Oil Prices and Supply
First off, if you drive a car that gets less than 20 MPG, you have no cause to protest high prices. You are the problem. The current high prices at the gas pumps are driven by factors that work all the way back to really basic supply and demand issues. People often say that oil is a finite, non-renewable resource. I'll buy the non-renewable part, but not the finite part. OK, oil is technically not infinite, but practically speaking we will never run out of oil. The issue is how fast can it be produced? Today the world is producing about 85MM barrels per day. By all accounts that is with all production going full out. Here's what will happen. When demand for oil and the world's ability to supply it are out of balacne, prices go up because demand is pushing the limits of supply capacity. Two things will happen in response. Consumers will make choices that will curtail their usage of enrgy--short and longer term structural changes; producers will ramp up efforts to deliver mor...