It’s “certainly possible” that the price of a barrel of oil will push above $100 a barrel, Daryl Guppy, CEO of Guppytraders.com, told CNBC Thursday. “Once you move above $100, then $110 is just clear freeway straight to that level,” Guppy added.

Watch the video here.

The former president of Shell Oil, John Hofmeister, says Americans could be paying $5 for a gallon of gasoline by 2012.

In an interview with Platt’s Energy Week television, Hofmeister predicted gasoline prices will spike as the global demand for oil increases.

“I’m predicting actually the worst outcome over the next two years which takes us to 2012 with higher gasoline prices,” he said.

Tom Kloza, chief oil analyst with Oil Price Information Service says Americans will see gasoline prices hit the $5 a gallon mark in the next decade, but not by 2012.

“That wolf is out there and it’s going to be at the door…I agree with him that we’ll see those numbers at some point this decade but not yet.” Kloza said.

Gasoline prices have been steadily rising. Last week, gas prices crossed the $3 mark for the first time since October 2008. According to AAA figures, prices are up 4% from a month ago and 16% from the $2.585 average a year ago.

Read the entire original story.

University of Michigan professors are working to understand and improve this procedure in an effort to speed up development of affordable biofuels that could replace fossil fuels and power today’s engines.

They are also examining the possibility of other new fuel sources such as E. coli bacteria that would feed on waste products from previous bio-oil batches.

“The vision is that nothing would leave the refinery except oil. Everything would get reused. That’s one of the things that makes this project novel. It’s an integrated process. We’re combining hydrothermal, catalytic and biological approaches,” said Phillip Savage, an Arthur F. Thurnau Professor in the U-M Department of Chemical Engineering and principal investigator on the $2-million National Science Foundation grant that supports this project. The grant is funded under the American Recovery and Reinvestment Act.

“This research could play a major role in the nation’s transition toward energy independence and reduced carbon dioxide emissions from the energy sector,” Savage said.

Read the rest…

As we all live in the present, it is very hard to fully assess the future implications of decisions supported or made by political and business leaders. An extraordinary game of geo-strategy is under way to lock in long-term agreements, notably in the energy sector. At a global level, the transit routes of future oil & gas pipelines become the object of a power struggle involving not only the suppliers and end-users but also the transit countries. Intensive courtships are under way where a ménage à trois, or more, may be the best option to prevent any country from being in a dominating position to rule a region and exercise political or economic pressure.

Let’s take a practical example and look at some of the dynamics behind the Nabucco pipeline and at the different interests involved.

Nabucco and the competing projects

Nabucco is a 3,300 km natural gas pipeline going East to West, with a capacity of 31 billion cubic meters (bcm) per year that would reduce Europe’s dependency on gas supplied by Russia. It will go from Turkey to Austria via Bulgaria, Romania, and Hungary. That project would be in direct competition with the Russian-endorsed South Stream pipeline, with a capacity of 63 bcm per year, that would start from Russia and end in Austria but with two prongs: one via Bulgaria, Greece, and Italy, and one via Serbia, Hungary and Slovenia. Nabucco’s estimated cost is about  €8 billion with a completion date of 2014 while south Stream’s estimated cost is from  €19 to €24 billion with a completion date of 2015. South Stream was launched in 2007 when Russia’s President Dmitry Medvedev was then Chairman of the Board of Directors of Gazprom, Russia’s largest company and the world’s largest gas producer.

Nabucco and the supplier countries

Formidable battles have been taking place between the Nabucco and South Stream backers to sign supply agreements, not only to guarantee that the much needed gas will be made available – as underutilizing the pipelines is not a viable option – but also to secure a political and financial will for the projects. Gazprom is engaged in a battle to preempt gas supplies and to keep European countries from what it considers as a Russian natural chasse guardée such as Azerbaijan and Turkmenistan, though both countries have pledged to supply Nabucco as they understand their vulnerability by not having several export routes.

