[news] Oil Hits $100 a Barrel for the First Time

[Mostly Water - "Canadian" and International alternative news feed]

[This article somewhat downplays the fact that we are simply running out of oil and its derivatives, instead saying "supplies have struggled to catch up" with demand. It also leaves the impression that the price of oil might one day return to some lower level, but the likelihood of us ever seeing cheap oil on this planet again, is a long shot. -ron] 

January 2, 2008  
Oil Hits $100 a Barrel for the First Time  
By JAD MOUAWAD

Oil prices reached the symbolic level of $100 a barrel for the first time on Wednesday, a long-awaited milestone in an era of rapidly escalating energy demand.

Crude oil futures for February delivery hit $100 on the New York Mercantile Exchange shortly after noon New York time, before falling back slightly. Oil prices, which had fallen to a low of $50 a barrel at the beginning of 2007, have quadrupled since 2003.

Futures settled at $99.62, up $3.64 on the day.

The rise in oil prices in recent years has been driven by an unprecedented surge in demand from the United States, China and other Asian and Middle Eastern countries. Booming economies have led to more consumption of oil-derived products like gasoline, jet fuel and diesel. Meanwhile, new oil supplies have struggled to catch up. 

Oil markets have become increasingly volatile and unpredictable, with large swings in 2007 that analysts attributed partly to financial speculation, not just market fundamentals. Political tensions in the Middle East, where more than two-thirds of the world's proven oil reserves are located, have also fueled the rise in prices. 

Gasoline has lagged the rise in the price of oil. It stands at a nationwide average of $3.05 a gallon for regular grade, according to AAA, the automobile club. That is below the all-time peak in May of $3.23 a gallon, but it is 73 cents higher than at this time a year ago. Some analysts worry that gasoline could hit $4 a gallon by next spring if oil prices remain at high levels. 

Oil is now within reach of its historic inflation-adjusted high reached in April 1980 in the aftermath of the Iranian revolution when oil prices jumped to the equivalent of $102.81 a barrel in today's money. 

Unlike the oil shocks of the 1970s and 1980s, which were caused by sudden interruptions in oil supplies from the Middle East, the latest surge is fundamentally different. Prices have risen steadily over several years because of a rise in demand for oil and gasoline in both developed and developing countries.

URL: http://mostlywater.org/oil_hits_100_barrel_first_time