August 31, 2005

Oil Down

Katrina Threatens $25 Billion of Damage; Oil Near $70 - Bloomberg

U.S. Decision to Release Oil Sends Prices Below $70 - New York Times

You know its sort of funny, I can't even remember oil passing $70, yet Google News is rammed with stories on how its dipping below...

Winston was smoking a Victory Cigarette which he held carefully horizontal. The new ration did not start till tomorrow and he had only four cigarettes left. For the moment he had shut his ears to the remoter noises and was listening to the stuff that streamed out of the telescreen. It appeared that there had even been demonstrations to thank Big Brother for raising the chocolate ration to twenty grammes a week. And only yesterday, he reflected, it had been announced that the ration was to be reduced to twenty grammes a week. Was it possible that they could swallow that, after only twenty-four hours?
- 1984

Ok, its clearly not that bad yet, but there does seem to be some cognitive dissonance at work here, no? This oil stuff keeps shooting up and up, one small disaster after another. I've never had held the catastrophic faith in the end of oil that some of the "peak oil" proponents have, but what was oil at a year or so ago? Under $30 I think, and while I'm having a hard time finding a good graph (ie one that I can understand) of crude prices, I'm pretty sure NYMEX's site confirms that. Has the levee broken? Or is this just a blip..

All the signs of a clusterfuck are in order. Lots of crying wolf, decades of it. People stop believing the warnings, maybe they understand the warnings, but they don't feel the fear. The prices creep up slowly, punctuated by a series of "one of a kind" events. It's not constant, there are little dips in price, dips of false hopes. Economists try and argue it away with their favorite refrain: "somebody else will take care of it"*. Maybe its just the onset of fall but I'm starting to feel like we are watching an explosion in slow motion.

Now betting that the world is going to end has been a losing proposition, for a few millennium at least. Alternative energy will improve for sure, but will it improve enough? Me personally, I really want to believe Thomas Gold's deep oil thesis, what could be more darkly comedic then a world of nearly unlimited oil? I'm not counting on it though, the world might not end, but that doesn't mean the economy is going to be good does it? Expensive transportation and expensive electricity stab right to the heart of our expensive culture and I'm not too excited to see that go down.

* just to be clear, that is not a direct quote from the site linked in the same sentence, but it is a pretty accurate summation of the faith.

Posted by Abe at August 31, 2005 11:01 AM


Good article, BBC has good graphs for oil