Apr 26
8:14 PM

The Phat Price of Oil

According to a 2009 study from the U.S. Energy Information Administration (EIA), the world currently consumes 89 million barrels of oil a day, and by 2030, world consumption would likely be over 100 million barrels. The United States now produces 9.7 million barrels of oil a day, according to the EIA. That's the most oil this country has pumped in 20 years, and puts it just behind Saudi Arabia and Russia as the world's top producer. Since 2005, US oil production has been steadily rising. The United States now produces about a million and a half more barrels today than it did 6 years ago. From 2005 to 2011, at one point, oil hit a record $147 a barrel.  

Oil Minister Wilson Pastor told Reuters in an interview that OPEC did not want prices "shooting up" because that could slow global economic growth. "For OPEC, a normal price range that would not affect the economy and would let oil producers have profits in the long term is between $80 and $90 a barrel," Pastor said, adding that he saw prices stabilizing in the next few months. OPEC Secretary General Abdullah al-Badri said in Iran, however, on April 19 that he did not expect crude prices to fall below $100 this year, even though there was no shortage in the market.  

In a strange catch-22, it is largely due to high oil prices that new oil production is possible in the US. The deepwater drilling, shale rock extraction and other techniques used to increase production are pricey endeavors. It's been a bounty for those that work in the oil and gas industry. In the last ten years the industry has added 2 million jobs, said Rayola Dougher, senior economic advisor for the American Petroleum Institute. The industry now employs over 9 million Americans. These are well-paying jobs. People can earn $15 to $20 an hour right out of high school. With a just a few years experience, $60,000 a year is possible. Petroleum engineers and others with advanced degrees easily clear six figures. It's also been good for oil companies. Thanks to lower taxes, companies generally make much more money on a barrel of oil produced in the United States than they do from North Sea or Middle East crude. [Full Article]  

With oil prices rapidly becoming the hot political topic, the EIA's 2011 EIA Energy Conference, held on April 26 and 27, promises to garner extra attention. The conference topics include a discussion on potential energy source "Game Changers" presented by Dr. Ernest Moniz, Professor of Physics and Engineering Systems at MIT. He stresses that mobility and energy security have the greatest role in implementing the new technologies of photovoltaic cells, batteries for electric vehicles, gas-to-liquids technology, and adding flexibility to fuels. [AR]

Leave a Reply