Oil price increases since 2003
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/* Mid-2008 increases */ mid-July selloff; cite for $147/bbl
<!-- If you are considering adding the {{current}} tag, please note that this tag is for articles which are edited many times a day by many different editors as events develop. This does not apply to this article -->
{{further|[[Gasoline usage and pricing]] and [[Price of petroleum]]}}
[[Image:Oil Prices Medium Term.jpg|thumb|300px|Medium term [[Price of oil|crude oil prices]], (not adjusted for inflation)]]
[[Image:Oil Prices Short Term.png|thumb|300px|Short term [[Price of oil|crude oil prices]], (not adjusted for inflation)]]
From the mid-1980s to September 2003, the inflation adjusted price of a [[barrel]] of crude oil on [[New York Mercantile Exchange|NYMEX]] was generally under $25/barrel. During 2004, the price rose above $40, then $50. A series of events led the price to exceed $60 by August 11, 2005, briefly exceed $75 in the middle of 2006, fall back to $60/barrel by the early part of 2007, then rise steeply to $92/barrel by October 2007 and $99.29/barrel for December futures in [[New York City|New York]] on [[November 21]], [[2007]].<ref>{{cite news
| publisher=BBC
| url=http://news.bbc.co.uk/2/hi/business/7105044.stm
| title=Oil reaches new record above $99
| date=November 21, 2007
| accessdate=2007-11-29
}}</ref> Throughout the first half of 2008, oil regularly reached record high prices. On February 29, 2008, oil prices peaked at $103.05 per barrel,<ref>Oil prices pushed to fresh high- http://news.bbc.co.uk/2/hi/business/7270392.stm</ref> and reached $110.20 on March 12, 2008,<ref>{{cite news
|url=http://money.cnn.com/2008/03/12/markets/oil_eia/index.htm
|title=Oil crosses record $110, despite supply rise
|author=David Goldman
|publisher=CNN Money
|language=English
|accessdate=2008-03-12
|date=March 12, 2008
}}</ref> the sixth record in seven trading days.<ref>{{cite news
|url=http://biz.yahoo.com/ap/080310/oil_prices.html
|title=Gas Prices Near Records, Following Oil
|author=John Wilen
|publisher=Associated Press
|language=English
|accessdate=2008-03-10
|date=Monday March 10, 3:50 pm
}}</ref><ref>{{cite news
|url=http://news.bbc.co.uk/2/hi/business/7289070.stm
|title=Oil sets fresh record above $109
|author=
|publisher=BBC News
|language=English
|accessdate=2008-03-11
|date=March 11, 2008
}}</ref> Prices on [[June 27]], [[2008]], touched $141.71/barrel, for August delivery in the New York Mercantile Exchange (after the recent $140.56/barrel), amid [[Libya]]'s threat to cut output, and [[OPEC]]'s president predicted prices may reach $170 by the [[Northern Hemisphere|Northern]] summer.<ref>[http://www.bloomberg.com/apps/news?pid=20601085&sid=aXp5o04xWszI&refer=europe bloomberg.com, Oil Is Little Changed After Falling as Investors Sell Contracts]</ref><ref>[http://www.bloomberg.com/apps/news?pid=20601103&sid=ae40xv_dkieQ&refer=news bloomberg.com, Oil Rises to Record Above $141 as Investors Buy Commodities]</ref> The most recent price per barrel maximum of $147.02 was reached on [[July 11]], [[2008]].<ref>[http://news.bbc.co.uk/2/hi/business/7501939.stm BBC.com, Oil hits new high on Iran fears]</ref>
Prices near $95–105 per barrel (2007 U.S. dollars) are equal to the previous all time [[inflation]] adjusted record of 1980.<ref>{{cite news
| url=http://news.bbc.co.uk/1/hi/business/7048600.stm
| title=What is driving oil prices so high?
| publisher=BBC
| date=November 5, 2007
}}</ref> This had been clearly exceeded by the first quarter of 2008. In terms of the crude price, U.S. records suggest that equivalent prices were last seen in the 1860s<ref>{http://tonto.eia.doe.gov/dnav/pet/hist/f000000__3a.htm}</ref>. In terms of refined [[petroleum]] products, one has to go back to the early 1920s to find similar prices in real terms<ref> {cite{http://www.fintrend.com/inflation/Inflation_Rate/Gasoline_Inflation.asp}}</ref>. Outside the U.S., the history of both inflation and [[oil prices]] will be different, but the fact remains that after being inflation adjusted, prices over $120/barrel are unprecedented since the very earliest days of commerical oil production.
Sustained high prices contribute to fears of an economic [[recession]] similar to that of the early 1980s.<ref>{{cite news
|title=Oil Rally May Be Economy's Undoing
|url=http://biz.yahoo.com/ap/080308/wall_main.html
|author=Joe Bel Bruno
|accessdate=2008-03-08
|date=2008-03-08
|publisher=AP
}}</ref> In the United States, gasoline consumption dropped by 0.5% in the first two months of 2008 in response to higher prices,<ref>{{cite news
|url=http://www.npr.org/templates/story/story.php?storyId=87924270
| title=Americans Using Less Gasoline
| publisher=NPR
| date=March 5, 2008
| author=Frank Langfitt
| language=English
}}</ref> compared to a drop of 0.4% total in 2007.<ref>{{cite news
| url=http://www.usnews.com/blogs/beyond-the-barrel/2008/3/4/oil-demand-is-dropping-but-prices-arent.html
| title=Oil Demand Is Dropping, but Prices Aren't
| publisher=U.S.News & World Report
| date=March 04, 2008
| author=Marianne Lavelle
| language=English
}}</ref>
Commentators have attributed the price increases of this period to a confluence of factors, including reports from the [[U.S. Department of Energy]] and others showing a decline in [[petroleum reserves]]<!--<ref>http://today.reuters.com/business/newsarticle.aspx?type=businessNews&storyID=2006-07-13T231429Z_01_SP327883_RTRUKOC_0_US-MARKETS-OIL.xml</ref> Reference not available -->,<ref>{{cite news
| url=http://www.ameinfo.com/90848.html
| title=Record oil price sets the scene for $200 next year
| publisher=AME
| date=[[July 6]] [[2006]]
| accessdate=2007-11-29
}}
</ref> worries over [[peak oil]],<ref>[http://www.energybulletin.net/ EnergyBulletin.net | Peak Oil News Clearinghouse]</ref> Middle East tension, and oil price speculation.<ref>[http://www.spiegel.de/international/business/0,1518,556519,00.html The Hike in Oil Prices: Speculation -- But Not Manipulation]</ref><!-- http://www.morganstanley.com/GEFdata/digests/20050714-thu.html#anchor2 doesn't work --> Some events have had short term effects on oil prices, such as [[North Korea]]n missile launches,<ref>[http://edition.cnn.com/2006/BUSINESS/07/05/oil.price/index.html Missile tension sends oil surging]</ref> the [[2006 Israel-Lebanon conflict|crisis between Israel and Lebanon]],<ref>[http://news.bbc.co.uk/2/hi/business/7083015.stm Oil hits $100 barrel], BBC News</ref> tension between Iran and U.S.,<ref>[http://news.bbc.co.uk/2/hi/business/4684844.stm Iran nuclear fears fuel oil price], BBC News</ref> and "a hundred factors."<ref name=Gross>{{cite web
|url=http://www.slate.com/id/2181282/
|title=Gas Bubble: Oil is at $100 per barrel. Get used to it.
|first=Daniel
|last=Gross
|publisher=Slate
|date=2008-01-05}}</ref>
==Causes==
{{Double image stack|right|Oil Prices 1861 2007.svg|Oil price chronology-june2007.gif|300|Oil price trend, 1861–2007, both nominal and adjusted to inflation.|Detailed analysis of changes in oil price from 1970–2007. The graph is based on the [[Real vs. nominal in economics|nominal, not real]], price of oil.}}
===Demand===
World crude oil demand grew an average of 1.76% per year from 1994 to 2006, with a high of 3.4% in 2003-2004. Demand growth is highest in the [[developing world]].<ref name=eiaoilconsumption>
{{cite web
|url=http://www.eia.doe.gov/emeu/international/oilconsumption.html
|title=International Petroleum (Oil) Consumption Data
|publisher=U.S. Energy Information Administration
|accessdate=2007-12-20
}}</ref> World demand for oil is projected to increase 37% over 2006 levels by 2030, according to the U.S.-based [[Energy Information Administration]]'s (EIA) annual report. Demand is projected to reach {{convert|118|Moilbbl/d}} from 2006's {{convert|86|Moilbbl}}, driven in large part by the transportation sector.<ref name=bbc062006>{{cite web
|url=http://news.bbc.co.uk/2/hi/business/5099400.stm
|title=World oil demand 'to rise by 37%'
|publisher=[[BBC News]]
|date=2006-06-20
}}</ref><ref name=eia2007ieo>
{{cite web
|url=http://www.eia.doe.gov/oiaf/ieo/oil.html
|title=2007 International Energy Outlook: Petroleum and other liquid fuels
|publisher=U.S. [[Energy Information Administration]]
|date=May 2007}}</ref>
As countries [[Economic development|develop]], industry, rapid [[urbanization]] and higher [[living standards]] drive up energy use, most often of oil. Thriving economies such as [[People's Republic of China|China]] and [[India]] are quickly becoming large oil consumers.<ref>[http://news.bbc.co.uk/2/hi/business/7387203.stm Oil price 'may hit $200 a barrel'], BBC News</ref> China has seen oil consumption grow by 8% yearly since 2002, doubling from 1996-2006,<ref name=eiaoilconsumption>
{{cite web
|url=http://www.eia.doe.gov/emeu/international/oilconsumption.html
|title=International Petroleum (Oil) Consumption Data
|publisher=U.S. Energy Information Administration
|accessdate=2007-12-20
}}</ref> indicating a doubling rate of less than 10 years. A 2008 report from the [[IEA]] predicted that the observed drops in demand from developed countries would continue due to high prices, but that a 3.7 percent rise in demand by 2013 in developing countries would cause a net rise in global petroleum demand.<ref>{{cite news|
|url=http://www.nytimes.com/2008/07/02/business/02oil.html?ei=5124&en=d92ebb45abddef25&ex=1372651200&adxnnl=1&partner=digg&exprod=digg&adxnnlx=1215090471-nCZUb0Eg4s/EwFnWc0QBBg
|publisher=[[The New York Times]]
|title=Oil Demand Will Grow, Despite Prices, Report Says
|date=July 2, 2008
|author=Clifford Krauss
|access date=July 3, 2008
}}</ref>
The sector that generally sees the highest annual growth in petroleum demand is [[transportation]], in the form of new demand for personal-use vehicles powered by [[internal combustion engine]]s.<ref name=wood082004>{{cite web |url=http://www.eia.doe.gov/pub/oil_gas/petroleum/feature_articles/2004/worldoilsupply/oilsupply04.html
|title=Long-Term World Oil Supply Scenarios: The Future Is Neither as Bleak or Rosy as Some Assert
|date=2004-08-18
|publisher=[[Energy Information Administration]]
|author=Wood John H, Long Gary R, Morehouse David F
}}</ref> Cars and trucks will cause almost 75% of the increase in oil consumption by [[India]] and [[People's Republic of China|China]] between 2001 and 2025.<ref name=wsj052004>
{{cite web
|url=http://www.iags.org/wsj050504.htm
|title=Asia's Thirst for Oil
|date=2004-05-05
|publisher=[[Wall Street Journal]]
}}</ref> As more countries develop, the demand for oil will increase further. This sector also has the highest consumption rates, accounting for approximately 68.9% of the oil used in the [[United States]] in 2006,<ref name=btstable4-3>
{{cite web
|url=http://www.bts.gov/publications/national_transportation_statistics/html/table_04_03.html
|title=Domestic Demand for Refined Petroleum Products by Sector
|publisher=U.S. [[Bureau of Transportation Statistics]]
|accessdate=2007-12-20
}}</ref> and 55% of oil use worldwide as documented in the [[Hirsch report]]. In 2008, auto sales in China were expected to grow by as much as 15-20 percent, resulting in part from economic growth rates of over 10 percent for 5 years in a row.<ref name=Chinagasguz2008>
{{cite news
|url=http://biz.yahoo.com/ap/080421/china_auto_show_big_cars.html
|title=Gas guzzlers a hit in China, where car sales are booming
|publisher=[[Associated Press]]
|author=Joe Mcdonald
|date=April 21, 2008
}}</ref>
Another large factor on petroleum demand has been human [[population growth]]. Because [[world population]] grew faster than oil production, production [[per capita]] peaked in 1979 (preceded by a plateau during the period of 1973-1979).<ref name="RCDuncan2001">
{{cite journal
| quotes =
| author = Duncan Richard C
| date =
| year = 2001
| month = November
| title = The Peak of World Oil Production and the Road to the Olduvai Gorge
| journal = [[Population & Environment]]
| volume = 22
| issue = 5
| pages = pp. 503–522
| issn = 0199-0039 (Print) 1573-7810 (Online)
| doi = 10.1023/A:1010793021451
| id =
| url = http://dieoff.org/page224.htm
| format =
| accessdate =
| laysummary =
| laysource =
| laydate =
| quote =
}}</ref> The [[World population|world’s population]] in 2030 is expected to be double that of 1980.<ref name=censusworldpop>
{{cite web
|url=http://www.census.gov/ipc/www/idb/worldpop.html
|title=Total Midyear Population for the World: 1950-2050
|publisher=U.S. [[Census Bureau]]
|accessdate=2007-12-20
}}</ref>
====The role of fuel subsidies====
State fuel subsidies have shielded consumers in many nations from the price rises, but many of these subsidies are being reduced or removed as the cost to governments of subsidization increases.
