Today, someone in the NYMEX pit session paid $100.00 per barrel for front month crude oil. (Logical for it to happen during a TOD holiday short staff period). Despite the talking head rationale for today’s $4 rally, the underlying reasons for the 8 year+ climb in crude are geologic in nature. $100 oil in itself is no big deal — its 1% higher than $99 oil. But it serves as a milestone reminder that the future is likely to be less ‘easy’, and perhaps dictated by new rules. Questions abound: will high prices bring about more production? Will high prices begin a “hoarding” phenomenon among exporters and producers? Will $100+ oil spur energy alternatives with the scale and quality of energy dense crude oil? Is this even possible? Will society start to realize the dichotomy between natural capital and financial capital? Will $100 oil reduce demand in developing countries? Will OECD oil-importing countries (like the US) take the lead on changing the cultural carrot of consumption that drives energy use?
At some point sooner or later (and my guess is sooner), a shortage of oil or price spike is going to put a lot of pressure on politicians to take to relieve the pressure through policies that have disastrous consequences for the climate — like liquefying coal. That will be one of the pivotal moments in determining the future of our climate. Let’s hope some wisdom and sanity prevail.