Originally Posted by mar123
The reason oil prices were so high to begin with is b/c of the stock market. When the real estate market tanked, investors turned to oil. The prices plummeted for a couple of reasons, the number one being an over supply. Yes, people were driving less, but we also had more oil.
I do not think the barrel of oil will ever reach as high as predicted. First of all, there is plenty of oil- we just need to drill for it. My dh works in the oil services industry and he looks at the reports all the time. There is oil there, but the price per barrel must be at a certain level or is doesn't pay to drill for it in this country. When oil was at $100.00 per barrel, lots of drilling was going on. Right now, many of the rigs have shut down. As supply dips, prices will rise and drilling will start again. If we have another major hurricane that shuts down the rigs and/or the refineries (as with Ike and Gustav) prices will go up again, quickly, because of speculation. If we have a quiet summer hurricane wise, prices should be fairly moderate.
In the 1970s, gas prices were very high when you figure inflation. People never believed they would be low again. However, gas was very cheap for 20 plus years.
However the oil we have left now is not spewing from the ground like it once use to all around the world. It is growing harder and harder to access the usable crude. The price has to go up.
Rigs on the sea are going to get damaged from storms forever that won't change. Just imagine how expensive oil would have to be to even attempt to drill for it in the Arctic! Yet here we are fighting about who owns it.
One barrel of oil from the Alberta Oil Sands costs around $75 dollars to produce. So we have a lot of unemployed Canadians sitting around right now in Alberta. (A good thing. IMO.) Add into that the fact that there is way too much pollution resulting from there and Obama and Harper are under a great deal of pressure to come up with ways to reduce the carbon output. Carbon capture is not going to be cheap.
I think gas prices are going to go up. I think they will because no one really knows exactly just how much oil there is in this world. No one knows for sure so there will always be speculations. I know gas prices will go up because the oil companies would never pass up an opportunity to make some money on those speculations.
I think in the end it will come down to, how much will we pay for it? How much can we afford to pay for it? How much environmental damage will we allow?