In June 2008, AFP reported that "China became the latest Asian nation to curb energy subsidies last week after hiking retail petrol and diesel prices as much as 18 percent... Elsewhere in Asia, Malaysia has hiked fuel prices by 41 percent and Indonesia by around 29 percent, while Taiwan and India have also raised their energy costs."<ref name=chinesecut>
{{cite web
|url=http://afp.google.com/article/ALeqM5habiTClO6-7n56i9zrbBMxdYvWBA
|title=Chinese cut fuel subsidies but demand fears remain
|publisher=AFP
|accessdate=2008-07-10
}}</ref> In the same month, Reuters reported that
<blockquote>
Countries like China and India, along with Gulf nations whose retail oil prices are kept below global prices, contributed 61 percent of the increase in global consumption of crude oil from 2000 to 2006, according to JPMorgan.
Other than Japan, Hong Kong, Singapore and South Korea, most Asian nations subsidize domestic fuel prices. The more countries subsidize them, the less likely high oil prices will have any affect in reducing overall demand, forcing governments in weaker financial situations to surrender first and stop their subsidies.
That is what happened over the past two weeks. Indonesia, Taiwan, Sri Lanka, Bangladesh, India and Malaysia have either raised regulated fuel prices or pledged that they will.<ref>
{{cite web
|url=http://www.iht.com/articles/2008/06/04/business/rtrcol05.php
|title= The hidden costs of fuel subsidies
|publisher=Reuters
|accessdate=2008-07-10
}}</ref></blockquote>
''[[The Economist]]'' reported: "Half of the world's population enjoys fuel subsidies. This estimate, from Morgan Stanley, implies that almost a quarter of the world's petrol is sold at less than the market price."<ref>
{{cite web
|url=http://www.economist.com/finance/displaystory.cfm?story_id=11453151
|title= Crude measures
|publisher=The Economist
|accessdate=2008-07-10
}}</ref> U.S. Secretary of Energy Samuel Bodman stated that around 30 million barrels per day of oil consumption (over a third of the global total) is subsidized.<ref name=chinesecut/> But energy analyst Jeff Vail warned that cutting subsidies would do little to reduce global prices.<ref>
{{cite web
|url=http://www.jeffvail.net/2008/06/eliminating-subsidies-wont-solve-oil.html
|title= Eliminating Subsidies Won't Solve the Oil Demand Problem
|publisher=Jeff Vail
|accessdate=2008-07-10
}}</ref>
===Supply===
An important contributor to price increases has been the slow down in [[Petroleum reserves|oil supply]] growth, which has continued since oil production surpassed new discoveries in 1980. The fact that [[peak oil|global oil production will decline]] at some point, leading to lower supply is the main long-term [[Supply and demand|fundamental cause of rising prices]].<ref>[http://www.energybulletin.net/primer.php Peak oil primer and links | EnergyBulletin.net | Peak Oil News Clearinghouse]</ref> This is because there is a limited amount of [[fossil fuel]], and the remaining accessible supply is consumed more rapidly each year. Increasingly, remaining reserves become more technically difficult to extract and therefore more expensive. Eventually, reserves will only be economically feasible to extract at extremely high prices. It is thought by many, including energy economists such as [[Matthew Simmons]], that prices could continue to rise indefinitely until a new market equilibrium is reached at which point supply satisfies worldwide demand.
Although there is contention about the exact timing and form of [[peak oil]], there are now very few parties who do not acknowledge that the concept of a production peak is valid – though before the present [[energy crisis]] some commentators argued that [[global warming]] awareness and new energy sources means that demand may fall before supply, making reserve depletion a non-issue.<ref>"We don't believe there is an absolute resource constraint. When peak oil comes, it is just as likely to come from consumption peaking, perhaps because of climate change policies as from production peaking." Peter Davies, Economist for BP, quoted by The Independent, 14 June 2007</ref>
In addition, turbulence in the [[Middle East]] (the world's largest oil-producing region) has led to decreased exports, especially civil unrest in [[Iraq]] after the [[2003 invasion of Iraq|2003 U.S. invasion]]. Outside the Middle East, [[Venezuela]] has experienced strikes and political turbulence, and there is growing instability in [[West Africa]].
Alternatively, lower production rates may be due to the fact that oil's historically high ratio of [[EROEI|Energy Returned on Energy Invested]] continues a significant decline. The increased price of oil also makes other, [[Non-conventional oil|non-conventional sources of oil]] attractive to businesses. The most prominent example of this are the massive reserves of the Canadian [[tar sands]]. They are a far less cost-efficient source of heavy, low-grade oil than conventional crude, but with oil trading above $60/bbl, the tar sands have become very attractive to exploration and production companies. Recent months have seen billions of dollars invested in the tar ([[bitumen]]) sands.
In view of tighter supplies worldwide, terrorist and insurgent groups have increasingly targeted oil and gas installations to maximize both mayhem and political gains{{Fact|date=January 2008}}<!--the reference below is not very notable, and way too POV. lets get some good secondary news sources in here-->. Sometimes, such attacks are perpetrated by militias in regions where oil wealth has produced few tangible benefits for the local citizenry, as is the case in the [[Niger delta]]. The terror factor adds an additional premium, including insurance costs, to the [[price of oil]].<ref>{{cite web
| url=http://www.maavak.net/maavak/maavak054.html
| title=Peak Oil and Political Economy of Terrorism
| author=Mathew Maavak
| date=April 21 2006
}}</ref>
Even if total oil supply does not decline, increasing numbers of experts believe the easily accessible sources of [[light sweet crude]] are [[peak oil|almost exhausted]] and in the future the world will depend on more expensive sources of heavy oil and renewable energy sources. Until the rises of 2008, [[Cambridge Energy Research Associates|CERA]] (a consulting company wholly owned by energy consultants [[IHS Energy]]<ref>{{cite web
| url=http://www.ihs.com/News/Press-Releases/2004/04cera.htm
| title=IHS Energy Acquires Cambridge Energy Research Associates (CERA)
| date=September 1 2004
| accessdate=2007-11-30
}}</ref>) did not believe this would be such an immediate problem. However, in an interview with the ''[[Wall Street Journal]],'' Daniel Yergin, best known for his quotes that the price of oil would soon return down to "normal", publicly amended the company's position on May 7, 2008, and now expects oil to reach $150 during 2008, due to tightness of supply<ref>{http://online.wsj.com/article/SB121010625118671575.html}</ref>
This reversal of opinion is significant, as CERA, among other consultancies, provide price projections that are used by many official bodies to plan long term strategy in respect of energy mix and price, so the impact of a misprediction is far wider than might otherwise be expected.
