04-25-2008
The rapidly rising price of oil is now at about $119 per barrel. This represents an almost 12-fold increase since 1998 (when oil dropped beneath $15 per barrel), and a 400 percent increase in the oil price since just prior to 9/11.
Obviously, oil's cost influences what drivers pay for gas, even though the gasoline price tends to lag several months behind oil price increases.
At my local filling station in Massachusetts, the fellows who change the numbers on the gasoline-price displays must have wrist strain keeping up with the daily increases: from $3.09 to $3.53 in a matter of about a week and a half. This is a familiar scenario for anyone in the U.S. now, where $4 per gallon gas is common in regions such as California.
The speed of oil's price rise is having a jaw-dropping effect, given the complacency with which we typically regard how we use energy. The price of oil affects everything.
A number of different factors are involved, and all of them are not temporary or going away.
- The decline of major oil fields and regions such as the Cantarell Complex in Mexico and the North Sea, and the failure of worldwide production to keep up with demand; the "peak oil" issue we have discussed on these pages.
- Greater demand from emerging large economies like China and India.
- Violence and terrorism in places like the Persian Gulf, Nigeria, and Iraq; pipelines sabotaged, tanker ships being attacked. These places are major conduits and producers of exported oil, the cessation of which causes chaos in the U.S. economy, even if only a small bit of our exported oil is affected.
Diesel fuel has risen to well over $4 per gallon, and this is the viscous stuff that guarantees a steady food supply to the vast majority of Americans, just about everyone who does not have a vegetable garden throughout the year.
Therefore, the price of food, already skyrocketing, increases further (or even, potentially, ceases to be transported at all).
And the U.S. is making half-hearted efforts to provide an alternative means of transporting people, as airline travel is sinking under the weight of huge fuel costs, and endlessly driving around in low-mileage cars will soon no longer be a viable option.
We need to resuscitate our backward train system as soon as possible!