Oil prices at record levels

Serious oil shortage is to be expected in years to come.

New oil price record (more than $134 for barrel, 05/22/2008, New York Mercantile Exchange - NYME) has been set after US government confessed decrease in crude oil and gasoline stockpiles last week, surprising analysts who were expecting an increase. U.S. Energy Information Administration said that crude stocks fell by 5.4 million barrels last week. According to a survey from Platts, an energy research firm, crude oil stocks were expected to be up 900,000 barrels. Some experts are now saying that serious oil shortage is to be expected in years to come, and that will be beginning of the end of oil era.

New record oil price is increase of 34% in this year, and by investment bank Goldman Sachs estimation in second half of this year average oil price will be around $141 for barrel. Same bank estimates that oil price will break $200 for barrel level in year 2010. Last year’s average oil price was $64.20 with price of $55.43 in May. Just for information: average oil price in year 2002 was $26.61.

New factor in oil price increase definitely are rumors about US – Iran war at the beginning of the next year. An Israeli press report that US President George W. Bush intends to launch a military attack on Iran before he leaves office - Tuesdays Jerusalem Post, cited a report on Israeli Army Radio, quoting Israeli officials who had met with Bush and his delegation during their visit to Israel last week. The report also cited the US official as stating that the hesitancy of Defense Secretary Robert Gates and Secretary of State Condoleezza Rice had delayed a decision on military action against Iran.

Weak American dollar is currently the main reason for increasing oil prices, but expected oil shortage and rumors about war with Iran are also big factors in oil prices. Some analysts also believe that China may need to import more fuel to make up for the disruption of other supplies after last week's earthquake.

Tokyo Tower Lights. Is it possible that we're using too much energy? Click on picture for full size.