In contrast, some other organisations, such as the [[International Energy Agency]] (IEA), had already been much less optimistic in their assessments for some time.<ref>{{cite web
| url= http://www.ft.com/cms/s/0/3c8940ca-8d46-11dc-a398-0000779fd2ac.html?nclick_check=1
| title= Transcript: Interview with IEA chief economist
}} Interview with Fatih Birol.</ref>
While efforts are underway to increase supply, for example through a number of new mines in [[Canada]]'s [[tar sands]] region which is estimated to contain as much "heavy" oil as all the world's reserves of "conventional" oil,{{Fact|date=April 2008}} such efforts lag behind the increasing demand of recent years.<ref>[http://www.energybulletin.net/1191.html Canada: Pinning hopes on the tar sand], EnergyBulletin.net</ref> Regulation and environmental efforts have also increased the shortage and price of oil.{{Fact|date=April 2008}}
===Financial causes===
====Financial speculation====
{{Expand|date=June 2008}}
In May 2008, [[Uwe Beckmeyer]], transport chief for Germany's Social Democrats, said a recent 25 percent rise in the price of oil to $135 a barrel had nothing to do with underlying supply and demand; "It's pure [[speculation]]," he said.<ref name='Ban'>{{cite news | first= | last= | coauthors= | title= Germany in call for ban on oil speculation | date= | publisher= | url =http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/26/cnoil126.xml | work =[[The Daily Telegraph]] | pages = | accessdate = 2008-06-07 | language = }}</ref>
Also in May 2008, ''[[The Economist]]'' pointed out that "The number of transactions involving oil futures on the [[New York Mercantile Exchange]] (NYMEX), the biggest market for oil, has almost tripled since 2004. That neatly mirrors a tripling of the price of oil over the same period."<ref>{{cite news | first= | last= | coauthors= | title= Double, double, oil and trouble | date= 2008-05-29 | publisher= | url =http://www.economist.com/research/articlesBySubject/displaystory.cfm?subjectid=381586&story_id=11453090 | work =[[The Economist]] | pages = | accessdate = 2008-06-17 | language = }}</ref>
Also in May 2008, [[hedge fund]] manager Michael Masters testified to a U.S. Senate committee about his belief that "What we are experiencing is a demand shock coming from a new category of participant in the commodities futures markets: Institutional Investors... In the popular press the explanation given most often for rising oil prices is the increased demand for oil from China. According to the [[United States Department of Energy|DOE]], annual Chinese demand for petroleum has increased over the last five years from 1.88 billion barrels to 2.8 billion
barrels, an increase of 920 million barrels. Over the same five-year period, Index Speculatorsʼ demand for petroleum futures has increased by 848 million barrels. The increase in demand from Index Speculators is almost equal to the increase in demand from China!"<ref>{{cite news | first= | last= | coauthors= | title= Michael Masters Written Testimony | date= | publisher= | url =http://hsgac.senate.gov/public/_files/052008Masters.pdf | work =[[United States Senate Committee on Homeland Security and Governmental Affairs]] | pages = | accessdate = 2008-05-28 | language = }}</ref>
In June 2008, ''[[The Wall Street Journal]]'' wrote: "[[Lehman Brothers]] cites evidence that institutional investors, including [[sovereign wealth fund|sovereign-wealth funds]], have been increasing their exposure to commodities. The investment house calculates that from January 2006 to mid-April 2008, more than $90 billion of incremental investor flows was devoted to assets under management by commodity indexes. It said for every $100 million in new inflows, the price of [[West Texas Intermediate]], the U.S. benchmark, increased by 1.6%."<ref>{{cite news | first= | last= | coauthors= Guy Chazan and Neil King Jr | title= Is Oil the Next 'Bubble' to Pop? | date= 2008-06-04 | publisher= | url =http://online.wsj.com/article/SB121251666620041937.html | work =[[Wall Street Journal]] | pages = | accessdate = 2008-06-17 | language = }}</ref>
Also in June 2008, analyst Theodore Butler wrote that the rise in prices since the credit crunch began in August 2007 was primarily due to [[short (finance)|short sellers]] buying back [[futures contract]]s so as to minimize their losses. "The index funds are holding the same size, or smaller, long position in crude oil than they held 10 months ago, when crude oil was $70/barrel... The buying back of previously sold short futures contracts, primarily in the commercial category, account for the bulk of the buying over the past eight months or so."<ref>{{cite news | title=The Real Speculators | date=2008-06-10 | publisher= | url =http://www.investmentrarities.com/06-10-08.html | accessdate = 2008-06-17}}</ref>
Also in June 2008, [[OPEC]]'s Secretary General Abdullah al-Badri provided statistics supporting rampant speculation in the oil-related financial markets. According to Badri, current world consumption of oil at 87 million bpd is far exceeded by the "paper market" for oil, which equals about 1.36 billion bpd, or more than 15 times the actual market demand.<ref>{{cite news | title=OPEC chief appeals for calm over oil | date=2008-06-10 | publisher=Reuters | url =http://www.reuters.com/article/newsOne/idUSWLA462520080610?pageNumber=1&virtualBrandChannel=0 | accessdate = 2008-06-10}}</ref>
In response to the possibility that financial speculators artificially inflated the oil market, the U.S. Congress began hearings in June 2008 intended to find ways to "tighten restrictions on pension funds, investment banks and other investors that they say are driving up fuel prices."<ref>{{cite news
| author = Associated Press
| title = Congress Plans to Tighten Rules on Energy Speculation
| url = http://www.nytimes.com/2008/06/24/business/24speculate.html
| date = June 24, 2008
| publisher = The New York Times
}}</ref>
On [[June 17]], [[2008]], [[Islamic Republic of Iran|Iranian]] OPEC governor [[Mohammad-Ali Khatibi]] described the oil market as saturated and warned that an increase in production from Saudi Arabia would be "wrong". Refiners stated that it is Saudi Arabia's traditionally high prices which make its crude noncompetitive. Prior to this, OPEC had stated that the oil market was well supplied and that high prices were a result of speculation and a weak U.S. dollar.<ref>[http://www.presstv.ir/Detail.aspx?id=60393§ionid=351020103 Riyadh's crude output decision, wrong] [[Presstv.ir]]</ref>
On [[June 21]], [[2008]], [[United States Secretary of Energy|U.S. energy secretary]] [[Samuel Bodman]] said that insufficient oil production, not financial speculation, was driving [[wikt:soaring|soaring]] crude prices. He said that oil production has not kept pace with growing demand, especially from developing countries like [[People's Republic of China|China]] and [[India]]. "In the absence of any additional crude supply, for every 1% of crude demand, we will expect a 20% increase in price in order to balance the market," Bodman said.<ref>[http://www.iht.com/articles/ap/2008/06/21/news/Saudi-Oil-Summit.php Bodman: Insufficient oil production behind prices], International Herald Tribune</ref><ref>[http://news.yahoo.com/s/afp/20080621/pl_afp/saudioilcommoditiesus US energy chief says 'speculators' not forcing up oil prices]</ref>
====Effect of U.S. dollar value on oil prices====
The price of oil is closely tied to the value of the U.S. dollar because oil is traded in dollars. This has led to concern among some economists that the [[Petrodollar|principal earned from the sale of oil]] may lose value in the long run if the U.S. dollar loses real value. {{Fact|date=July 2008}}
In discussing the effect of the changing value of the U.S. dollar on the real price of oil, however, it is important to include a calculation of [[Exchange_rate#Bilateral_vs_effective_exchange_rate|effective exchange rates]] of the currencies in question, to separate the [[Real_value#Uses_and_examples_of_nominal_and_real_values|real and nominal values]] of those currencies. This method accounts for [[Market basket|the amount that a dollar can buy]] (of electronics or food for example) compared to the amount another currency, such as a [[Euro]] or [[Pound sterling]], can purchase. While the U.S. dollar has lost nominal value to other major currencies from 2001 to 2007, its change in real value has not differed significantly from other currencies.<ref>According to calculations at [http://www.measuringworth.com/ppowerus/ Measuring Worth], US$100 in 2000 has the same purchasing power as US$120 in 2007. Prices in England have gone from ₤100 to ₤123 in the same period.</ref>
In addition, by comparing the price of oil in various currencies to the fluctuations in the exchange rates of those currencies it is clear that oil price is no more significantly correlated to the value of the dollar than to any other currency. This also holds true in a comparison of oil price to gold price.<ref>[http://europe.theoildrum.com/node/3106 The Oil Drum: Europe | Oil Prices around the World: Do Exchange Rates Matter?<!-- Bot generated title -->]</ref> Similarly, since the early 1970s, the price of oil has been negatively correlated to the value of the dollar, suggesting that the price of oil has more of an effect on the value of the dollar than vice versa. As developed economies depend heavily on oil for transportation, [[petrochemical]] feedstock, and [[industrial agriculture]], this correlation would affect most currency values.<ref>{{cite web
|url=http://www.econbrowser.com/archives/2007/10/does_dollar_wea_1.html
|title=Does Dollar Weakness 'Cause' High Oil Prices?
|author=Menzie Chinn
|publisher=Econbrowser: Analysis of current economic conditions and policy
|date=October 31, 2007 }}
</ref>
Some analysts believe that as much as $25 of the June 2008 prices around $140 are due to dollar devaluation.<ref>{{cite news
|url=http://news.yahoo.com/s/ap/20080706/ap_on_bi_ge/dollar_doldrums
|title=The buck doesn't stop here; it just keeps falling
|author=Tom Raum
|publisher=Associated Press
|date=July 6, 2008
|accessdate=2008-07-06
}}</ref>
===Other causes===
Besides supply concerns, many other issues have also had some effect on oil prices. Labour strikes, hurricane threats to oil platforms, fires and terrorist threats at refineries, and other short-lived problems are not solely responsible for the higher prices. Such problems do push prices higher temporarily, but have not historically been fundamental to long-term price increases.{{clarifyme|date=July 2008}}<!-- all look like Supply concerns, should this be moved to Supply section, with cites? Is this another way of saying the market tries to anticipate future prices (from supply and demand beliefs) which applies to any traded commodity? -->
==History==
{{globalize/USA}}
{{Copyedit|needs a better flow than a timeline of events, [[price of gasoline]] info moved, and irrelevant facts moved or removed.|date=January 2008}}
===2003===
The U.S.-led [[2003 invasion of Iraq]] was a significant event for oil markets because of Iraq's large oil reserves. The price of oil rose in the months running up to the invasion in March. Prices dropped in mid-2003, and several observers attributed this to the perception that the armed conflict would come to a quick resolution. The War coincided with an increase in global demand for petroleum, but it also reduced Iraq's current oil production, and has commonly been blamed in part for oil price increases since.<ref name="Collier">{{cite news |first=Robert |last=Collier |title=Iraq invasion may be remembered as the start of the age of oil scarcity |url=http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2005/03/20/MNGJKBS9PM1.DTL |work=San Francisco Chronicle |date=2005-03-20 |accessdate=2008-03-20 }}</ref> However, [[Peak Oil|peaknik]]s{{clarifyme|date=July 2008}}<!-- not found in [[Peak Oil]], needs defining, is it a typo? --> such as [[Matthew Simmons]] tend to emphasize the simultaneous [[peak oil|peaking and decline]] of many present or former oil-exporting countries{{clarifyme|date=July 2008}}<!-- of the countries themselves or of the oil production? Please clarify. --> around the world, such as [[Mexico]], [[Indonesia]], and the [[U.K.]] for the overall upward price trend of oil, contending that the combination of relentlessly rising global demand and peaking or eventually declining supply means the price must eventually go up. According to Simmons,<ref name="simmons_another_nail">{{cite web
|url= http://www.simmonsco-intl.com/files/Another%20Nail%20in%20the%20Coffin.pdf
|title= Another Nail in the Coffin of the Case Against Peak Oil
|accessdate= 2008-04-05
|accessdaymonth=
|accessmonthday=
|accessyear=
|author= Matthew Simmons
|last= Simmons
|first= Matthew
|authorlink= [[Matthew Simmons]]
|coauthors=
|date= 2007-11-16
|year=
|month=
|format=
|work=
|publisher=
|pages=
|language=
|doi=
|archiveurl=
|archivedate=
|quote=
}}</ref> isolated events such as the Iraq war affect short-term prices but by themselves do not determine the long-term trend. Simmons cites the use of [[enhanced oil recovery]] techniques in large fields such as Mexico's [[Cantarell Field|Cantarell]],<ref name="simmons_another_nail"/> which maintained production for a few years, but only made the eventual decline all the more drastic. Pumping oil out of Iraq faster may reduce petroleum prices in the short term, but cannot keep the price low forever. From Simmons' point of view, then, the invasion of Iraq happened to be a major event that we can associate with the start of the long-term oil price rise, but at most this merely shifted the schedule ahead a few years, and may actually [[Mitigation of peak oil|mitigate the inevitable decline]] in oil production by keeping some of Iraq's oil in reserve.
===2004===
As a direct consequence of the [[Iraq War]] that followed the [[2003 Invasion of Iraq]], the oil production capacity of Iraq was cut from more than three to two million barrels per day.<ref name="Ibrahim">{{cite news |author= Youssef M. Ibrahim |title= The world has lost Iraq's oil |url= http://www.usatoday.com/news/opinion/editorials/2004-10-05-iraqi-oil_x.htm |work= USA Today |date= 2004-05-10 |accessdate= 2008-03-20
}}</ref>
===Mid-2005 increase===
[[Image:Gas-hike.jpg|thumb|300px|Overnight gasoline price hike shown at a United States [[Chicago]] area [[BP]] station (background) on August 12, 2005. The [[Royal Dutch Shell|Shell]] station (foreground) had not yet posted the 12 U.S. cent price increase.]]
After retreating for several months in late 2004 and early 2005, [[crude oil]] prices rose to new highs in March 2005. The price on [[NYMEX]] has been above [[United States dollar|USD]] 50 per barrel since [[March 5]], [[2005]]. On [[March 16]], [[2005]], the price surpassed the October 2004 high of USD 55.17 to close at USD 56.46. In April 2005 the price began to fall, reaching USD 53.32 on [[April 9]]. It then reversed course and headed to an all time high of USD 58.28, driven mainly by lingering concerns of a prolonged weak dollar.{{Fact|date=July 2008}} In June 2005 crude oil prices broke the psychological barrier of USD 60.