The courtship is ongoing and in October 2009, Alexey Miller, Chairman of Gazprom, personally went to Baku, Azerbaijan to sign a long-term natural gas purchase and sale contract with the State Oil Company of the Azerbaijan Republic (SOCAR). Following the signature, Miller made a statement, which gives a good insight on what is at stake: ”Russia and Azerbaijan have a common border and have already been connected by the unified infrastructure. This enabled Gazprom to propose the State Oil Company of Azerbaijan Republic the most attractive commercial terms and conditions of gas purchase. Our partnership is logically consistent and fully meets our mutual interests. I am confident that in the coming years the volume of Azerbaijani gas supplied to Russia will increase.”

This statement and contract are interesting because the agreement provides for a supply of 500 million cubic meters starting in January 2010, with potential increases depending on Azerbaijan’s export potential. This comes at a time when Gazprom has interrupted its deliveries of gas from Turkmenistan since April 2009, arguing a lesser demand from Europe. A few days after being in Azerbaijan, Miller was meeting with the President of Turkmenistan but no decision was reached regarding resumption of gas imports from Turkmenistan.

Who is holding whom by the tail?

The dynamics around Nabucco when looked at closely highlights a web of sweet deals corresponding to a complex reality of entangled needs.

Russia has very aggressively pursued locked-in supply agreements for extensive periods of time. The initial idea is that getting a deal in first could work towards keeping other players out. That approach did not end up creating exclusive relationships as countries such Azerbaijan and Turkmenistan appear to have enough supplies to satisfy multiple parties. Pricing agreements were also locked in for specified periods of time but the tumble in world energy prices put Gazprom in a dire situation: Gazprom is reported to have been paying $375.50 per thousand cubic meters (tcm) for Turkmen gas while only paying $217/tcm for Kazakhstani gas and $210/tcm for Uzbek gas. An “unfortunate” explosion in April 2009 that the Turkmens blame on Russia hit the pipeline connecting the two countries and deliveries have stopped. Gazprom stated it had not intention to resume purchasing Turkmen gas in 2009. Turkmenistan is said to be losing $1 billion/month over this issue. With Turkmenistan, Gazprom has a 25-year sale and purchase agreement Turkmenneftegaz signed in 2003. Prices were locked below world market prices, at less than half the price Europe was paying for its gas.  Subsequent price increases were negotiated but in exchange for the promise of higher delivery volumes with 60 bcm of gas in 2007, 60-70 bcm in 2008 and subsequently export up to 80 bcm annually through 2028.

Needless to say that Turkmenistan’s announcement in July 2009 of its willingness to provide gas to Nabucco does not come as a surprise in this context. Similarly the completion in October 2009 of $400 million 188-km section in Turkmenistan of a 7,000 km natural gas pipeline that will reach China is an important step towards diversification. The Turkmen government stated: “Getting gas supplies to China will mark another important milestone in the successful implementation of Turkmenistan’s strategy of diversifying energy export routes to world markets.”

Turkmenistan has been assiduously courted because of it immense gas reserves. In 2008 the oil advisory firm Gaffney Cline & Associates (GCA) conducted a study on the South Yolotan-Osman field and determined that that field alone was the fifth largest in the world, with an estimated 4 trillion to 14 trillion cubic meters of gas. That good new was tampered in October 2009 when reports surfaced that GCA may have been misled (see article: “Turmen Gas – Caveat Emptor” http://www.oilprice.com/article-turkmen-gas-caveat-emptor.html . In any event, the potential of Turkmenistan should not be underestimated.

