The end of cheap oil?

Memorial Day is the traditional start of the summer driving season. Hope you’re flush this summer.

Gas prices are higher than Willie Nelson on the Fourth of July. American Airlines, pressed hard by high jet fuel prices, shocked flyers last week by announcing plans to start charging for transporting luggage. Every day brings more evidence that life is changing under the petroleum price assault.

“Does it trouble any of you when you see what you’re doing to us?” blustered Sen. Dick Durbin, the Illinois Democrat, to oil executives last week. Demagoguery is not going to address this crisis, which is about insufficient supply to meet growing demand. The International Energy Agency reportedly will sharply downgrade its forecasts of future oil availability. IEA chief economist Fatih Birol told The Wall Street Journal, “The oil investments required may be much, much higher than what people assume. This is a dangerous situation.”

Is this the start of the predicted peak oil catastrophe? It’s hard to say, given that the role of speculators and the weak dollar in the current oil spike is unclear. But peak oil theory, once a fringe phenomenon, is now taken more seriously. Peak oil advocates hold that the global supply of oil that’s economically feasible to extract and refine has passed its “peak,” and is in permanent decline.

Dallas Morning News