===2005–2006 increases===
In the United States gasoline prices reached a record high during the first week of September 2005 in the aftermath of [[Hurricane Katrina]]. The average retail price was nearly [[United States dollar|USD]] 3.04 per [[U.S. gallon]].<ref>{{cite web
| url=http://www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/mogas_home_page.html
| title=Weekly U.S. Retail Gasoline Prices, Regular Grade
| accessdate=2006-09-26
}}</ref> The previous high was USD 1.42 per gallon in March 1981, which would be USD 3.20 per U.S. gallon after adjustment for [[inflation]]. In comparison, the average retail price of a litre of [[petrol]] in the [[United Kingdom]] was 86.4p on [[19 October]] [[2006]].<ref>{{cite web
| url=http://www.petrolprices.com
| title=Free UK Petrol Prices
| accessdate=2007-11-29
}}</ref> This equates to USD 6.13 per U.S. gallon.
On [[January 17]], [[2006]] crude oil for February delivery rose by USD 2.38 (3.7%) to USD 66.30 a barrel. This was the highest increase since early October 2005. Observers believe that violence in Nigeria, and the increasing tension between USA and Iran are responsible for this price increase. Continued tension between Iran and USA raised the price to USD 68.38 on [[January 31]].<ref>[http://news.bbc.co.uk/2/hi/business/4664590.stm BBC NEWS | Business | Iran moves to ease oil concerns<!-- Bot generated title -->]</ref> However, due to rising stockpiles of crude oil and an abnormally warm northern winter, on [[February 14]] the price of crude hit a 2006 low of USD 59.60.<ref>[http://www.bloomberg.com/energy Bloomberg.com: Energy Prices<!-- Bot generated title -->]</ref>
Oil production in Iraq continued to decline as result of the [[Civil war in Iraq|ongoing conflict]], decreasing to an output of just {{convert|1|Moilbbl/d|m3/d}}.<ref name="Krane"> {{cite news |first=Jim |last=Krane |title=Iraq Oil Output Lowest Since Invasion |url=http://www.washingtonpost.com/wp-dyn/content/article/2006/04/28/AR2006042801082.html |format= |work=Washinton Post |publisher= |date=2006-04-28 |accessdate=2008-03-20}}</ref>
{{Quotation|"[The Iraq production shortfall is] a significant contributing factor to the high price of oil,"|Dalton Garis|economist at the Petroleum Institute in Abu Dhabi<ref name="Krane" />}}
===Mid-2006 increase===
[[Image:Gas prices, July 2006, San Francisco, California 01.jpg|thumb|July 2006, [[San Francisco, California|San Francisco]], [[California]]]]
Regular gasoline prices were averaging [[United States dollar|USD]] 3.036 per [[Gallon#Definitions|U.S. gallon]] across the U.S. in August, 2006, slightly below the post-Katrina peak of USD 3.057.<ref>[http://money.cnn.com/2006/08/07/news/economy/gas_prices/index.htm Record gas prices seen after Alaska shutdown - Aug. 7, 2006<!-- Bot generated title -->]</ref> Adjusted for inflation, these U.S. prices were the highest in 25 years. The all-time U.S. inflation-adjusted record is approximately USD 3.20 per U.S. gallon, set in March 1981.<ref>[http://www.foxnews.com/story/0,2933,206457,00.html FOXNews.com - Government: Gas Prices Rise, But More Slowly - Energy | Alternative Energy | Oil - FOXNews<!-- Bot generated title -->]</ref>
In July 2006, crude oil for August delivery traded over USD 79 per [[Barrel#Oil barrel|barrel (bbl)]],<ref>[http://money.cnn.com/data/commodities/index.html Commodities - Latest Trading Prices and Data from CNNMoney<!-- Bot generated title -->]</ref> an all-time record. The mid-2006 runup is attributable to increasing gasoline consumption, up 1.9% year over year in the U.S., and geopolitical tensions as North Korea launched missiles, the tension between Iran and USA drags on, and [[2006 Israel-Lebanon conflict|Israel and Lebanon went to war]]. The early 2006 runup in prices has been attributed to a number of factors, including continuing supply disruptions from the [[2005 Atlantic hurricane season]] (18% of Gulf Coast supplies were still off-line in early 2006),{{Fact|date=June 2008}} supply disruptions from the changeover from [[Methyl tert-butyl ether|MTBE]] to [[ethanol]], lingering concerns over [[Iran]] and [[Nigeria]], and anticipation of higher summer demand in the Northern Hemisphere. Hostilities in Nigeria alone have caused a supply disruption of 675,000 bbl per day.<ref>[http://www.angolapress-angop.ao/noticia-e.asp?ID=460075 AngolaPress - News<!-- Bot generated title -->]</ref> On [[August 7]], BP shut down its [[Prudhoe Bay, Alaska]] field due to pipeline corrosion, bringing supply down by up to 400,000 bbl/day or about 8% of total U.S. production.<ref>[http://money.cnn.com/2006/08/07/news/international/oil_alaska/index.htm BP shuts largest U.S. oil field due to damaged pipeline - Aug. 7, 2006<!-- Bot generated title -->]</ref>
The higher price of oil substantially cut growth of world oil demand in 2006, including an outright reduction in the oil demand of the [[OECD]].<ref>[http://www.finfacts.com/irelandbusinessnews/publish/article_10008746.shtml Oil demand falls in developed world for first time in 20 years<!-- Bot generated title -->]</ref>
===September 2006 decreases===
Oil prices began to decrease during September 2006, closing below US$66/barrel on [[September 11]].<ref>[http://www.iht.com/articles/2006/09/11/business/opec.php Despite drop in oil price, OPEC stick with targets]. International Herald Tribune. [[September 11]], [[2006]].</ref> The U.S. national average gas price dropped to US$2.70/gallon in early September, down US$0.11 from the previous week. Some cities were seeing average prices below US$2.40/gallon.<ref>[http://www.bizjournals.com/sanantonio/stories/2006/09/04/daily30.html Calmer Weather Fuels Lower Gas Prices in Texas]. San Antonio Business Journal. [[September 8]], [[2006]].</ref>
In September, prices continued to fall, and the average cost of gasoline per gallon (U.S. nationwide) was below US$2.50. On [[September 19]], crude oil fell US$2.14 to a 6-month low of US$61.66. The recent significant fall in the price of crude oil has led some to speculate that price of gasoline may fall to as low as $1.15/gallon.<ref>[http://www.journalstar.com/articles/2006/09/15/top_story/extras/doc4509d8dcefed9603383138.txt Gas prices poised to drop further]. Kevin G. Hall, ''The Associated Press.'' [[September 15]], [[2006]]. Last accessed [[September 22]], [[2006]].</ref> By October 3, the price closed at US$58.68, its lowest close since mid-February.<ref>[http://money.cnn.com/2006/10/03/markets/oil.reut/index.htm?postversion=2006100315 Oil flops to seven-month low, below US$59] Reuters, ''CNNMoney.com'', [[October 3]], [[2006]]. Last accessed [[October 3]], [[2006]].</ref> Reasons for the recent price decreases have included easing tensions with Iran, ample supply and the [[2006 Atlantic hurricane season|lack of hurricane activity]] in oil-producing regions of the [[Gulf of Mexico]].{{Fact|date=February 2007}}
After news of North Korea's successful nuclear test on [[October 9]], [[2006]], oil prices rose past $60 a barrel, but fell back the next day. Also, for several days in early October, oil prices bounced around the $60 mark on possible news that some OPEC countries would cut oil production by {{convert|1|Moilbbl/d|m3/d}}. OPEC had not cut its production since December 2004. However, the oil market has lately seemed to shrug that news off, especially considering that Saudi Arabia said that no such agreement exists (to cut production).
On [[October 11]], oil prices fell below US$58 for the first time since February. Days later, on [[October 20]], a barrel of crude oil closed at US$56.82 per barrel. The same day, OPEC declared that they would cut production by {{convert|1.2|Moilbbl/d|m3/d}} in order to arrest the sliding price, the first drop since December 2004.<ref>[http://www.usatoday.com/money/industries/energy/2006-10-19-opec_x.htm?csp=34 "OPEC moves against falling oil prices"], [[Reuters]] via ''[[USA Today]]'', [[20 October]] [[2006]]</ref>
===Mid-2007 increases===
{{Unreferencedsection|date=July 2008}}
The U.S. national average on May 16, 2007 was $3.09, and some parts of the West Coast were selling regular unleaded at $3.33/gallon (e.g. San Francisco and Los Angeles). On NYMEX, a barrel was trading at $73.93, based on civil unrest in Nigeria. A pipeline disruption in the North Sea has also bumped the price of [[Brent Crude]] up to $79.64 (an all time high).<ref>[http://www.bloomberg.com/energy/ Bloomberg.com: Energy Prices<!-- Bot generated title -->]</ref>
Legislation from the U.S. Congress, from approving the [[No Oil Production and Exporting Cartels Act of 2007]] (in which the [[Sherman Act]] is amended towards foreign companies acting as cartels), and hearings in May 2007 from the House Energy and Commerce Committee's Oversight and Investigations Subcommittee will address the following: [[price gouging]] (especially from oil companies) as a federal crime, and the intervention of the Joint Economic Committee led by Senator [[Charles Schumer]] to which lawmakers should intervene where the current corporate mergers ([[Exxonmobil]], [[ConocoPhillips]], [[Chevron Corporation|Chevron]], [[Royal Dutch Shell|Shell]]) should break up, as a way to protect American consumers.
The "NOPEC" bill passed the U.S. House of Representatives with a 345-72 vote on May 22, 2007.
On September 12, 2007 oil prices rose to an all-time high of $80 per barrel, which surpassed even the highs of the early 1980s. High prices and restricted supplies have increased the concerns of those who believe that [[peak oil]] is either imminent, or may have already passed, because of the implication that oil supplies will not increase significantly beyond that point, and in the longer term a decline will occur. It should be remembered that some of this trend in prices is partly due to the slide of the dollar against other currencies. Measured in Euro for example, as the dollar has been falling steadily, the price of oil appears much less volatile. This results in worldwide price gains being relatively mild, but as the dollar loses its value against the euro, oil prices in the United States rise because they are priced in dollars.
===Late 2007 increases===
On October 19, 2007, U.S. [[light crude]] rose to a new height of $90.02 per barrel due to a combination of ongoing tensions in eastern [[Turkey]] and the reducing strength of the [[United States dollar|U.S. dollar]].<ref>[http://newsvote.bbc.co.uk/1/hi/business/7052071.stm Oil prices touch above $90 level], ''[[BBC News]]''</ref> Prices fell briefly on the expectation of increased U.S. crude oil stocks, however they rose again rapidly to a peak of $92.22 on October 26, 2007 when stocks were revealed to have instead fallen.<ref>[http://newsvote.bbc.co.uk/1/hi/business/7063250.stm Supply fears push oil above $92]</ref>
Prices increased throughout late October and early November. On November 7, 2007 light crude oil reached another record, closing at $98.10 per barrel. On November 21, 2007, oil prices rose to a new high of $99.29 per barrel,<ref>[http://www.cnn.com/2007/BUSINESS/11/21/oil.prices.ap/index.html], ''[[CNN News]]''</ref> leading to fears of the price breaking the $100 per barrel mark due to a ''[[The Wall Street Journal|Wall Street Journal]]'' report which stated that peak oil had arrived.
