Crude Oil Prices Jump Almost $3 per Barrel; More to Come?

By: Lowell
Published On: 1/31/2007 8:37:07 AM

Yesterday, the price of "light, sweet" crude oil (aka, West Texas Intermediate - WTI) jumped $2.96 per barrel, reaching $56.97 per barrel.  This represented the biggest jump in WTI prices since September 19, 2005, just before Hurricane Rita pounded the U.S. Gulf Coast.  According to the Associated Press, prices rose on forecasts of Arctic cold weather in the Northestern United States, plus "[r]enewed concerns about OPEC production cuts also bolstered oil prices." (note: OPEC is slated to cut oil supplies by 500,000 barrels per day beginning tomorrw, February 1. 

Meanwhile, Reuters notes that "Tension between Iran and the West over Tehran's nuclear program, which helped send U.S. oil to records above $78 a barrel last July, could also prop up prices."  And just yesterday, Senator John Warner called for "gunboat diplomacy" against Iran.  So, is the sharp spike in oil prices yesterday a sign of things to come, or simply a one-day aberration? 

My guess is that oil prices won't keep surging like they did yesterday, but I wouldn't be surprised to see $60 per barrel soon enough, especially if we get an extended cold snap and increased geopolitical tensions with regard to Iran.  Ultimately, any military action against Iran could cause oil prices to exceed $100 per barrel, but for now, perhaps we will simply return to the "anxious market" conditions that have prevailed for much of the past 3-4 years.


Comments



But Tom Davis says oil companies are our friend (Andrea Chamblee - 1/31/2007 9:10:14 AM)
Waxman's hearing Tuesday revealed no surprises when witnesses testified that the administration suppressed scientific information about climate change. After all, under Tom Davis's watch Waxman had pushed for hearings on the administration's refusal to allow government scientists to reveal information about climate change, Plan B, abortion and breast cancer, the cost of its Medicare reform, and air and water quality after 9/11 and Hurricane Katrina, but Tom Davis refused Waxman's request in 2005 to hold hearings on the politicization of science, and refused to meet with whistleblowers.
At this week's hearing, Davis defended the administration's suppression of science saying, "the issue of politicizing science has itself become politicized."

"The mere convergence of politics and science does not itself denote interference," said Davis.

He's an excellent RNC Exec Committee talking head.  Or maybe it's all those nickles he took from oil companies talking.



Has the buildup already begun? (Greg Kane - 1/31/2007 9:25:21 AM)
According to the Sunday Herald / Scotland:

"American forces could be using their two USAF bases in Bulgaria and one at Romania's Black Sea coast to launch an attack on Iran in April," the Bulgarian news agency Novinite said.
The American build-up along the Black Sea, coupled with the recent positioning of two US aircraft carrier battle groups off the Straits of Hormuz, appears to indicate president Bush has run out of patience with Tehran's nuclear misrepresentation and non-compliance with the UN Security Council's resolution. President Ahmeninejad of Iran has further ratcheted up tension in the region by putting on show his newly purchased state of the art Russian TOR-Ml anti-missile defence system.

....at the same time, the Democrats in the Senate are urgently pressing the WH - asking if the Administration feels they have the authority (without further Congressional approval) to attack Iran now.



"Anxious Market" is right (RayH - 1/31/2007 9:43:53 AM)

The market is reactionary. After the huge inflation of oil prices in 2005-6, supplies for this winter were raised. When the weather earlier this winter was unseasonably warm, there was lower demand, prices fell, and suppliers began slowing production. Investors fretted about the economic implications of crude prices dipping below $50 per barrel. How quickly things can change!

With a change in weather increasing demand, and continued instability among oil producing nations, the price of crude is moving up- and that affects nearly every aspect of our economy.

There is a direct link between climate change and economic stability because of our dependence upon oil for everything from heat to transportation to food and materials. As we experience wider swings in weather patterns, we may expect wider cost swings in basic commodities that rely upon oil products.

We need to move more quickly to limit our dependence on oil.



I couldn't agree more. (Lowell - 1/31/2007 10:13:21 AM)
Climate change has powerful national security implications, not to mention all of its other (economic, environmental) implications.  The fact that BushCo has its head in the sand on this issue is almost beyond belief in its idiocy (even by the low standards that this Administration has established for itself!).


Time to take action (RayH - 1/31/2007 12:32:22 PM)
Climate change causes economic and geo-political instability, as well as environmental devastation. It is in our best interest to actively do something decisive about it as soon as possible.

Prominent members of corporate America are now ahead of the Bush administration on this issue. Bush and the Congress need to lead, follow or get out of the way.

Check out the recommendations of the US Climate Action Partnership, which includes high-profile corporations like Alcoa, Caterpillar, Dupont, GE, Duke Energy, (http://www.us-cap.or...).

They presented very specific recommendations to Bush prior to the SOTU address, which you can find in PDF format here: http://www.us-cap.or...

Key to their recommendations: set mandatory caps on carbon emmissions for stationary sources (electric utilities), and build incentives for low CO2 emission vehicles.

Recently, Speaker Pelosi sent out a mass email asking for recommendations about global warming initiatives. I think that the recommendations from USCAP would be a good start.



Scary (Gordie - 1/31/2007 10:42:49 AM)
Last night I went to the NCDC meeting and got home in time to hear Olderman's commentary about Bush's credit for breaking up Terrorist attacks. HA!
But then on Scarbourgh it really became scary. This administration is blaming Iran for the ambush with the black SUV's that killed out troops. It was so well organized that only a county like Iran could orchester such an attack. What was left out is our CIA could accomplish such an attack with Bush's approval.
Any way it sounds exactly like the build up to invade Iraq. Almost to the last word. Yes we could be in for over $5 a gallon gasoline and maybe more. With such an attack we will draw the entire Mideast into this type of war. And there goes our economy down the drain. All because of a Supreme Court that now recognizes they may have made a mistake in 2000.