It is interesting that once again the oil traders are looking for a run up in oil prices, Statistical Surveys Inc. General Manager Tom Walworth tells RVBUSINESS.com and RVBusiness magazine, for which the Grand Rapids, Mich,-based executive generates periodic policy statements.
We are currently looking at a very similar pace as we had in late 2007 and all of 2008. If you remember the stories in 2008, the world was running out of oil. The developing nations were using supply that they had not used in the past and this, we were told, justified the run up in fuel prices.
Yet, if you take a look at the accompanying graph, we started December of 2007 at a national average price of $3.11 per gallon. In January we went to $3.15 per gallon and by July we were at $4.16. Curiously, in December of 2010 the price for a gallon of gas was $3.11 per gallon. The January 2011 price was $3.14 per gallon.
Does this look familiar?
Let’s look at the rest of the story: By December of 2008 gas was at $1.67 a gallon. This was a 59% decline in gas prices from the high in July of 2008. How could this be when, only months earlier, we were running out of oil? The lack of supply and demand came into play with the price of spot crude at $145.31 a barrel. Every oil producer was pumping as much as they could, and the search for more crude was hot. The end result was the world found more crude, prices dropped and there was a glut of oil.
The search resulted in more oil off the coast of Brazil and Africa. Remember the big find that the United States had in North Dakota, in the Gulf of Mexico and in the Canadian oil sands of Alberta? These did not go away. They continued to produce oil as did other producers. Bottom line, the earth continued to produce ‘Black Gold.’
The fact of the matter is that we have enough oil to take us into the late 2000’s, and after that we have a large supply of natural gas to which conventional engines can be converted if and when that day arrives.
No, it seems as if this run up in fuel costs is due to the ‘anticipation of a shortage,’ not to any real long term shortage. The manipulation of our fuel prices benefit a small group in the short term and will hurt our economy with rising unemployment – this, in an already weak economy.
You need to be concerned with the rising fuel prices. But history shows that this price spike – however severe it may get — should not be long term. Our suggestion: Don’t let the threatened fuel price increase take you out of the market for any fuel-burning product.
Statistical Surveys Inc.