israel I wish we were producing our own oil so as not to keep us dependent on the Middle East only feeds the coffers of jihad, which the Saudi's fund. Also, we need to give incentives to auto manufacturers and buyers of non-gas dependent vehicles.
January 12 at 7:52pm · Like ·
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