The Oil Drum

This story is part of my new Countdown to $200 oil series, which is the successor of my earlier, and now terminated by reality, Countdown to $100 Oil series.

As in previous years, I got my ass whipped in my latest attempt to suggest on Daily Kos that gas taxes should be increased, despite the fact that the place is completly dominated by Obama fans and Obama's solid stance against the gas-tax holiday.. Some commenters kindly called me a "rich elitist f*ck from Europe" (guilty on all counts, of course) for wanting to bankrupt poor Americans who cannot do without gasoline, preferably cheap, and are already struggling mightily.....

Today, someone in the NYMEX pit session paid $100.00 per barrel for front month crude oil. (Logical for it to happen during a TOD holiday short staff period). Despite the talking head rationale for today's $4 rally, the underlying reasons for the 8 year+ climb in crude are geologic in nature. $100 oil in itself is no big deal - its 1% higher than $99 oil. But it serves as a milestone reminder that the future is likely to be less 'easy', and perhaps dictated by new rules. Questions abound: will high prices bring about more production? Will high prices begin a "hoarding" phenomenon among exporters and producers? Will $100+ oil spur energy alternatives with the scale and quality of energy dense crude oil? Is this even possible? Will society start to realize the dichotomy between natural capital and financial capital? Will $100 oil reduce demand in developing countries? Will OECD oil-importing countries (like the US) take the lead on changing the cultural carrot of consumption that drives energy use?

What does $100 oil mean to you? Please add your thoughts, links and suggestions.

In an interview with the Financial Times, the Saudi oil minister, Ali Naimi, admits he is powerless in today's market:

We have nothing to do [with] where the price is today. (...) We work very hard and consciously to be sure that whatever actions we take that we are responsible do not dampen economic growth. (...) We are today not producing all our capacity because it is not needed. The demand is not there, the customers are not there.

This was initially posted as Opus 53 of my "Countdown to $100 oil" series on European Tribune.

This is crossposted from the European Tribune, as well as from DailyKos, where this series was started in June 2005 as oil prices were closing in on the $60 mark. All previous installments are listed at the end of this post; most have focused on the physical and political factors that have been pushing prices up and are meant to be read by non specialists (so my apologies if I spend too much time explaining things which may be obvious to regular readers of TOD). A useful companion to this opus is DoDo's Oil price in euros which has various graphs showing oil prices in euros and inflation-corrected in both dollars and euros.

We look back to a week where new record highs were set almost every day for both oil prices (above $93) and the euro (above $1.44) against the dollar. On this round number juncture, we can note that we're less than 10% away from the other symbolic line I chose in June 2005 as a target to be reached inexorably, and that it's pretty likely that this $100 figure will be reached before opus 100 is written (and I expect to continue to stick to writing just under 2 opuses per month as from the beginning).

But rather than focusing on the most recent prices, I'd like to flag a distinction that Michael Klare, in an excellent article over at the Nation (Beyond the Age of Petroleum) makes:

This past May, in an unheralded and almost unnoticed move, the Energy Department signaled a fundamental, near epochal shift in US and indeed world history: we are nearing the end of the Petroleum Age and have entered the Age of Insufficiency. The department stopped talking about "oil" in its projections of future petroleum availability and began speaking of "liquids."