Shalom Life | October 23, 2014

Oil Prices Facing $100 per Barrel

Oil could be on its way to a triple digit price increase as Western deficits soar.

By: Yosef Tastassa

Published: October 25th, 2010 in Business » World

Oil Prices Facing $100 per Barrel

Western economies are at a continuous deficit. Oil refineries in France are striking and the Chinese economy is growing at nearly 10 per cent a year in terms of GDP.

J.P. Morgan analysts say that a combination of the above three elements may cause a rapid increase in oil prices in a short period of time, with the oil even touching $100 per barrel by the end of 2011, or even before that.

Why would oil prices soar again? It could happen because the above means that the US dollar will continue to weaken, world oil stocks will decrease and China will keep consuming higher quantities than before.

What will be the effect of high oil prices? We will again have to pay over $1.30 per liter at gas stations. Electricity prices will jump as well and of course the winters will be very expensive.

The labour market will be the next to suffer. High operating cost at the industrial sectors will slow or shut down many sectors people will lose their jobs.

The automobile industry will suffer directly less new cars will be sold as running costs will be higher. Instead of saving money for a new car, people will spend it on gas.

Oil and human behaviour

When we go back only two years ago, we will find that oil prices touched the scary peak of $147 per barrel. Prices were high for a while, until they dropped to $40 per barrel in 2009, and later returned to the $70 zone with fluctuations of $10 in each direction.

Decision makers did not take the once in a lifetime opportunity to find an alternative solution to the usage of oil for the longterm.

The technology is here. We have all heard of air turbines, hydroelectricity, solar cells and even nuclear energy for the purpose of civilian use. The question is: Will we see it happening in our life time, or will we keep complaining and do nothing.

Other green or renewable energy exists in the market, it's just priority, politics and comfort of private and public sectors.

Currently the world consumption is of 85 million barrels a day. The current number of vehicles on Earth is around 940 million. By 2030, only 20 years from now, the number will be around 1,660 million vehicles, an increase of 36 million vehicles a year, or nearly 100,000 new vehicles moving every day on the surface of our planet.

Every 25 million new cars increase the oil consumption by 2 million barrels a day. This means that by the year 2030, world consumption due to cars will be an extra 57 million barrels. Prices in such a situation can jump not only to $100 but to over 200$ per barrel.

We need alternatives and we need them now, not tomorrow.

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