Thursday, May 22, 2008

A Picture Tells The Story

It's a simple picture that really answers the question of why oil prices are skyrocketing (click to enlarge):

Gee, who could've predicted it?

Added: OPEC is coming out today and saying there's nothing they can do about supply. Translated: We're topped out in production. OPEC claims Saudi Arabia has some more capacity but is enjoying the cash flow too much. As I've said before, I don't think Saudi Arabia can do any more either but they don't want the world to know it.

The American public has been trained to simply weather these price storms, enjoy a pullback, then adjust to the new level of gasoline prices. What happens if prices don't level and just continually rise? If what OPEC and peak oilers are saying is true, it's not until demand falls substantially that prices will stabilize. And with a couple billion Indians and Chinese now demanding petroleum, American consumption may not be able to affect prices the way it once did. Maybe Americans will finally have to think about alternative energy and alternative transportation? But hey. What's the hurry?

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