Nabucco and the transit countries

Several Eastern European countries have been turning their back to Russia and have joined the European Union, espousing the EU’s energy security objectives to reduce its dependency on Russia gas.  The January 2009 showdown between Russia and Ukraine, which resulted on the gas supply to be cut to most of Europe in the midst of winter, could only serve as a wake-up call for the need to diversify energy routes. Bulgaria – which has the ambition to become an international gas hub and that is a party to both the Nabucco and South Stream projects – will benefit from that situation, notably by increasing its bargaining position to negotiate better energy agreements with Russia. It could, among other things, threaten to raise transit fees. Ukraine is using this threat against Russia and in September 2009, Gazprom expected Ukraine to increase gas transit fees by up to 58% in 2010. The stakes are high as transit fees represent a bonanza. While visiting Bulgaria in 2007, Vladimir Putin estimated that Bulgaria could earn up to $2.5 billion per year in transit fees alone.

Russia: just another shrewd player but…

One may think that Russia pockets the difference from rates below market prices, but the reality is that Russia uses the discounted gas for its own domestic needs. It also has been using it to supply Ukraine under very favorable terms, and Ukraine has been very vocal in resisting Russia’s attempts to raise prices. Note must be made that Ukraine imports the bulk of its natural gas from Turkmenistan via Russia. Countries like Russia and Ukraine have been resisting passing on price increases to end-users to avoid social unrest and have been struggling to keep non-competitive industries afloat. One way of doing so is by keeping the cost of energy low. The adverse effect is that Ukraine is one of the most energy inefficient countries in Europe.

A point must be made that Russia should not just be perceived as a natural bully but more as a wounded bear. Russia, like any country, is looking after its own interests and is not always subtle about it, even more so as it feels that everyone is ganging against her, rightfully or not. Russia is also confronted with its own economic reality, most notably the over reliance of its economy and state budget on oil & gas revenues. Efforts to diversify the economy have failed to generate visible results. It is therefore essential for Russia to secure a guaranteed income flow from the sale of it oil and gas, and from the oil and gas of its neighbors, that it buys to resale at a profit or that it routes through its extensive pipeline network for a fee. But things change: sourcing oil and gas from or routing it via Russia is no longer the only option.

… a new transportation mode is emerging

As the gas pipeline battles are under way, a new trend is emerging which is the transition towards Liquefied Natural Gas (LNG). That transportation mode of natural gas through seaborne tankers will open new markets, alleviate the dependency of some countries on existing pipeline routes, and reduce the number of players able to impact proper delivery and pricing.

This article was written by Philip H. de Leon for OilPrice.com – Who offer free information and analysis on Energy and Commodities. The site has sections devoted to Fossil Fuels, Alternative Energy, Metals, Oil prices and Geopolitics. To find out more visit their website at: http://www.oilprice.com

While many Western investors remain fixated on somehow acquiring a slice of Turkmenistan’s natural gas riches, despite a recent scandal over the country’s actual reserves, there is another country further east whose energy and mineralogical reserves have been overlooked – Uzbekistan.

While a number of factors are responsible for this oversight, including relative geographical isolation (Uzbekistan, along with Liechtenstein, is one of the world’s doubly landlocked nations, requiring crossing two other nations to gain access to the oceans), which currently limits energy exports available for the global market, there are a number of pluses that the country has for investors willing to “think outside the box.”

With a population of 27 million, Uzbekistan is Central Asia’s most populous and dominant power. A conservative fiscal policy since 1991, including inconvertibility of the national currency, the som, has shielded its citizens from the hyperinflation that ravaged other former Soviet republics, but the policy previously diminished potential foreign investment.

Since the global recession that began a year ago, however, Uzbekistan’s fiscal conservatism, previously dismissed by the foreign investment community, has looked more and more like a pragmatic policy that isolated the country from the worst aspects of the recession in stark contrast to other post-Soviet states that fervently embraced free market capitalism like Lithuania, whose economy contracted 18.1% this year and is expected to shrink further by 3.9% in 2010. In a move certain to be welcomed by foreign investor Uzbekistan is slowly moving towards making its currency convertible but whenever it happens, for the present the country offers a fiscal stability unmatched by many of its more free-market neighbors.

