Remember Cheap Oil?
Nov 28th, 2007 at 7:27 am by Susie
Remember when we invaded Iraq, and people were saying, “At least we’ll have cheap gas“?
Stephen Schork, editor of the daily Schork Report energy newsletter published in Villanova, said hedge funds were “buying all [the oil options] they can now,” hoping the prices will rise.
Big funds are betting that people will adjust and keep buying gasoline.
“Everyone thought demand would pull back at $2 a gallon, but it didn’t,” Schork said. “It soared above $3 for a time after [Hurricane] Katrina, and demand remained strong.” He asked: Is the point at which demand will fall “$4? Is it $5? We don’t know.”
Oil prices also are rising from tensions with Iran and its neighbors, said Shawkat Mammoudeh, a Drexel University economist who has studied the oil industry for nearly 30 years.
The weak dollar, which hit an all-time low against the euro Friday, is another factor. “When the dollar goes down, oil producers want to compensate,” Mammoudeh said.
Even in its inflated state, oil accounts for a smaller percentage of family incomes than it did in the 1980s, Mammoudeh said.
Those hardest hit now include poor people and many elderly on fixed incomes, he and others said.
““Everyone thought demand would pull back at $2 a gallon, but it didn’t,” Schork said. “It soared above $3 for a time after [Hurricane] Katrina, and demand remained strong.” He asked: Is the point at which demand will fall “$4? Is it $5? We don’t know.””
Until we have a real energy policy, demand will not fall. That’s part of the whole racket.
What choice do people have, honestly? Here in philly, it gets WAY too cold to take a bike during winter, The price of fuel impacts SEPTA too.
And of course this doesn’t take into account the people who live in the burbs and have to drive to work. What’re they gonna do, quit their jobs?