===Early 2008 increases===
[[Image:Rwcgasppricesmall.jpg|thumb|March 15, 2008, [[Redwood City, California|Redwood City]], [[California]]]]
On January 2, 2008, U.S. [[light crude]] surpassed the psychological barrier of $100 before falling to $99.69, due to tensions on New Years Day in Nigeria and on suspicion that U.S. stocks of crude will have dropped for the seventh consecutive week. A [[BBC]] report from the following day stated that a single trader bid up the price. Stephen Schork, a former floor trader on the [[New York Mercantile Exchange]] and the editor of an oil market newsletter, said one [[floor trader]] bought {{convert|1000|oilbbl|m3}}, the smallest amount permitted, and sold it immediately for $99.40 at a $600 loss. However, on January 3, oil rose to $100.05 a barrel in intraday trading.<ref>Single trader behind oil record - http://news.bbc.co.uk/1/hi/business/7169543.stm</ref> Oil fell back later in the week to $97.91 at the close of trading on Friday, January 4, in part due to a weak jobs report that showed unemployment had risen.<ref>{{cite web | url=http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a2UkH.smkwps| title=Oil Falls More Than $1 as U.S. Jobs Data Signal Lower Fuel Use | last=Shenk | first=Mark |publisher=[[Bloomberg L.P.]] | date=[[January 4]], [[2008]]}}</ref>
Despite news on weakened demand, the price of oil once again rose to $100.10 a barrel on February 19th after a Texas refinery fire, rumors about OPEC production cuts, and evidence that the supply of oil is decreasing faster than demand of oil.
Oil prices rose above $101 a barrel [[February 27]] [[2008]].<ref>{{cite web | url=http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a2UkH.smkwps| title=http://edition.cnn.com/2008/BUSINESS/02/27/oil.prices.ap/index.html | last=CNN| publisher=[[CNN]] | date=[[February 27]], [[2008]]}}</ref> Oil prices surpassed $103 a barrel [[February 29]] [[2008]] as continued weakness in the [[United States dollar|U.S. dollar]] and the prospect of lower [[Federal funds rate]]s attracted fresh capital to the oil market.<ref>{{cite web | url=http://edition.cnn.com/2008/BUSINESS/02/28/oil.prices.ap/index.html |title=Oil hits record high above $103 | publisher=[[CNN]] | date=[[February 29]], [[2008]]}}</ref>
Oil prices continued to rise to $104 on March 3, 2008 continued by the weakness in the United States dollar.{{Fact|date=March 2008}} The [[OPEC]] on [[March 5]] [[2008]] accused the [[United States]] of economic "mismanagement" that it said is pushing oil prices to record highs, rebuffing calls to boost output and laying blame at the feet of the [[Presidency of George W. Bush|George W. Bush administration]].<ref>{{cite web | url=http://edition.cnn.com/2008/WORLD/europe/03/05/opec.oil.ap/index.html |title=OPEC accuses U.S. on oil prices | publisher=[[CNN]] | date=[[March 5]], [[2008]]}}</ref> Oil prices surged above $110 to a new inflation-adjusted record on [[March 12]] [[2008]] before settling at $109.92.<ref>{{cite web | url=http://www.bloomberg.com/apps/news?pid=20601087&sid=a8GJB8fjITio&refer=home|title=Oil Rises Above $110 to Record as the Dollar Falls Against Euro | publisher=[[Bloomberg]] | date=[[March 12]], [[2008]]}}</ref> Oil continued its soar skywards, hit $111 a barrel, on [[March 13]] [[2008]], before sliding back to below $110 amid fears of economic [[recession]] in the [[United States]].<ref>{{cite web | url=http://edition.cnn.com/2008/BUSINESS/03/13/world.markets/index.html|title=Gold, oil reach highs amid U.S. recession fears | publisher=[[CNN]] | date=[[March 13]], [[2008]]}}</ref> The record was again broken on March 17, 2008, with U.S. light sweet crude reaching $111.80.<ref>{{cite web | url=http://newsvote.bbc.co.uk/1/hi/business/7300204.stm|title=Oil and gold jump to new records | publisher=[[BBC]] | date=[[March 17]], [[2008]]}}</ref> On April 15, 2008 the price of oil broke the $114 mark for the first time.
The price increased to $115.07/barrel on April 16, 2008 due to the increasing weakness of the U.S. dollar,<ref>[http://news.bbc.co.uk/1/hi/business/7349852.stm BBC News: Oil price holding firm above $114]</ref> and increased again to $117 per barrel on April 18, 2008 after a militant group in Nigeria said it had attacked an oil pipeline.<ref>[http://newsvote.bbc.co.uk/1/hi/business/7355121.stm BBC News: Oil prices continue upward march]</ref> Oil prices rose to a new high of $119.90 a barrel on April 22, 2008,<ref>{{cite news
|url=http://money.cnn.com/2008/04/22/markets/oil.ap/index.htm
|title= Oil nears $120
|author=
|publisher=CNN Money
|language=English
|accessdate=2008-04-22
|date=April, 22, 2008
}}</ref> before dipping and then rising $3 on April 25, 2008 to $119.10 on the New York Mercantile Exchange after a news report that a ship contracted by the U.S Military Sealift Command fired at an Iranian boat.<ref>[http://www.marketwatch.com/news/story/crude-surges-after-report-us/story.aspx?guid=%7B56D55DC5%2D7A17%2D4C73%2D8CD6%2D8652531F3C63%7D&siteid=bnb Oil jumps over $3 after report on U.S. shot toward Iran boat]</ref>
===Mid-2008 increases===
[[Image:May2008gasolineCA.jpg|thumb|Gas prices on May 26, 2008 ([[Memorial Day]] in the United States) outside [[Bakersfield, California]]]]
On May 9, 2008, the oil price exceeded $125 per barrel for the first time,<ref>[http://www.enerfaxgold.com/ Energy, Oil & Gas<!-- Bot generated title -->]</ref> while on May 21, 2008 the oil price exceeded already $130 per barrel of [[Brent Crude]]. In approximately 24 hours from May 21 to May 22nd, 2008, the price per barrel of oil passed $135.
On June 6, prices rose $11 in 24 hours, the largest gain in history.<ref>[http://www.nytimes.com/2008/06/07/business/07oil.html?em&ex=1212897600&en=3877f96aee464d82&ei=5087%0A Oil Prices Take a Nerve-Rattling Jump Past $138, New York Times, June 7, 2008]</ref> The possibility of an attack on Iran by [[Israel]] was considered to have contributed to the rise.<ref>http://ap.google.com/article/ALeqM5i5TtajgUpSm7KY5jf-lCJGHBB-tAD914VUFG7</ref> The combination of two major oil suppliers reducing supply has generated fears of a repeat of the [[1973 energy crisis]]. The mid-July decision of the Saudi kingdom to increase oil output has caused no significant influence on prices, but the caused the Iranian government misgivings. According to the oil minister of the Islamic Republic of Iran Gholam-Hossein Nozari the world markets are saturated<ref>[http://www.presstv.ir/Detail.aspx?id=59780§ionid=351020103 Iran: World oil market saturated]</ref> and that a Saudi promise of increased production would not lower prices.<ref>[http://www.presstv.ir/Detail.aspx?id=60841§ionid=3510213 Oil output increase will not affect price]</ref> Several Asian refineries were refusing Saudi petroleum in late June as over priced and of the wrong [[benchmark (crude oil)|grade]].<ref name= "press1" >[http://www.presstv.ir/Detail.aspx?id=60318§ionid=3510213 Asia says no to extra Saudi crude]</ref>
Oil prices on [[June 28]], hit record of $142.99 at 1:58 p.m., the highest since 1983 and to $142.97, the highest intraday price since 1988, owing to a weak dollar, geopolitical unrest and global equities slump.<ref>[http://www.bloomberg.com/apps/news?pid=20601087&sid=al_YJdkPa3b8&refer=home bloomberg.com, Oil Rises Above $142 for First Time as Investors Spurn Stocks]</ref><ref>[http://www.boston.com/business/articles/2008/06/28/oil_rises_to_trading_closing_records_on_falling_us_dollar/ boston.com, Oil rises to trading, closing records on falling U.S. dollar]</ref><ref>[http://www.guardian.co.uk/business/feedarticle/7615328 guardian.co.uk, Oil hits record near $143 on rising investor flows]</ref> Oil rose on [[July 1]] to a NYME record $143.67 and a London's ICE Futures Europe exchange record $143.91.<ref>[http://www.bloomberg.com/apps/news?pid=20601081&sid=ayPdya_4mTFI&refer=australia bloomberg.com, Oil Is Little Changed, After a Record, Amid Iran Supply Concern]</ref><ref>[http://www.theaustralian.news.com.au/story/0,25197,23950539-5005200,00.html theaustralian.news.com.au, Oil retreats after striking new peak]</ref>
On [[July 3]], "the [[Brent Crude|Brent North Sea]] crude contract for August delivery rose to $US145.01 a barrel" in Asian trade.<ref>[http://www.theaustralian.news.com.au/story/0,25197,23962236-20142,00.html Oil strikes above $US145 in Asia trade]</ref> London Brent crude reached a record of $145.75 a barrel, and Brent crude for August delivery peaked to a record $145.11 a barrel on London's ICE Futures Europe exchange, and to $144.44 a barrel on the NYMExchange.<ref>[http://www.bloomberg.com/apps/news?pid=20601087&sid=aPW1IHcLY51A&refer=home bloomberg.com, Crude Oil Rises to Record Above $144 After U.S. Stockpile Drop]</ref><ref>[http://uk.reuters.com/article/businessNews/idUKMOL27139920080703 uk.reuters.com, Oil hits new peak]</ref> By midday in Europe, light, sweet crude for August rose to a record $ 145.85 a barrel on the NYME while Brent crude futures rose to a trading record of $ 146.69 a barrel on the ICE Futures exchange.<ref>[http://ap.google.com/article/ALeqM5i5TtajgUpSm7KY5jf-lCJGHBB-tAD91MAM4O3 ap.google.com, Oil prices near $146]</ref><ref>[http://www.washingtontimes.com/news/2008/jul/03/oil-prices-near-146/ washingtontimes.com, Oil prices near $146]</ref> On July 11, Oil hit another record of $US147.00 a barrel, after a $10.00 decline in oil before.<ref>[http://news.theage.com.au/world/oil-prices-top-147-us-dollars-per-barrel-20080712-3dvb.html The Age, Oil prices top 147 US dollars per barrel]</ref>
On [[July 15]], a selloff began after remarks by [[Chairman of the Federal Reserve]] [[Ben Bernanke]] which indicated significant [[demand destruction]] within the US because of the high prices. Within hours of his statements, an $8 drop had occurred, the biggest since [[Gulf War|the first US-Iraq war]].<ref>[http://money.cnn.com/2008/07/15/markets/oil/ CNN, Biggest oil price drop in 17 years]</ref><ref>[http://money.cnn.com/2008/07/16/markets/oil/index.htm CNN, Oil's two-day decline: more than $10 a barrel]</ref>
==Forecasted prices and trends==
[[Fatih Birol]], chief economist of the International Energy Agency expressed his opinion in October, 2007 that oil prices will remain high for the foreseeable future due to rapid increases in demand from the huge developing economies of [[China]] and [[India]]. Although India has raised prices, China has "no plans" to do so.<ref>{{cite web
|url=http://www.iht.com/articles/2007/10/31/business/oil.php
|title=IEA says oil prices will stay 'very high,' threatening global growth - International Herald Tribune
|publisher=[[International Herald Tribune]]
|accessdate=2008-05-08
|date= 2007-10-31
|last= Kanter
|first= James
