by John Galt
August 26, 2012 15:50 ET
With soon to be Hurricane Isaac about to slam into the north central coast of the Gulf of Mexico, the problem of peak oil, aka, peak cheap oil is about to rear its ugly head in a major way. Long before a hurricane was a threat or the umpteenth thousand and ninety-ninth rumor of a pending Israeli attack on Iran, retail regular unleaded gasoline prices in my area have skyrocketed from $3.25 per gallon to well over $3.75 in less than four weeks.
Add in dash of Isaac and another rumor of war and voila, we’ll be at $5.00 per gallon before the first tree falls from the storm and the first bomb falls from an IAF aircraft. The only thing missing is a clown like Bill O’Reilly starting his campaign to blame it on those evil speculators again, even if his stand against those “evil speculators” was muted throughout 2007 and 2008 regarding their actions in the real estate market.
That brings us to tonight’s commentary from Ambrose Evans-Pritchard in the U.K. Telegraph:
(click on the link above to read the article in full)
The headline is hard enough for the average person to swallow as one side proclaims we are awash in cheap oil while the other refuses to recognize that it is a combination of government over-regulation along with dollar dilution which has made petroleum products expensive in the U.S. The problem is that the “peak oil theory” is no longer a theory; it is a fact as highlighted by this portion of Mr. Pritchard’s editorial:
Brent crude jumped to $115 a barrel last week. Petrol costs in Germany and across much of Europe are now at record levels in local currencies.
Diesel is above the political pain threshold of $4 a gallon in the US, hence reports circulating last week that the International Energy Agency (IEA) is preparing to release strategic reserves.
Barclays Capital expects a “monster” effect this quarter as the crude market tightens by 2.4m barrels a day (bpd), with little extra supply in sight.
Goldman Sachs said the industry is chronically incapable of meeting global needs. “It is only a matter of time before inventories and OPEC spare capacity become effectively exhausted, requiring higher oil prices to restrain demand,” said its oil guru David Greely.
This is a remarkable state of affairs given the world economy is close to a double-dip slump right now, the latest relapse in our contained global depression.
Hmmmm, peak oil prices in a recessionary environment before Isaac and a major Middle Eastern War. One might want to take a moment and click on the link above to read the commentary in total. Because if anyone turns their head for one minute, gasoline prices might jump ten cents or more. Which in and of itself might cripple the so-called recovery for a decade to come.