And now, the good news about the country’s resources. In 2006 Uzbekistan’s natural gas reserves were estimated at 1.798 trillion cubic meters (tcm). During the Soviet era Uzbekistan was the USSR’s third-largest producer of natural gas, accounting for more than 10% of the Soviet Union’s production, trailing only Russia and Turkmenistan. In 1992, the country’s first year of independence, Uzbekistan produced 42.8 billion cubic meters (bcm) of natural gas. Uzbekistan currently produces 60 bcm of natural gas annually, an amount nearly equal to Turkmenistan’s production. Uzbekistan’s reserves are primarily concentrated in Qashqadaryo province and near Bukhara in the country’s south-central region. During the 1970s Uzbekistan’s largest natural gas deposit at Boyangora-Gadzhak was discovered in Surkhandaryia province north of the Afghan border.

Unlike its energy-rich neighbors to the West, Kazakhstan and Turkmenistan, nearly 80 percent of Uzbekistan’s production, about 48.4 bcm, is currently reserved for domestic use at heavily subsidized rates. Of the remaining 12 bcm of natural gas that Uzbekistan exports, more than half currently goes to Russia, with the remainder to neighboring Central Asian states.

Under Uzbekistan’s fiercely patriotic President Islam Karimov relations with Europe’s favorite bête noire, Russia’s state-owned gas firm Gazprom, have been subject to fierce negotiations to win an equitable price for the country’s exports. Like other former Soviet republics, the Uzbek government chafed under Gazprom’s “buy cheap, sell dear” policies and in early December 2008 scored a significant negotiating success by getting an agreement that in 2009 Gazprom would pay $305 per thousand cubic meters (tcm). To put the accomplishment in perspective, Uzbekistan’s state gas company Uzbekneftegaz sold gas to Gazprom for $130 per tcm in the first half of 2008, which then rose to $160 in the second half of 2008.

Those betting on the eventual pacification of Afghanistan and the subsequent pipelines that would crisscross the country to deliver Central Asian gas to the massive Pakistani and Indian markets would also do well to take note of Uzbekistan’s persistent, low key policies over more than a decade attempting to bring peace to its hapless southern neighbor. The initiatives put forward by Uzbek President Islom Karimov during the NATO summit in Bucharest in April 2008 take on heightened importance as one of the few foreign policy ideas offering some hope to quelling Afghanistan’s three decades of turmoil. The text of Karimov’s address is at http://www.jahonnews.uz/eng/sections/politics/address_by_president_of_the_republic_of_uzbekistan_he_mr_islam_karimov.mgr.

Nearly completely overshadowed by the Bush administration’s relentless efforts to have Georgia and Ukraine join the alliance, Karimov proposed that the UN’s Afghanistan “6 plus 2″ assembly, established in 1999, be revived by expanding it into a “6 plus 3″ ensemble by including NATO because of its anti-terrorist operations in Afghanistan among the “six” members Uzbekistan, Tajikistan, Turkmenistan, Pakistan, China and Iran and the “two,” the United States and Russia.

Noting that that it is impossible to solve Afghanistan’s problems without the direct involvement of neighboring countries, which have felt the destructive impact of the Afghan crisis for more than 30 years, as Afghanistan’s problems are now of global nature, Karimov told his audience in Bucharest that their resolution must also be global, with the participation of members of the international coalition that comprise NATO’s International Security Assistance Force (ISAF). Karimov concluded by noting that the current situation in Afghanistan precludes a purely military solution and that while it is possible to continue increasing the foreign military presence there, without a clear model of national reconciliation it will be impossible to end the conflict.

Needless to say, one of the benefits of peace and the aforementioned pipelines for Uzbekistan would be that it could export its surplus gas through Afghanistan to southern Asian markets for a higher price than it receives at home or Gazprom’s miserly accountants. Acting on Tashkent’s belief that economic assistance is of greater utility than military operations, Uzbekistan has become involved in a host of reconstruction projects in Afghanistan, including railways, power generation, mining, agriculture, irrigation, education and the exchange of specialists as well as providing its neighbor with construction materials, metals, fertilizer, food and other goods. Uzbek companies and engineers have built 11 bridges in the Mazar-e-Sharif-Kabul area and are finishing the construction of a 275-mile high-voltage line capable of transmitting 150 megawatts from Termez to Kabul across some of the world’s most mountainous terrain, which when it becomes fully operational next month, will provide power and light not only to the capital but the country’s five northern provinces.