}}</ref> According to informed observers, OPEC, meeting in early December, 2007, seemed to desire a high but stable price that would deliver substantial needed income to the oil producing states, but avoid prices so high that they would negatively impact the economies of the oil consuming nations. A range of 70–80 dollars a barrel was suggested by some analysts to be OPEC's goal.<ref name="OPEC_nytimes">{{cite web
|url= http://www.nytimes.com/2007/12/06/business/worldbusiness/06opec.html
|title= OPEC Finds Price Range to Live With
|accessdate= 2008-05-08
|last= Mouawad
|first= Jad
|date= 2007-12-06
|publisher= [[The New York Times]]}}</ref>
Some analysts point out that major oil exporting countries are rapidly developing; and because they are using more oil domestically, less oil may be available on the international market. This effect, outlined in the [[Export land model|export land economic model]], could significantly reduce the oil available for trade and cause prices to continue to rise. Particularly significant are [[Indonesia]] (which is now a net importer of oil), [[Mexico]] and [[Iran]] (where demand is projected to exceed production in about 5 years), and [[Russia]] (whose domestic petroleum demand is growing rapidly).<ref name="nytimes_krauss">{{cite web
|url= http://www.nytimes.com/2007/12/09/business/worldbusiness/09oil.html
|title= Oil-Rich Nations Use More Energy, Cutting Exports
|accessdate= 2008-05-08
|last= Krauss
|first= Clifford
|date= 2007-12-09
|publisher= [[The New York Times]]}}</ref>
In May 2008, [[Barclays Capital]] raised its forecast for average crude oil price in 2008 from its previous prediction of $100.80/bbl to $116.90/bbl, citing the only modest decreases in oil consumption among [[Organization for Economic Cooperation and Development|OECD]] countries, strong demand growth among non-OECD countries, the slow development of [[alternative fuel]]s, and weak non-[[OPEC]] supply which "continues to under-perform dramatically relative to consensus expectations."<ref name="bloomberg_barclays_crude_oil_forecast">{{cite web
|url= http://www.bloomberg.com/apps/news?pid=20602099&sid=antCHNDlIF6Q&refer=energy
|title= Barclays Raises 2008 Crude Oil Forecast to $116.90 (Update2)
|accessdate= 2008-05-08
|last= Schmollinger
|first= Christian
|coauthors = Sophie Tan
|date= 2008-05-08
|publisher= [[Bloomberg L.P.]]}}</ref>
Also in May 2008, Arjun N. Murti and other [[Goldman Sachs]] analysts issued a research report predicting oil prices are likely to rise to between $150 to $200/bbl in the next six to 24 months.<ref name="goldman_sachs_200_oil">{{cite web
|url=http://www.foxbusiness.com/story/markets/industries/energy/goldman-sachs-oil-prices-hit---barrel/
|title=Goldman Sachs: Oil Prices May Hit $150-$200 a Barrel
|publisher=[[Fox Business Network]]
|accessdate=2008-05-08
|date=2008-05-06
|last=Lesova
|first=Polya
}}
</ref> This was a marked increase from Goldman Sachs' earlier (September, 2007) forecast of oil prices averaging $85/bbl through
2008, rising to $95/bbl at year end, which was in turn an increase from still-earlier predictions.<ref name="goldman_sachs_2007_forecast">
{{cite web
|url=http://www.energypublisher.com/article.asp?id=11171
|title=Goldman Sachs lifts end-of-year oil price forecast
|publisher=www.energypublisher.com
|accessdate=2008-05-08
|date=2007-09-24
|last=
|first=
}}
</ref>
Also in May 2008, [[T. Boone Pickens, Jr.]], the influential oil investor who believes the world’s oil output is about to [[Peak oil|peak]], warned oil prices would hit $150 a barrel by the end of the year. “Eighty-five million barrels of oil a day is all the world can produce, and the demand is 87m,” Mr Pickens said in an interview with [[CNBC]]. “It’s just that simple.”<ref>[http://www.cnbc.com/id/24723260/ Pickens: Oil Going to $150, So Move to Gas], CNBC.com</ref>
In June 2008, [[Alexei Miller]], head of Russian energy giant [[Gazprom]], warned that the price of oil is likely to hit $250 a barrel sometime in 2009. Miller said that while speculation had played a role in oil prices, "this influence was not decisive."<ref>[http://www.reuters.com/article/OILPRD/idUSL1056924820080610 Russia's Gazprom predicts $250 oil in 2009], Reuters</ref>
Bloomberg reported that, as of mid-June, "At least 3,008 options contracts have been purchased giving holders the right to buy oil at $250 a barrel in December".<ref>{{cite news | first= | last= | coauthors= | title= Gazprom CEO's $250 Oil Forecast Is Doom Traders Love | date= 2008-06-16 | publisher= | url =http://www.bloomberg.com/apps/news?pid=20601109&sid=a1OfxCNSkbnI&refer=home | work = Bloomberg.com | pages = | accessdate = 2008-06-17 | language = }}</ref>
Also in June 2008, [[Shukri Ghanem]], head of Libya's [[National Oil Corporation]], said: "I think it [the oil price] will go higher. That is a trend that will continue for some time. The easy, cheap oil is over, [[peak oil]] is looming."<ref>[http://www.guardian.co.uk/money/2008/jun/09/householdbills.oil Domestic energy bills expected to soar as cost of oil keeps increasing], The Guardian</ref>
On [[26 June]], [[2008]], [[OPEC]] President [[Chakib Khelil]] said in an interview: "I forecast prices probably between $150-170 during this summer. That will perhaps ease towards the end of the year."<ref>[http://www.reuters.com/article/GCA-Oil/idUSPAB00415020080626 OPEC Chief Sees $150-170 Oil in Coming Months], Reuters</ref> [[Iran]]'s OPEC governor [[Mohammad-Ali Khatibi]] predicts that the price of oil would reach $150 a barrel by the end of this summer.<ref>[http://www.presstv.ir/detail.aspx?id=59279§ionid=3510213 Iran's OPEC governor: Oil to hit $150], Press TV</ref>
Near-term [[peak oil]] proponent [[Matthew Simmons]] predicts a rise to $300 a barrel or higher by 2013 as [[sweet crude petroleum]] becomes more scarce and major producers begin failing to meet demand.<ref name="matt_simmons_300_bbl">{{cite web
|url= http://www.arabianbusiness.com/512436-oil-could-reach-us300-claims-expert
|title= Oil could reach $300, says expert
|accessdate= 2008-03-27
|last=Ferris-Lay
|first= Claire
|date= 2008-02-28
|publisher= ArabianBusiness.com}}</ref>
== Effects ==
Rising oil prices are not directly proportional to increases in [[Gasoline and diesel usage and pricing|gasoline prices]] at the pump. For example, while crude oil prices increased 400% from 2003–2008, United States [[price of gasoline|gasoline prices]] did not rise by the same factor. This is because the profits of distributors and retailers, production costs (such as refining, transportation), and taxes are all part of the price of auto fuel. However, as the cost of crude oil increases, the crude-oil cost becomes a relatively larger component of the retail price of gasoline, causing any further increases in crude oil prices to have correspondingly larger impact on consumers.
There is debate over the effect the current long term elevation of oil prices will have. Some speculate that an oil-price spike could create a recession comparable to those that followed the [[1973 energy crisis|1973]] and [[1979 energy crisis|1979 energy crises]] or a potentially worse situation such as a global [[oil crash]].
In any case, costs are reflected in nearly everything one can buy.<ref>http://www.dallasnews.com/sharedcontent/dws/news/localnews/stories/DN-oilQ&A_15bus.ART.State.Edition1.4dc8e7b.html</ref>
Political scientist [[George Friedman]] has postulated that if high prices for oil and food persist, they will define the fourth distinct geopolitical regime since the end of [[World War II]], the previous three being the [[Cold War]], the 1989-2001 period in which economic [[globalization]] was primary, and the post-9/11 [[war on terror]].<ref>
{{cite web
|url=http://www.stratfor.com/weekly/geopolitics_130_oil
|title=The geopolitics of $130 oil
|publisher=[[Stratfor]]
|accessdate=2008-07-11
|last=Friedman
|first=George
|date=2008-05-27
}}
</ref>
=== Inflation and recession ===
{{further|[[Oil crisis]] and [[Recession of 2008]]}}
The perceived increase in oil price differs internationally according to currency market fluctuations and purchasing power of currencies. For example, excluding changes in relative purchasing power of various currencies, from [[2002-01-01]] to [[2008-01-01]]:<ref>To see table and sources : [[Talk:Oil_price_increases_since_2003#World_view]]</ref>
* In [[US$]], oil price rose from $20.37 to nearly $100, about ''4.91'' times more expensive;
* In the same period, the [[NT$|Taiwanese dollar]] gained value over the U.S. dollar to make oil in Taiwan ''4.53'' times more expensive;
* In the same period, the [[¥|Japanese Yen]] gained value over the U.S. dollar to make oil in [[Japan]] ''4.10'' times more expensive;
* In the same period, the [[€|Euro]] gained value over the U.S. dollar to make oil in the [[Eurozone]] 2.94 times more expensive.
On average, oil price has increased approximately 400% for these areas. Because of this protests are appearing.<ref>[http://www.boston.com/news/education/k_12/articles/2008/05/13/high_gasoline_prices_spawning_songs_signs_symbolic_acts/ High gasoline prices spawning songs, signs, symbolic acts - Boston.com<!-- Bot generated title -->]</ref><ref>[http://www.principalsforchange.org/ Principals For Change]</ref>
Rising transport costs may start to reverse [[globalization]], due to the fact that distance will cost more and more money. As oil prices keep rising, transport costs could cancel out lower [[wage]] advantages, such as in [[East Asia]].<ref>http://research.cibcwm.com/economic_public/download/smay08.pdf</ref>
====United States====
[[Image:XOI 3-year chart 2005-09-02.png|thumb|250px|Three-year performance of the oil industry...]]
[[Image:XOI 1-month chart 2005-09-02.png|thumb|250px|...and one-month performance.]]
It is easiest to gauge the effects of oil prices in the United states, where comparison of oil prices to average income are simplified. One of the most closely watched measures is the [[Gasoline usage and pricing|price of gas]],<ref>[http://www.usatoday.com/money/industries/energy/2008-06-29-home-heating_N.htm?loc=interstitialskip Northeast braces for home heating oil increases], USATODAY.com</ref> but the average United States [[Market basket|consumer's basket of goods]] contains many other [[petroleum products]] as well.
Despite the rapid increase in the price of oil, neither the [[stock market]]s nor the growth of the global economy were noticeably affected until supply declined rapidly starting in November 2007. Arguably, [[inflation]] has increased; in the [[United States]], inflation averaged 3.3% in 2005–2006, as compared to an average of 2.5% in the preceding 10-year period.<ref>[http://www.miseryindex.us/iRbyyear.asp?StartYear=1995&EndYear=2006 The United States Inflation Rate By Year<!-- Bot generated title -->]</ref> As a result, during this period the [[Federal Reserve]] has consistently increased [[Federal funds rate|interest rates]] to curb inflation.
