[Announce] Poor OKC leadership response to peak oil

[Robert Waldrop]

I've been watching the peak oil situation since I signed on as a moderator of 
runningonempty2 at yahoogroups.com in 2001.  It's been interesting to watch the evolution of the public conversation about that issue.  

Bruce Bell, who is often interviewed by the Oklahoman on oil and gas issues, 
in particular, has long been an advocate of "these are just temporary price increases".  In the Oklahoman's article below, he continues to spin the situation.  

To paraphrase -- "Well, as the summer goes on, and people see that supplies 
remain adequate, the price will go down."  What, maybe ten cents a gallon?  Twenty cents?  Big whoop.

Annual Average of the Weekly Average Prices for Regular Unleaded Gasoline, Jan 2001 - Jan 2008

(Note, the formatting didn't come out too well on this.  These numbers are:

Year
Change from previous year
Annual average of the weekly average price for gasoline
Low weekly average gasoline price
High weekly average gasoline price
 
2001
 $1.38
NA
  $1.04
 $1.66
 
2002
 $1.32
 -4.3%
 $1.08
 $1.44
 
2003
 $1.51
 14.4%
 $1.41
 $1.69
 
2004
 $1.81
 19.9%
 $1.49
 $2.03
 
2005
 $2.23
 23.2%
 $1.75
 $3.04
 
2006
 $2.53
 13.5%
 $2.19
 $3.00
 
2007
 $2.76
 9.1%
 $2.11
 $3.21
 
2008 start
 $3.09
 11.9%
 $3.09
 
 Gasoline price, first week of Jan 2001:  $1.377
 Gasoline price, first week of Jan 2008:  $3.09
 % inc:  124.4%
 
This kind of price pattern is certainly in keeping with most peak oil scenarios, a bumpy up and down plateau.  May 2005 is thus far the peak in world oil production.  2005 also saw the big hurricane disasters in the Gulf of Mexico.  Right about then, although often not noticed in the mainstream press, "demand destruction" started in earnest in third world countries.  Most people kept right on driving, generally, taking advantage of our pricing power to direct oil resources towards us and away from Third World countries. 

Such actions have consequences.

In 2002, Zimbabwe lost 70% of its oil imports when Libya decided to no longer accept the local currency in payment for the oil. http://news.bbc.co.uk/2/hi/business/2445539.stm .   When oil prices went over $65/barrel in 2005, Zimbabwe stopped importing any oil.  Since they have no domestic oil production, they became the first nation to literally run out of oil.  http://www.fcnp.com/529/peakoil.htm .  By the fall of 2005, all public transportation ceased operations.   Gasoline hit $36/gallon on the black market.   http://www.fcnp.com/529/peakoil.htm 

That same year, Zimbabwe initiated Operation Murambatsvina, which systematically destroyed the slum neighborhoods of the cities.  Two million people were driven out into the countryside with no means of support or housing.
http://en.wikipedia.org/wiki/Operation_Murambatsvina   .

Meanwhile, in Oklahoma City, what are our leaders' priorities? Stealing the Sonics from Seattle, getting MAPS for millionaires passed, and replacing the Union Station railyard with ten lanes of freeway.  We have heard some good talk from Oklahoma City government in the past year about mass transit, but thus far it is "all talk, no walk".  

Bob Waldrop, Oklahoma City

http://newsok.com/article/3190901/

Spring gasoline forecast could prove expensive
By Jack Money
Business Writer

Motorists in Oklahoma and the rest of the country 
likely could see new record gasoline prices at the 
pump later this year.

Two analysts contacted by The Oklahoman on 
Wednesday didn't predict exact prices.
But Sue Ann Hamm and Bruce Bell both said they 
don't expect prices to drop between now and 
Memorial Day. And Bell expects motorists will be 
paying record-setting prices before the 
traditional start of the summer driving season.

Crude oil prices reached $100 a barrel last week, 
but Hamm said market players already are buying 
oil futures for delivery in November and December 
at $200 a barrel.
Are they betting right? Time will tell, both 
analysts said.

Prices aren't temporary

"I don't think anyone should be writing about this 
being temporary," Hamm said. "Even the government 
isn't saying it's temporary anymore. In the past, 
when the price of oil went up, our government 
would stop buying oil for the Strategic Petroleum 
Reserve and even sell some of it. But today, it is 
still buying oil.

"I don't know where gasoline prices will be, but 
oil drives the price of gas, and I don't see a 
letup."

Wednesday, light, sweet crude with a February 
delivery lost 66 cents to settle at $95.67 a 
barrel on the New York Mercantile Exchange. 
Initially, it traded higher when government 
officials reported crude inventories had dropped 
more than expected. But a report of 
higher-than-forecasted gasoline inventories calmed 
the market.

"The price of oil makes up about 60 percent of the 
cost of a gallon of gasoline right now," said 
Bell, chairman emeritus of the Mid-Continent Oil 
and Gas Association of Oklahoma.
"So, if we see oil go up another $50 a barrel, 
then we are talking about $4 for a gallon gasoline 
in that type of situation. But it is really tough 
with what we know at the moment to up come up with 
a price."

Bell said the nation seems to have an adequate 
supply of gasoline for now, while prices hover 
near $3 a gallon nationwide. Wednesday, the 
average price for a gallon of regular unleaded 
gasoline nationally was about $3.10. In Oklahoma, 
the average was about $2.98.
Season drives price

Likely, prices will start to go up in early May 
this year as the start of the summer driving 
season approaches, Bell said.

Wednesday, he predicted the cost of gasoline 
likely could be in a range of $3.25 to $3.50 a 
gallon then.

"But once we get into the driving season, and 
everyone realizes supply remains available, then 
prices will moderate a little bit - at least they 
have the past four or five summers," he said.

Gas prices in the U.S. in past years often were 
influenced by refinery capacity.
But today, that isn't the driving force, experts 
say. Instead, growing appetites for oil and 
gasoline in India and China are a major factor.

If the U.S. economy were to falter, as some 
analysts predict, then a similar slowdown in the 
Far East might depress its petroleum consumption 
and help U.S. consumers, Bell said.
But if their economies remain strong, it could 
spell trouble.

"Demand in the U.S. is not is what is driving the 
price," said Hamm, manager of crude oil marketing 
at Continental Resources.

China, in the midst of preparing for the Olympics, 
will keep worldwide demand from dropping, even 
though demand growth is flat right now. At the 
same time, production is dropping, Hamm said.

"I don't see oil prices going down. I'd love to 
say this is temporary, but I think this is just 
the very start of the storm," she said.

Contributing: The Associated Press
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