I believe I made a statement in a post or comment a few months ago that we would never see gasoline below $3.00 per gallon ever again. Well, last week I saw gasoline advertised for $2.95 per gallon. Peak cheap oil must be a false storyline. Facts must no longer matter.
I WAS WRONG Make sure you take a screen shot. It might never happen again. I mean it might be the last time you ever see me admit that I was wrong, with the likes of SSS, Llpoh, and Stuck ready to pounce on any sign of weakness.
I failed to anticipate a drastic global economic slowdown and the lengths to which Obama and Saudi Arabia would go to try and destroy the Russian and Iranian economies. The energy independence crowd is crowing that the shale oil miracle has achieved nirvana for the American people. There is one law that works the majority of the time – supply and demand.
The reason prices have crashed is because worldwide consumption has stopped growing due to recession in Europe, stagnation in the U. S., and a slowdown in China. There has been no dramatic increase in supply. Adjusted for population growth, the number of miles being driven by vehicles in the U. S. are are at the same level they were in 1995, and down 9% from the 2005 peak. This is not due to engine efficiency. Gas guzzling pickups, SUVs and sports cars still acount for 75% of vehicle sales. The vehicle miles have declined because commerce has been reduced, requiring less trucking, and people without jobs don’t have to drive to work.
This post was published at The Burning Platform on 27th October 2014.