For now, Uzbekistan remains largely a transit country rather than a net energy exporter in its own right. But the fiercely independent nationalist policy that Tashkent has followed since 1991 indicates that any company whose policies most benefit the country will have an inside track, and as the old saying goes, “fortune favors the bold.” Chinese, Malaysian, Russian and South Korean companies have already begun investing in Uzbekistan’s energy infrastructure – what do they seemingly know that American and European companies do not?

This article was written by John C.K. Daly for OilPrice.com – Who offer free information and analysis on Energy and Commodities. The site has sections devoted to Fossil Fuels, Alternative Energy, Metals, Oil prices and Geopolitics. To find out more visit their website at: http://www.oilprice.com

Houston We Have A Problem is about America’s ferocious appetite for oil from the insider’s perspective of the Energy Capital of the World – Houston Texas. The film explores our dangerous addiction to oil through candid insights from the Barons, Wildcatters, CEO’s and Roughnecks that comprise the world of Big Oil. Oilmen on oil addiction.

Has anyone been able to see the film? What did you think?

In a surprising public acknowledgment, Mexican President Felipe Calderon said last week that drug cartels have extended their operations into the theft of oil, Mexico’s leading source of foreign income which finances about 40 percent of the national budget.

At least one U.S. oil executive has pleaded guilty to a conspiracy that involved what prosecutors said was about $2 million in stolen Mexican oil, U.S. Justice Department officials confirmed to The Associated Press.

Exploring our dangerous addiction to oil through candid insights from the Barons, Wildcatters, CEO’s and Roughnecks that comprise the world of Big Oil. This film is an inside look into the culture of oil that explores the history of our dependency that has led us to our current ENERGY CRISIS.

We learn how the perceived perpetrators of this critical American problem understand its complexities better than anybody. These seasoned professionals and New Wildcatters are presenting innovative strategies with a systemic shift to renewable, sustainable energy sources.

For too long, the energy policy of this country has been dictated by lobbyists and knee-jerk political decisions but now, politicians and business are finally joining together for a solution

The film premiered at the AFI Dallas International Film Festival earlier this year. Unfortunately, I wasn’t lucky enough to be there. There is, however, an interesting interview from the festival with director Nicole Torre and producer Eric Mofford where they talk about how the motivation for the film developed out of a conversation where two people, representing two distinctly different political and social perspectives, were able to overcome the obvious obstacles and discuss real solutions to the shared crisis.

I talked briefly with the film’s director Nicole Torre yesterday who told me they are still shopping it around for national theatrical distribution, and the screening schedule and DVD release date is not yet available.

You can learn more about the film Houston We Have  Problem and it’s schedule at their website, or on the film’s FaceBook page.

Click image to enlarge.

The API report wants to emphasis that oil companies only make a 5.5% margin on each drop of oil the buy, refine, and transport to your local filling station.

More interesting are the taxes; nearly a quarter of the money consumers spend at the pump gets fed back to local, state, and federal governments. Any idea why every administration since the 1970′s oil crisis has so far failed to solve our oil addiction? Anyone?

For a while, when the price at the pump was around $1.59 a gallon in the Iowa Quad-Cities, the refining margin on gasoline was negative, MacIntyre said.

“Refiners were losing money in that they were selling the gasoline to wholesalers for less than what they were paying for the crude oil that goes into the refining,” MacIntyre said.

However, they were making money on other products such as diesel and jet fuel, he added.

The price of gasoline is not set by the refiners, MacIntyre said. Gasoline prices, as well as the prices of all the other products refineries make from oil, are set by the market.

