Oil Prices

Consider that a Barrel of Oil cost roughly $10 in the late ‘90s and is now hovering around $70.

That’s a 600% increase in 5 years! That’s a MAJOR worry because the US economy is so dependant on Oil.

America is built on the Automobile. Cars burn Gas and Gas is refined Oil. So right away, rising Oil Prices increase your driving costs. In other words the extra $20 or $50 it takes to fill up your car can no longer be used to pay down your credit cards or your mortgage. Increased Oil Prices are a direct tax on your earnings.

But the effects are even more profound than that.

Oil is a part of an energy source called fossil fuels. Fossil fuels are mined from the ground and include Natural Gas and Coal. The fact is that the price of ALL fossil fuels have been rising - which is quite profound if you think about it!

* Your home uses Natural Gas for heating or air conditioning.
* A lot of power plants use Natural Gas and Coal to generate Power.
* Even fertilizer used to grow food contains fossil fuels in the form of nitrates.

In other words, a rising Oil price means almost every single thing you do or consume will go up in Price. A scary thought indeed.

So why are Oil Prices rising?

The Media will have you believe that Oil Prices are high because of the War in the Middle East. No doubt that has something to do with it. The Middle East is incredibly unstable and we rely on Saudi Arabia and friends for nearly 20% of our Oil!

Venezuela, providing us with 10% of our Oil imports, is another important source of Oil. And Chavez, the president of Venezuela is not overly friendly to the United States. Source Oil Industry statistics.

But there is another MAJOR factor.

Many leading geologists are starting to claim that the World has reached what the call Peak Oil. Peak Oil is the term used to describe the fact that Oil demand will outstrip supply and continue to do so year after year after year. In other words, we don’t have enough Oil to meet the insatiable demand (remember China and India are rapidly becoming major users of Oil) in the future. And that can only mean one thing, MUCH higher oil prices.

The great hope is a MAJOR discovery very SOON. There are potentials for a major find in northern Iraq (under difficult circumstances no doubt) or for Prudhoe Bay (Alaska) to come online in a big way or the Canadian Oil Sands to exceed expectations. However the fact is that there will probably not be enough Oil to meet demand and prices will continue moving higher.

This will have a dramatic effect on our lifestyle and the way society organizes itself. Big suburban centers (where all food and produce is trucked in) will no longer be viable!

If you thought $3 gas was bad, what do you think about $10 per Gallon? That’s where we’re heading if Oil Prices continue their relentless march upwards!