So, good news - we're spending more - on fuel!!

[Darth Vader]

Did anyone else see the latest figures on spending on ITV news this evening?

 

Bad news - people are spending less in the High Street.

 

But on the upside, we're spending loads more on fuel.

 

Great if you're Director of EON or the government, not so great if you are being ripped off so much for fuel you can't afford to buy from the High Street this year.

[carltoncdx]

http://www.petrolprices.com/the-price-of-fuel.html

 

Look about half way down.....enough to make your eyes water:o

[Darth Vader]

http://www.petrolprices.com/the-price-of-fuel.html

 

Look about half way down.....enough to make your eyes water:o

 

No wonder, they can afford such OTT security measures for the Olympics. It's great that they can afford to throw money away, and give it to the bankers, yet, teaching assistants are being given the push, and tax credits are being frozen for hardworking families who are struggling.

 

Of course High Street spending is going down. Families are being squeezed out.

[Nagel]

I don't understand why the price of oil remains high, even in a recession. Normally the oil price drops in a recession, but this hasn't happened this time, probably because there's no recession in the majority of the world, only in Europe and the USA.

[JFKvsNixon]

I don't understand why the price of oil remains high, even in a recession. Normally the oil price drops in a recession, but this hasn't happened this time, probably because there's no recession in the majority of the world, only in Europe and the USA.

 

The price of oil drops in a recession because the demand for it drops, this recession is different from the others because the growth in China has driven the demand for oil causing the price to continue to rise.

 

It'll only get worse, as the demand continues to increase, and the cost of extracting the oil we have left increases as well. Cheap oil is a thing of the past, and any society that built upon the availability of cheap oil will struggle.

 

Maybe we need to invade an oil rich Middle Eastern country?

[Vague_Boy]

I don't understand why the price of oil remains high, even in a recession.

China is now the world's biggest oil importer. They have this crazy approach to economics called "making things". Don't they they know that the true path to economic stability is to spend money you don't have propping up reckless failed gamblers (i.e. bankers) and to pay 8 million people to do nothing while simultaneously flooding the country with migrant workers.

 

The debasement of the dollar through money printing and QE is also a factor.

 

Bernanke Bludgeons China With Inflation in Currency War

 

Oil must be purchased in dollars so any debasement of the dollar means that the price of oil rises. This chart shows the inverse correlation between dollar debasement and rising oil prices.

 

Oil is Inversely Related to the Dollar

 

Devaluing the Dollar: a Warning

 

Also, in the past, the oil producing nations could just ramp up production to meet demand and bring down the price. But with oil production remaining flat for the last 6 years, despite increasing demand (a likely precursor to Peak Oil), this isn't an option.

 

Time to Worry: World Oil Production Finishes Six Years of No Growth

 

As oil prices rose ever higher in the last decade, the optimists kept predicting rising production capacity and plummeting prices. Looks like they got it wrong.

 

We are entering what may be the longest stretch of no growth in world oil production since the early 1980s. But the reasons for that lack of growth differ in ways that ought to make us all uncomfortable.

 

Starting in 1980, production slumped because for the first time in history people needed less oil. After the huge oil price increases in the 1970s, cars suddenly got smaller. People became more careful about combining trips to save gas. A lot of people switched their home heating to natural gas which was considerably cheaper than heating oil. And, in the United States the Congress severely restricted the use of oil for new electric power generating plants. Those using oil began to switch to cheaper natural gas and coal. The whole globe went on an energy efficiency binge.

 

Beyond this, the world went through two recessions, one in 1980 and the second in 1981-82 which turned out to be the worst since World War II (until the current one). That curbed oil demand as economic activity sank. All the while, large oil discoveries in Alaska and the North Sea and furious drilling elsewhere produced a glut of capacity that sent prices from a high near $40 a barrel in early 1981 to about $16 a barrel six years later. As it turned out, all of these factors combined to keep world oil production below its 1980 peak until 1988.

 

Fast forward to 2005 when conventional oil supplies stopped growing and then fluctuated between 73 million and 74 million barrels per day on an annual basis through 2010. (Production averaged 73.8 million barrels per day this year from January through July, the last month for which data is available.) The chain of events following the 2005 peak are both different and worrisome. Following the cessation in growth of conventional oil supplies, the world economy continued to grow until the end of 2007 when it slipped into recession. Prices peaked in July 2008 at around $147 a barrel.

 

But then they plunged to around $35 a barrel in December 2008 as the world sank into an economic slump worse than anything since The Great Depression. With it oil demand and production slumped as well. Then the price did something that few people expected. It bounced back even as overall global economic recovery remained sluggish. Rapid recovery in the Far East, however, created robust demand for oil even as North American and European countries remained locked into an unusually tepid rebound. As a result, last spring prices for Brent crude vaulted above $125.

 

Six years from the ostensible topping out of conventional petroleum production, prices remain considerably higher. Oil prices finished 2005 around $50 a barrel. As of this writing, they are around $90 for Nymex crude and around $110 for Brent crude. This, of course, is exactly the opposite of the trend which occurred in the six years following the 1980 peak. Today, the often predicted rise in conventional supplies has failed to materialize, flummoxing the optimists so much that they simply ignore the data and talk of wonders yet to come.

 

Now, it's not as if high prices haven't sent people looking for more oil and working on more substitutes. The problem is that all of this activity is facing a considerable headwind. It's called depletion. And, as they say in the oil patch, depletion never sleeps. It's going on in every operating well in every country around the clock, 365 days a year. Estimates suggest that the decline in current production capacity might be around 4 percent per year. That means that 4 percent of the current production capacity for oil must be replaced each year just to break even. And, of course, to grow supplies, new production capacity must exceed this amount. But it hasn't, and oil substitutes haven't really grown by any significant amount in the last six years either.

 

The media loves to announce new seemingly large discoveries of oil as if they are the solution to what is really an unfolding liquid fuels crisis. They point to the Tupi field off Brazil which is purported to have 8 billion barrels of oil in it. And, they point to discoveries in the deepwater Gulf of Mexico thought to contain between 3 and 15 billion barrels. And, they point to the 4 billion barrels in the Bakken Shale in North Dakota. It all sounds like a lot. When I ask audiences how long a billion barrels of oil will last the world at current rates of consumption, I often get replies that range anywhere from three months to 5 years. The correct answer is 12 days. Just multiply these multi-billion-barrel discoveries by 12, and you'll realize right away that they are not going to overcome the constraints we are experiencing in oil supplies.

LINK

[Willie Pete]

I don't understand why the price of oil remains high, even in a recession. Normally the oil price drops in a recession, but this hasn't happened this time, probably because there's no recession in the majority of the world, only in Europe and the USA.

 

Oil prices also remain high because of tensions in the middle east. This is good news for Arab countries and Iran.

 

Any time they want the Oil prices bumped up, Iranians make some bellicose announcement/speech - the Oil market then reacts fearing war which would hit Oil supplies.

[iansheff]

Noticed Morrisons at Catcliffe petrol had gone up this morning.