Or…

There are a lot of partial explanations. It’s partly due to some refineries cutting production, both to increase profit by reducing supply and to make repairs, at least in California. It’s partly due to the crude oil market being in contango, the term for when “the current month’s (Feb.) future price is trading lower than the futures price for the following month”—which means there’s a lot of oil being bought and stored in tankers for future sale. (The problem: we don’t know how this contango directly translates to higher prices at the pump. Does it create a shortage? Can anyone educate us in laymen’s terms?) Oh, it might also partly be due to the temporary spike in crude prices back at the end of 2008, because often pump prices lag crude prices.

More…

Gas prices continue upward spiral – AAA says for the third consecutive week crude oil prices have declined and retail gasoline prices drifted higher. Consumer demand remains weak and supply is so ample that offshore oil tankers are carrying millions of barrels of crude oil and going nowhere.

Why Do Gas Prices Rise As Oil Prices Fall? – Alvarez has one theory that speculators are behind the increase, betting the crude oil will rise in the coming days. Alvarez does stress, however, that gas station owners have the final say on how they price their gas. 

I’ve written several times, bout OPEC cuts, and crude oil stowed at sea… is this having an effect? What do you think?

From the Indian Ocean to the South Atlantic to the Gulf of Mexico, giant supertankers brimming with oil are resting at anchor or slowly tracing racetrack patterns through the sea, heading nowhere.

The ships are marking time, serving as floating oil-storage tanks. The companies and countries leasing them for that purpose have made a simple calculation: the price of oil has fallen so far that it is due for a rise.

Some producing countries are trying to force that rise by using the tankers to withhold oil from the market, while traders are trying to profit by buying cheap oil now to store and sell at a higher price later. Oil storage has become so popular that onshore tank capacity is becoming scarce.

The crude oil markets are none-to-worried about the “unrest” in the middle east either, it seems. Normally a war (or threat of a war) in that area results in a spike in the price of crude, as futures traders bet on a resulting shortage resulting from direct action or political punishment. But not this time. There was a blip last week, just a hint of warming… but it didn’t last long. 

OPEC lowered its energy demand forecast for 2009, with investors already shrugging off production cuts of 4.2 million barrels a day by member countries. The Organization of Petroleum Exporting Countries said in its January report that it expects world demand for crude will fall 180,000 barrels per day in 2009, compared with the previous year.

Is Gaia herself giving us a glimpse into our financial future? Do the record low temperatures foretell the continued glacerialization of world economies, the freezing of credit, and the icing-over of hope?

Even Hugo Chavez can’t believe his eyes, or the bottom line. He’s busy eating a little crow at the moment, hoping to court western oil companies to help bail him out of the mess he’s created in his oil-rich but cash-starved 

President Hugo Chávez, buffeted by falling oil prices that threaten to damage his efforts to establish a Socialist-inspired state, is quietly courting Western oil companies once again.

Until recently, Chávez had pushed foreign oil companies here into a corner by nationalizing their oil fields, raiding their offices with tax authorities and imposing a series of royalties increases.

But faced with the plunge in prices and a decline in domestic production, senior officials here have begun soliciting bids from some of the largest Western oil companies in recent weeks — including Chevron, Royal Dutch/Shell and Total of France — promising them access to some of the world’s largest petroleum reserves, according to energy executives and industry consultants here.

This economic slowdown, recession, adjustment (whatever you’d like to call it) seems bigger than currently imagined.

Meanwhile, U.S. oil inventories have been rising for months, suggesting that the recession severely cut into energy demand. The Energy Information Administration said Wednesday that crude inventories grew by 1.2 million barrels for the week ended Friday after jumping 6.7 million barrels the previous week…

Refineries are cutting back production because profit margins are next to nil.

Flynn said any existing storage facilities could be flooded with crude as the February contract comes to a close Tuesday, leaving little excess capacity.

“We’re running out of places to put it,” he said. “There’s more oil out there now than we’ve had in a long time.”

