Oil Production, Demand, Technology, and Prices

Oil Skyrockets in Biggest One-Day Gain Ever, Almost $11 because of the idea of using oil as a dollar hedge, if the dollar increases in value. The idea was supposed to be if the dollar went up, oil would go down.

Nobody is understanding the price of oil. India is subsidizing it, but recently has decided to reduce their subsidizing. So has Taiwan, China, Malaysian, and Taiwan. So do many countries in the Middle East. With the high Euro, Europe has not had their prices increase as much as the US, but they still have increased.

Many of the deposits of oil are in countries that are or have nationalized their production. Saudi Arabia, Kuwait, Venezuela, Russia, etc. The effect of shafting their foreign partners is reduced interest in investing. So you want me to invest so you can just reap the reward if their is a payoff? Hmm...

The cost of opening new fields is going up and taking longer. An interesting fact is old oil fields still have at least 50% of oil in them, the issue is the technology necessary to get more oil out is not available yet. The amount of oil that can be taken out of a field has been increasing.

So where is the price of oil going? Nobody knows. I believe technology will provide alternatives to oil that make sense, the question is how soon. Every year solar comes down in price, as does wind, and even Ethanol. The question is when will they be competitive? And if the price of oil crashes like it did after Carter left office, will development of alternate energy get stopped again? I hope not.