Exactly how much trade, [[wikt:soaring|soaring]] transport costs divert from China (or for that matter anywhere else) depend ultimately on how important those costs are in total costs. Goods that have a high value to freight ratio carry implicitly small transport costs, while goods with low value to freight ratios typically carry significant moving costs. A high percentage of Chinese exports to the U.S. fall in the latter category. [[Furniture]], [[apparel]], [[footwear]], [[metal manufacturing]], and [[industrial machinery]]—all typical Chinese exports, incur relatively high transport costs.<ref>http://research.cibcwm.com/economic_public/download/smay08.pdf</ref>
Soaring costs are squeezing gas station owners too.<ref>http://www.latimes.com/business/la-fi-gas10-2008jun10,0,6281075,full.story</ref>
In 2008, a report by [[Cambridge Energy Research Associates]] stated that 2007 had been the year of peak gasoline usage in the United States, and that record energy levels would cause an "enduring shift" in energy consumption practices.<ref>
{{cite news
|url=http://online.wsj.com/article/SB121392646391690835.html?mod=googlenews_wsj
|title=Prices Curtail U.S. Gasoline Use
|publisher=[[Wall Street Journal]]
|date=June 20, 2008
|page=A4
|author=Ana Campoy
|language=English
}}</ref> According to the report, in April gas consumption had been lower than a year before for the sixth straight month, suggesting 2008 would be the first year U.S. gasoline usage declined in 17 years. The total miles driven in the U.S. began declining in 2006.<ref>
{{cite news
|url=http://www.nytimes.com/2008/06/19/business/19gas.html?ref=business
|title=Driving Less, Americans Finally React to Sting of Gas Prices, a Study Says
|publisher=[[New York Times]]
|date=June 19, 2008
|author=Clifford Krauss
|language=English
}}</ref>
=====United States and GDP=====
In the United States, for instance, each 1000 dollars in [[Gross domestic product|GDP]] required 2.4 barrels of oil in 1973 when adjusted for inflation, while this number had fallen to 1.15 by 2001.<ref>http://www.eia.doe.gov/emeu/mer/pdf/pages/sec1_16.pdf</ref>
For calendar 1981, United States oil consumption was {{convert|5861058000|oilbbl|km3|abbr=on}}<ref>[http://tonto.eia.doe.gov/dnav/pet/hist/mttupus1A.htm U.S. Total Crude Oil and Petroleum Products Product Supplied (Thousand Barrels)<!-- Bot generated title -->]</ref> and GDP was $5,291.7 billion<ref>[http://www.bea.gov/bea/dn/gdplev.xls BEA : Page Not Found<!-- Bot generated title -->]</ref> (chain-volume 2000 dollars), a ratio of $902.86/bbl. In 2005, consumption was 7,539,370,000 bl and GDP was $11,048.6 billion, a ratio of $1,465.45/bbl.
Many of the energy intensive industrial and manufacturing activities present in the 1970s U.S. moved out of the country during a period of outsourcing. Manufacturing as a portion of U.S. GDP has declined considerably since 1973.<ref>http://www.epi.org/content.cfm/briefingpapers_bp149</ref> While the United States no longer makes as many goods and therefor does not expend as much energy to do so higher energy prices are still impacting the cost to manufacture these goods overseas. The increased cost impacts the U.S. GDP via the trade deficit. The size of this impact is difficult to estimate though the total energy/GDP effect should be commensurate with the 1970s value compensated by any efficiency gains from the outsourcing itself and the increased transportation costs.
=====United States stock market=====
The increase in oil prices over two years was mirrored by an increase in stock values in the energy sector. Energy [[Exchange-traded fund|ETFs]] like XLE (an overall energy sector fund) and OIH (an oil service industry fund) did well during the period, with XLE's price increasing from $26 (2004-01-01) to $54 (2006-03-02), and OIH's price increasing from $60 (2004-01-01) to $143 (2006-03-02).
The value of the stock in companies such as Apache<ref>[http://finance.yahoo.com/q/bc?s=APA&t=2y APA: Basic Chart for APACHE CP - Yahoo! Finance<!-- Bot generated title -->]</ref> and Conoco-Phillips<ref>[http://finance.yahoo.com/q/bc?t=2y&l=on&z=m&q=l&p=&a=&c=&s=cop COP: Basic Chart for CONOCOPHILLIPS - Yahoo! Finance<!-- Bot generated title -->]</ref> rose sharply during this period. These prices increased more rapidly toward the end of August, particularly after [[Hurricane Katrina]].<ref>[http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2005-08-31T182810Z_01_N31372134_RTRIDST_0_ENERGY-KATRINA-STOCKS-UPDATE-2.XML]{{Dead link|date=March 2008}}</ref>
[[Wal-Mart]] shares continued their decrease in value that began with the increase in the oil prices. Over two years, stock in Wal-Mart dropped in value by 25% from $60 per share to under $45 per share.<ref>[http://finance.yahoo.com/q/bc?s=WMT&t=2y WMT: Basic Chart for WAL MART STORES - Yahoo! Finance<!-- Bot generated title -->]</ref> Earlier in August, Wal-Mart announced that higher than expected oil prices cut into the corporation's profits for the 2nd quarter of 2005. Since oil prices after the end of the 2nd quarter continued to rise, 3rd quarter profits from Wal-Mart are expected to be small. Because Wal-Mart's distribution system relies on the customer to drive to a large discount [[big-box store]], increases in the price of fuel might discourage some customers from making the trip as often. Wal-Mart, like all retailers, will also face higher shipping costs to get goods from the factory to the stores. This will likely cause [[Inflation|inflationary pressures]]. Nevertheless, Wal-Mart's sales actually increased as a result as [[disposable income]] decreased due to the increased price of gasoline.
====Europe====
In the developed countries of Western and Central Europe, the prices of transport fuels are made up of the price of the refined product, plus a substantial tax element, which can vary between roughly 2/3 and 3/4 of the total price. (in the [[UK]] nearly 70% of the price of a litre of petrol is made up of fuel duty and VAT. A doubling of the oil price would add perhaps 30% to the cost of fuel at the pump in the [[UK]], if the duty was not changed.) These taxes are not harmonised, nor are different countries' budgets updated at the same time. As a consequence, people who live nearby will often find it worthwhile to drive over the border to fill up, despite the hassle and traffic congestion this causes. However, in general, by having a large tax fraction, governments have the benefit of some room for manoeuvre, to smooth sudden price [[shock (economics)|shocks]] by relaxing and then slowly ramping back the fuel duties, and the population has lifestyles that are already well adapted to fuel prices that would appear very high to consumers in the USA (where the tax fraction is less than 20%). These two effects conspire to make European demand largely independent of the crude oil price, at least over short periods of a few years.
====Asia Pacific region====
The [[Pacific rim]] had been experiencing oil shortages on an ongoing basis prior to Hurricane Katrina. Some countries are increasing production of biofuels to offset the higher costs of oil.{{Fact|date=January 2008}}
In July 2008, [[Malaysia]] experienced protests against high fuel prices.<ref>[http://www.theage.com.au/world/malaysians-turn-out-in-thousands-to-defy-police-20080706-32mu.html Malaysians turn out in thousands to defy police (07-07-2008)]</ref>
In [[Indonesia]], fuel subsidies grew to encompass "almost one third of the state budget".<ref>[http://www.thejakartapost.com/news/2008/07/07/editorial-sby-still-doesn039t-get-it.html Editorial: SBY still doesn't get it (07-07-2008)]</ref>
On July 15 2008, [[Japan]]ese [[fishermen]] for the first time began a protest strike over the high cost of boat fuel (which had tripled over a three year period). The high fuel costs have been compounded by higher domestic meat consumption, lower priced foreign competitors, and the cumulative effects of overfishing. During the strike around virtually the entire Japanese fishing fleet of 200,000 boats sat idle. This follows strikes by truck and taxi drivers, as well as other fishermen, in Asia, Europe and the U.S.<ref>[http://english.aljazeera.net/news/asia-pacific/2008/07/200871545139795255.html Japan fishermen strike over fuel]. Al Jazeera English. July 15, 2008.</ref><!-- given as refs but not enough info to know what they point too: <ref>CNN International. July 16, 2008, 3:30 CET.</ref><ref>Al Jazeera English. July 15, 2008.</ref> --> Between 2006 and 2008, the number of fishermen in Japan dropped by as much as 20% and the Japanese Ministry of Agriculture, Forestry and Fisheries projects this number to grow. {{cn}}
====Developing countries====
High oil prices are likely to first affect less affluent countries, particularly the developing world, with less discretionary income. There are fewer vehicles per capita, and oil is often used for electricity generation, as well as private transport. The [[World Bank]] has looked more deeply at the effect of oil prices in the developing countries.
An analysis finds that in South Africa a 125 percent increase in the price of crude oil and refined petroleum reduces employment and GDP by approximately 2 percent, and reduces household consumption by approximately 7 percent, affecting mainly the poor.<ref>[http://econ.worldbank.org/external/default/main?pagePK=64165259&theSitePK=469382&piPK=64165421&menuPK=64166093&entityID=000158349_20070918095351]World bBank, Policy Research working paper ; no. WPS 4354: Economy-wide and distributional impacts of an oil price shock on the south African economy (2007/09/18)</ref>
====Sub-Saharan Africa====
High oil prices are hurting many countries in [[Africa]], including [[Zimbabwe]], [[Eritrea]] and [[Tanzania]]. High oil prices have created an oil supply instability, per barrel price instability or both. There are reports that this has led to fuel rationing being enacted in some cases.<ref>[http://www.energybulletin.net/32909.html What about the poor? | EnergyBulletin.net | Peak Oil News Clearinghouse<!-- Bot generated title -->]</ref> Many countries in Sub-Saharan Africa lack the foreign exchange reserves to purchase enough oil products at increasingly higher prices. These nations have little choice but to limit imports and/or ration their existing supplies.
====Latin America and Caribbean====
[[Venezuela]]'s president, [[Hugo Chávez]], came under increasing scrutiny as he began selling heating oil at lower-than-market prices to poor U.S. consumers and to island nations in the Caribbean such as Cuba.<ref>[http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1125611420336&call_pageid=968256290204&col=968350116795 TheStar.com - Page Not Found<!-- Bot generated title -->]</ref> {{Dead link|date=January 2008}}
====Persian Gulf States and Eurasian Arab-Islamic regions====
Some stock markets in [[Cooperation Council for the Arab States of the Gulf|the GCC]], notably in [[Saudi Arabia]] and [[Dubai]], experienced a boom, roughly 100% index increase in the [[Tadawul|Saudi stock market]].<ref>[http://www.tadawul.com.sa/wps/portal/!ut/p/_s.7_0_A/7_0_49S?chart_tasi_timeframe=1+YEAR¤t_page=%2Ftasi%2Fjsp%2Findeces_detail.&chart_tasi_current_sector=TASI&TASIactionString=chart_tasi.form.config_change&s8fid=2114543112712 (السوق المالية السعودية (تداول - Navigation Root<!-- Bot generated title -->]</ref> However, this boom was followed by a market crash. A number of planned projects to stir development, such as [[King Abdullah Economic City]], have been proposed due to $29.3 billion surplus.<ref>[http://www.recexpo.com/recweb/News_show_news.asp?id=1521 REC<!-- Bot generated title -->]</ref> On May 1, 2006 Saudi Arabia lowered prices on all hydrocarbon fuels for local consumption; 95 [[octane rating|octane]] gasoline costs .606 USD/gallon (fixed price).<ref> {{cite web | url=http://www.huffingtonpost.com/raymond-j-learsy/saudi-arabias-oil-sover_b_38677.html | title=Saudi Arabia's Oil? Sovereign Responsibility Trumps Sovereign Rights! | date=[[January 15]] [[2007]]}}</ref>
An [[EIA]] report stated that [[OPEC]] member nations were projected to earn a net amount of $1.251 trillion in 2008 from their oil exports, due to the record crude prices.<ref>[http://in.reuters.com/article/businessNews/idINIndia-34433820080708 OPEC to earn $1.251 trillion from oil exports - EIA], Reuters</ref>
===Transportation===
====Ground transport====
Prior to the runup in fuel prices, many motorists opted for larger, less fuel-efficient [[sport utility vehicle]]s and [[full-size]] vehicles in the United States, Canada and other countries where fuel taxes have historically been low. This trend began reversing in 2008 due to rising prices of fuel along with an increasing perception that future fuel prices will be at least as high. At the same time, [[appraisal]] and [[depreciation]] rates for SUVs, trucks, and vans have increased 30% and current SUV, truck, and van owners who cannot liquidate their [[gas-guzzler]]s because of low resale values are donating their vehicles for [[tax credits]]; this trend occurred during the [[1973 oil crisis]] where [[musclecar]]s and luxury cars faced the same predicament.
