Citizen Power

Our wallets had it good for awhile, but gas prices are going to rise fast in 2009. Happy New Year!

In December, Civilianism’s podcast reported on the UAE–CNN “Goldilocks Oil” story that said OPEC is prepared to raise oil prices in order to maximize their profits, in response to lowering world oil prices. This is to make up for the fact that people are using less oil and gas. OPEC oil prices will again be manipulated to go up enough to keep their profits stable, so our oil and gas prices are once again going to rise.

Iranian Press reported “Iran says it will cut oil output by 545,000 barrels per day (bpd) from Jan.1 in line with OPEC’s December decision to reduce supplies…. The Organization of the Petroleum Exporting Countries (OPEC), which produces about 40 percent of the world’s crude, agreed in a December summit to cut output by a record 2.2 million bpd to prevent the downward spiral of oil prices.”

“Oil markets are expecting a tough year in 2009 as the global financial crisis is expected to sharply slash demand for oil. According to a Reuters poll, US crude will be traded with an average price of $49 a barrel in the first quarter of 2009 and $58.48 a barrel for the whole year, $14 less than earlier forecasts.”

I don’t believe the prices will stabilize anywhere near $60 a barrel. The CNN story (excerpt below) clearly states that OPEC is planning for around $75 per barrel, and that’s before the probable world response of diminishing need and use for oil in the future. When that happens, the price will go up even more. And because of climate change, we can’t use more fossil fuels, especially with a new Obama administration, because he has said he will fight climate change. Climate change is not fought by burning fossil fuels, it’s fought by replacing fossil fuel use with other types of energy. That will further lower the demand for what OPEC is selling.

The higher oil prices themselves (even only slightly higher) will also lead to more conservation and more alternative fuels, and in response, OPEC will probably raise oil prices even more, and that cycle will probably continue. Add to that the fact that we are at or past peak oil, and the existing world supply of oil is going down from now on. That will lead to desperate countries trying to suck oil out of rocks or tar sands (this is already happening). That’s a very expensive, dirty and impractical process. Under the Obama administration, it won’t last long either. In other words, oil is never going to go down in price to today’s levels again, except for some minor fluctuations.

“In search of Goldilocks The story of Goldilocks and the three bears has a little girl rummaging through a house uninvited to try all three bowls of porridge until she finds one that is not too hot and not too cold. The OPEC cartel — producers of about 40 percent of the world’s oil — is not living through a fairy tale, but in reality is finding it difficult to secure the right price for its crude as economies tumble into recession.

After choosing not to take action at an emergency meeting in Cairo, energy ministers have made their opinions known about what is the Goldilocks price for their product. Saudi Arabia’s Oil Minister, Ali al-Naimi, the swing producer of the group, surprised those who follow this business by declaring $75 a barrel as a “fair price” for crude today.

His Qatari counterpart Abdullah bin Hamad al-Attiyah was hot on his heels saying that colleagues were searching to stabilize prices of $70 to $80 because it is a level which will lead to investment in future production.”

With the year 2008, cheap gas is gone. The writing is on the wall — oil prices will rise and remain high as demand for fossil fuels diminishes in the next 8 years. Oil is the fuel of the past, and we are moving forward with alternative energy. OPEC will become a dinosaur, like the earliest components of the fossil fuels that it continues to push on the world.

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