Global resources essential

The price of a gallon of gas at your local pump is one of the best examples of competing interests in a world getting smaller every day. Why has the price of oil risen from $10 a barrel just nine years ago to the staggering price of $140? Sure we have inflation in this country and in the world but let’s get real. This isn’t inflation. What is the future for oil and what are its implications for everything else we depend on?

One of the world’s best known economic forecasting and market analysis firms is headed by Dr. Horace “Woody” Brock. He recently spoke at a conference in Sydney, Australia (no, I was not there but wish I had been) and offered the best assessment of the oil market I have heard.

He gave three reasons for why the oil market is where it is. The first reason is increasing demand from all over the globe. Even though demand in this country has tapered off, other countries have made up for our weaker appetite for oil. The second reason is about peak oil. I wrote about this some time ago when we were just starting to see peak oil. A few years ago, several of the world’s largest oil fields peaked in terms of production, not because of demand but because of supply. Brock cited the oil production in Mexico that is down 30 percent over the past four years as well as declines in other areas of the world such as the North Sea and Russia. The last reason is the most intriguing and controversial.

Times Argus