Saudi Arabia to host summit on high gas prices
Since when do we deal with our addiction by going to summits hosted by drug suppliers? Yet here is the Washington Post:
JIDDAH, Saudi Arabia, June 21 — Leaders from oil-producing and oil-consuming nations will meet here Sunday to try to pinpoint the reasons behind the rise in oil prices, which have doubled over the past year, and to find ways to bring them down.
You cannot make this stuff up. I can “pinpoint” the reason prices are high. We are addicted to your product, just like the president said. We will pay any price you charge and do nothing whatsoever to break the addiction. Heck, we will even go to a summit you host to talk about anything but our addiction.
U.S. Energy Secretary Samuel W. Bodman, representing the world’s top oil consumer, said Saturday that insufficient oil production is driving the soaring crude prices. Oil production has not kept up with increasing demand from developing countries including China and India, Bodman said.
Has your head exploded yet? Is Big Media that gullible? Don’t answer that second question. Is the energy secretary unaware that we still use twice as much oil as China and India combined? Is he unaware supply is limited but that his boss has blocked most efforts to reduce demand? (See “Peak Oil? Bring it on!“)
Question for the Energy Secretary: What country’s insatiable thirst for oil imports is most responsible for the tightening world market from 1995 to 2004?
Hint: It’s not China. From 1995 to 2004, China’s annual imports grew by 2.8 million barrels a day. Ours grew 3.9 million.
I think Bodman may be the worst energy secretary of all time, and that is saying a lot. Let’s not forget Bush Secretary of Energy Spencer Abraham, the ultimate delayer, who said in 2003:
Either dramatic greenhouse gas reductions will come at the expense of economic growth and improved living standards, or breakthrough energy technologies that change the game entirely will allow us to reduce emissions while, at the same time, we maintain economic growth and improve the world’s standards of living.
Now Bodman and the Washington Post did provide one useful service in this article. They made clear that oil prices are going to get much, much higher:
“In the absence of any additional crude supply, for every 1 percent of crude demand, we will expect a 20 percent increase in price in order to balance the market,” [Bodman] said.
Until the recent price spike, demand had been rising about 2 percent per year. Given how hard it is going to add much new supply, beyond replacing the decline in supply from any existing countries, we are no doubt facing $200+ barrel of oil in the not-too-distant future.