Monday, January 17, 2011

Price of oil - Here we go again

We may see the price of oil spike sometime during the current quarter. What follows is a quantification of how I arrived at that conclusion and how the entire world can get off of that boom/bust cycle and the associated economic implications.

In a previous post, I quantified the fact that:

A) The soaring price of oil in 2008 was a simple matter of world demand exceeding world supply.

B) ANWR alone (a tiny, but still very important fraction of our VAST domestic hydrocarbon resources) could have ENTIRELY prevented that price spike on a global level.

C) The global recession curtailed world demand, brought global supply back in balance with global demand and caused the price of oil to plummet.

With most of the world economies currently in recovery (to varying degrees), global demand has now risen above the previous record from Q4 of 2007. Global supply has also risen above the previous records from Q1 of 2008. However, because Obama and his Dims continue to prevent the USA from developing our VAST hydrocarbon resources, global demand is once again exceeding global supply and is threatening to send the global economy back into recession. The quantitative facts are documented below:

On 11/15/2010, I produced this chart documenting that
global demand once again exceeded global supply.

Click the image to enlarge it:
Click the image to enlarge it
Source: this spreadsheet downloaded from this page
3/6/11 Update: Click here for an updated chart showing Q4 of 2010.

On 12/10/2010, the IEA published this chart reaffirming
what had already been released in their spreadsheet:

Click the image to enlarge it:
Click the image to enlarge it
Source: Click here

For a variety of reasons, the price per barrel has risen from
recent lows and is roughly back in line with long term trends.

Click the image to enlarge it:
Click the image to enlarge it
Source: this spreadsheet downloaded from this page

My previous analysis concluded that there was about
a 2 quarter lag between a supply/demand imbalance
and a steeply rising price per barrel of oil.

Click the image to enlarge it:
Click the image to enlarge it
Sources cited within a previous post on my blog.

If the past repeats itself, we should see the price of oil soar in the very near future (sometime this quarter). Gasoline prices will not be far behind.

If you don’t like these economic roller coaster rides, I suggest you vote for somebody who will allow the USA to develop our vast hydrocarbon resources!

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