It turns out 2008 was the second-best year ever for Saskatchewan in terms of actual drilling with 4,045 oil and gas wells created. Most of that attention is focused on the Bakken oil play and the Weyburn-Estevan area.

Part of the reason that sector has exploded in recent years is the advent of horizontal drilling. Once an experimental technique it’s become common-place in our province, accounting for nearly half of total oil production.

Apparently as world oil prices fall the smaller oil drilling companies are increasingly competitive with the bigger companies, thanks to their lower overhead costs and high demand for the sweeter oil they are pumping that requires less refining. 

Source: CKOM

 My first impression after today’s panels; I’m impressed with the knowledge, experience, focus and pace of this organization – they have a laser-lock on what they intend to do, and are efficient in getting the message out as powerfully as possible.

The panels are impressive leaders in their fields, from geo-political security experts to plug-in hybrid magazine editors. I’m taking many notes.

The attendees are an ambitious and eclectic group of people from a variety of backgrounds who are interested in understanding and solving the current energy crisis. Authors, government officials past and present, entrepreneurs, concerned citizens fill the conference hall – about 150 in all.

I’ve met several authors, a frog farmer, a history professor, a few lawyers, and several “regular joes” who are attending in an effort to ”do something” about this problem. 

I’m not yet sure where I fit in here, but I keep talking to people, and am learning quite a lot.

(Update 10/27/08 – I’m home from Chicago, with enough new information to fill this blog for weeks. I’m currently writing a few entries, and will begin posting them as they are completed.)

Source: IHT.com 

At the beginning of the year, OPEC producers felt confident that strong economic growth and tight supplies would keep oil prices high. When oil crossed the $100-a-barrel threshold in February, the cartel’s president blamed speculators and said there was not much OPEC could do.

But now, panic is gripping producers as prices drop. Oil is down by half since July, and the speed of the decline has stunned oil-rich governments that have become dependent on high prices.

OPEC is worried that prices are going to slip too far. This, of course is great news for consumers, who have been suffering for months paying balooning prices at the pump. It’s also a confirmation that basic rules of supply and demand still work to determine the cost of commodities like fuel. Of course lower fuel prices would be even more welcome if not for the global economic downturn.

Were fuel prices a contributor to the economic crisis - a perfect storm of the housing credit and oil bubbles? I’m sure that high fuel prices helped push consumer confidence down. How can you be optimistic about weathering your other economic problems when every day the price of fuel rises, and never seems to fall. High fuel costs may have pushed us over the economic edge we have be teetering at for the last few years.

Early in the year there were numerous reports from government transportation agencies and commercial groups like AAA that Americans were curtailing driving, driving less that they had the year before, indicating the first decrease in driving in decades. In any case, the oil market is finally reacting to months of run-ups, where we found ourselves paying over $140 for a barrel of oil just a few short months ago. We stopped buying as much, and the price slips.

Now OPEC, the largest oil cartel, may attempt to flex its muscle to prop up falling oil prices and protect their profits, by purposely reducing oil supply. 

Is it possible to demonstrate more clearly the need to find alternative supplies for energy than this? Is it possible to demonstrate more clearly the effect of energy conservation than this? We all participated in the grandest supply and demand experiment of modern history.

Conservation works – and works quickly, without any new technology required. Finding alternative sources of energy, or just stating the intention of finding alternative sources of oil, also works to reduce prices. It doesn’t take years, as predicted by politicians from each side. Speculators and cartels are discouraged when they hear the largest customer has decided to shop around a little. Sellers tend to sweeten the deal in order to keep the customer. It’s less about actual drops of oil, and more about managing human greed. Let’s not be lulled back into old habits by lower prices.

Let’s also remember that relatively small changes in demand led to fairly substantial changes in price. It’s true that Americans are driving less than last year – but it’s only by a small percentage. Look around, there are cars everywhere – moving around all hours of the day. American’s haven’t abandoned their cars, they are just using them a little less, or using them a little more efficiently. I’d like to think we contributed, however slightly.