Thursday, September 11, 2008

Energy prices all about government

Opec has decided to cut oil production to stop oil prices dropping below $100 a barrel.
Fortunately, Saud Arabia may not go along with other cartel members.
But why were prices dropping from their $140 or so peak?
It's all about something the proponents of peak oil don't understand- the market.
Oil prices dropped because the world could not afford to pay such high prices, their slowing economies started using less, thus the price fell.
Unlike what the greenies say, oil won't run out suddently, it's use will eventually decline and alternative fuels will be used more. The market will take care of the problem.
Despite what we might think, governments understand markets too.
Why else has Uncle Helen pushed through her beloved Emissions Taxation Scam that will add 7c a litre to the price of petrol. She wants us to drive less. Same with all the other uses of fuel. She wants us to fly less, transport less, heat less and use less fuel in making stuff.
The cost, as noted this week, will be $60 a week in higher costs to families, and $90 a week in lower wages as the effects work their way through the economy.
Whether we agree with 'climate change' theory or not,this is what Uncle Helen has done.
Meanwhile, over in the USA, the Republicans have picked a VP candidate from an oil-rich state.
Sarah Palin understands the needs of secure energy supplies for the benefit of Americans and the US economy.
Obama and the Democrats will no doubt continue their calls to see fuel supplies locked up for posterity, but OPEC's move will help the Republicans even more.
No way should the US or the economies of any civilised and developed economy should allow themselves to be held to ransom by greedy Arabs , aggressive Russian bears or Venezuelen dictators.
As the saying goes, drill here, drill now, pay less!


Spam said...

7 cents per litre is based on a carbon price of around $30 - $35 / tonne. With the greens amendment requiring credits to come from "green" sources, then that carbon price has been suggested to be $70 / tonne. So double that price.

I've seen some economic sensitivities on carbon taxes for the energy industry, and I can say that even at $35 / tonne, the $100 million that the truckies are claiming is only scratching the surface of the true cost to the energy industry.

Pique Oil said...

To say that oil price is about markets is misleading. Oil is a finite resource and that must be factored into any price. I am not a greenie yet I am firmly in the Peak Oil camp.
Oil will not run out suddenly, but the only indicators that we have of how it will decline are the existing fields and countries that are in post peak decline. Mexico and the UK are examples of two countries that spring to mind. UK is now a nett importer of crude and Mexico is rapidly heading that way. What is happening in the OPEC countries is reliant on their reported figures, and I believe they use the auditing model pioneered by Winston First.
Aunty Helen wanted the ETS to show her future employers/subjects in the UN how she can get things to happen. We mere serfs are collateral damage in that pursuit

Clunking Fist said...

Hey pique.
This will pass like the Peak Food shock of yesteryear. So some countries change from net exporter to net importer. Big deal, it happened in food, too.
It's what's happening to oil resverves in the world that matters.
And what matters is that first world countries are being a bit precious about drilling in their own back yard. They'll get over themslves and their nimby attitude after oil price starts back on an upward trend.
And when nuclear becomes fashionable again, there will likely be a move away from burning coal, oil and gas for electric, which will free up some supply for transport sector.
And who knows what advances are around the corner in terms of batteries and electric or hybrid cars, eh?