The September 2005 sales data for all the vehicle vendors indicated SUV sales dropped while small cars sales increased compared with 2004 sales. There is also an ever increasing market for [[hybrid vehicles]] (e.g., [[Toyota Prius]] and [[Honda Civic Hybrid]]) and [[diesel engine]] vehicles (e.g., [[Volkswagen Group|Volkswagen]] [[Turbocharged Direct Injection|TDI]] and Mercedes-Benz E320 CDI) since they are more fuel efficient; since the [[1973 energy crisis]], the [[front-wheel drive]] passenger car has replaced [[rear-wheel drive]] as the preferred layout for energy efficient cars. There is increasing demand of "[[crossover SUV]]s" (i.e., SUVs based on [[unibody]] platforms) which are marginally lighter and therefore more fuel efficient than SUVs built on [[body-on-frame]] chassis.
The [[Union Pacific]] Railroad has had to address with its rising fuel bill, which has reached the point of becoming its single biggest operating expense. <ref>http://www.omaha.com/index.php?u_page=1208&u_sid=10360571 . See also [[railway electrification system]]</ref> Airlines and oveseas shipping companies are also struggling to contain costs as their energy expense soar.
Anecdotal evidence suggested that in mid-2008, rising fuel prices motivated an increasing number of drivers to adopt [[fuel economy maximizing behaviors]].<ref name="Gwyn_2008_06_13">
{{cite web
|url=http://www.thestar.com/World/Columnist/article/442580
|title=As oil spikes, our behaviour changes
|publisher=[[Toronto Star]]
|accessdate=2008-06-15
|last=Gwyn
|first=Richard
|date=2008-06-13
}}
</ref>
In July 2008, millions of [[India]]n truck drivers joined a series of protests in [[Asia]] and [[Europe]] after crude oil's record run forced governments and fuel retailers to cut subsidies and raise prices.<ref>[http://news.bbc.co.uk/2/hi/south_asia/7484671.stm India truckers strike over fuel], BBC News</ref><ref>[http://www.nytimes.com/2008/06/14/world/asia/14korea.html?_r=1&partner=rssnyt&oref=slogin South Korean Truckers Strike to Protest Rising Fuel Costs], NYTimes.com</ref><ref>[http://news.bbc.co.uk/2/hi/europe/7443257.stm Spanish hauliers on fuel strike], BBC News</ref>
====Air travel====
{{further|[[History of aviation#The challenge of peak oil]]}}
Although [[Peak oil]] theorists such as [[David Goodstein]], [[Richard Heinberg]], and others, had for years predicted sharp declines in air travel following the peaking of world oil production and its subsequent decline,<ref name="heinberg_partys_over">{{cite book
| last = Heinberg
| first = Richard
| authorlink = Richard Heinberg
| title = [[The Party's Over: Oil, War, and the Fate of Industrial Societies]]
| publisher = New Society Publishers
| year = 2003
| doi =
| isbn = 0-86571-482-7 }}</ref> [[air travel]] enjoyed robust growth around much of the world spurred by low [[jet fuel]] costs starting in the [[1980s oil glut|mid-1980s]]. For example, air travel in the United States grew five times faster than population in the decades after 1978, with 769 million passengers boarding U.S. airline flights in 2007.<ref name="air_travel_costs">
{{cite web
|url=http://www.usatoday.com/money/industries/travel/2008-04-30-jet-fuel-high-fares_N.htm
|title=Rising costs reshaping air travel across the USA
|publisher=[[USA Today]]
|accessdate=2008-05-10
|last=Adams
|first=Marilyn
|date=2008-04-30
}}
</ref> However, the run-up in oil prices after 2003 began eroding airline profits, and the further doubling of oil prices from May 2007 to May 2008 began to have a substantial impact on airline operations, forcing airlines to reduce flight schedules, and pushing weaker carriers into merger or bankruptcy.<ref name="air_travel_costs"/><ref name="airlines_cut_flights">
{{cite web
|url=http://www.usatoday.com/travel/flights/2008-06-03-airlines-cuts-flights-fares_N.htm
|title=Fliers in for pain as airlines pack it in
|publisher=[[USA Today]]
|accessdate=2008-06-05
|last=Adams
|first=Marilyn
|coauthors=De Lollis, Barbara, and Hansen, Barbara
|date=2008-06-03
}}
</ref><ref name="half_life_for_air_travel">
{{cite web
|url=http://www.inteldaily.com/?c=154&a=6390
|title=The Peak Oil Crisis: The Half-Life For Air Travel
|publisher=www.inteldaily.com
|accessdate=2008-05-10
|last=Whipple
|first=Tom
}}
</ref> During the first half of 2008, at least tweinty-five airlines world-wide entered bankruptcy or were forced to cease operations.<ref>http://news.asiaone.com/News/Latest+News/Business/Story/A1Story20080708-75407.html</ref>
April 2008 began with four small airlines ([[Aloha Airlines]], [[Champion Air]], [[ATA Airlines]] and [[Skybus Airlines]]) ceasing operations in a period of a week.{{Fact|date=July 2008}} A fifth airline, [[Oasis Hong Kong Airlines]] ceased operations on April 9, 2008.{{Fact|date=July 2008}} A sixth airline, [[Frontier Airlines]] filed for bankruptcy on April 11, 2008 to protect itself from its credit card processing company which was withholding airline ticket revenues. Frontier continues to operate under Chapter 11 and is working to get a new agreement with said company.{{Fact|date=July 2008}} [[Eos Airlines]], a small specialty carrier with high costs, ceased operations on April 27, 2008.{{Fact|date=July 2008}} An eighth airline [[Nationwide Airlines]] ceased operations on April 29, 2008, due to the "impossibility" of profitably operating the [[Boeing 737-200]] with oil prices of over $133 a barrel.{{Fact|date=July 2008}} The 737-200 is a 30 year old aircraft that is 30% less fuel efficient than new production 737's.{{Fact|date=July 2008}} On May 9, 2008, a ninth airline, [[EuroManx]] announced that it was ceasing all operations, citing rising fuel prices and reduced passenger numbers as the reasons.{{Fact|date=July 2008}} <!-- With the exception of [[Oasis Hong Kong Airlines]], [[Nationwide Airlines]] and [[EuroManx]], the only other airlines outside of the United States that have ceased operations in the first half of 2008 have done so due to [[rebranding]] or safety violations. Do not add information about non-recession related airline closures/bankruptcies.-->
A 5% U.S. domestic capacity cut (since raised to around 15%) may be expanded to all airlines to save on fuel by eliminating older aircraft from their fleets similar to the exchange that took place in the late 1970s and early 1980s.{{Fact|date=July 2008}}{{huh?}} Although a slightly larger cut happened in the aftermath of [[9/11]] (20%), this is the first time since the 1970s that airline service has been cut to save on fuel for the United States.{{Fact|date=July 2008}} Other airlines such as [[Ryanair]] and [[Scandinavian Airlines System]] have also cut capacity.{{Fact|date=July 2008}}
====Shipping====
Recent changes in transportation have led to increased sensitivity to higher energy prices. Most notable of these changes is the massive trend towards [[containerization]] that effectively makes shipping costs more vulnerable to swings in fuel costs. Container ships can be unloaded much faster than [[break cargo]]s so they spend much more time at sea than in ports.<ref>http://research.cibcwm.com/economic_public/download/smay08.pdf</ref>
Another factor is speed. The shift to container ships has increased the importance of ship speed. Over the past two decades, container ships were built to go faster than bulk ships and since container ships were steadily gaining share, the world’s fleet speed picked up. But greater speed requires greater energy, as it does in all other modes of transport. In global shipping, the increase in ship speed over the last fifteen years has doubled fuel consumption
per unit of freight.<ref>http://research.cibcwm.com/economic_public/download/smay08.pdf</ref> Accordingly, in 2008 some shipping companies responded to higher fuel costs by slowing down their ships,<ref name="ships_lower_speeds">
{{cite web
|url=http://www.abc.net.au/news/stories/2008/01/22/2143897.htm
|title=Ships turn to sails, lower speeds to cut fuel use
|publisher=ABC News ([[Australian Broadcasting Corporation]])
|accessdate=2008-06-05
|last=
|first=
|date=2008-01-22
}}
</ref> while companies such as [[SkySails]] began prototyping large [[power kite|towing kites]] to harness [[wind power]], partly offsetting some engine power for propulsion.<ref name="ships_lower_speeds"/>
The cost of shipping a standard 40-foot [[Containerization|container]] from East Asia to the [[East Coast of the United States|U.S. Eastern Seaboard]] has already tripled since 2000 and will double again as oil prices head towards $200 per barrel. At 2008 oil prices, every 10% increase in trip distance translates into a 4.5% increase in transport costs.<ref>http://research.cibcwm.com/economic_public/download/smay08.pdf</ref>
Including [[inland]] costs, shipping a standard 40-foot container from Shanghai to the U.S. Eastern Seaboard now costs $8,000. In 2000, when oil prices were $20 per barrel, it cost only $3,000 to ship the same container. But at $200 per barrel, it will soon cost $15,000 in transport costs to ship from China to the U.S. Eastern Seaboard. Trans-oceanic transport costs also exploded during the two historic [[OPEC oil price shock]]. The cost
of shipping a standard cargo load overseas almost tripled, just as it did over the past few years.<ref>http://research.cibcwm.com/economic_public/download/smay08.pdf</ref>
===Food security===
{{further|[[Food security#Risks to food security|Risks to food security]], [[Peak oil#Population|Agriculture and population limits]], [[Food vs fuel]] and [[2007–2008 world food price crisis]]}}
Since the 1940s, agriculture has dramatically increased its productivity, due largely to the use of petrochemical derived [[pesticide]]s, [[fertilizers]], and increased [[mechanization]] (the so-called [[Green Revolution]]). During this time, the [[world population]] has more than doubled. Between 1950 and 1984, as the Green Revolution transformed [[agriculture]] around the globe, world grain production increased by 250%.<ref>http://www.energybulletin.net/281.html, Eating Fossil Fuels. EnergyBulletin.net</ref><ref>[http://www.canada.com/vancouversun/news/story.html?id=2eeece50-285f-4c4b-bb37-2d053d04d4e8&p=1 Civilization's golden era is teetering on collapse], The Vancouver Sun</ref>
By late 2007, increased farming for use in [[biofuel]]s,<ref>[http://www.sundayherald.com/news/heraldnews/display.var.2104849.0.2008_the_year_of_global_food_crisis.php 2008: The year of global food crisis]</ref> world [[oil prices]] at nearly $100 a barrel<ref>[http://www.time.com/time/world/article/0,8599,1717572,00.html The World's Growing Food-Price Crisis]</ref> and growing consumer demand in [[China]] and [[India]]<ref>[http://www.csmonitor.com/2008/0118/p08s01-comv.html The global grain bubble]</ref> pushed up the price of [[grain]].<ref>[http://news.bbc.co.uk/1/hi/world/7284196.stm The cost of food: Facts and figures]</ref> [[:Category:Food riots|Food riots]] occurred in many countries across the world in 2007 and 2008.<ref>[http://www.guardian.co.uk/world/2007/dec/04/china.business Riots and hunger feared as demand for grain sends food costs soaring]</ref><ref>[http://www.timesonline.co.uk/tol/news/environment/article3500975.ece Already we have riots, hoarding, panic: the sign of things to come?]</ref><ref>[http://www.guardian.co.uk/environment/2008/feb/26/food.unitednations Feed the world? We are fighting a losing battle, UN admits]</ref> In December 2007, 37 countries faced food crises, and 20 had imposed some sort of [[food]]-price controls. Geologist [[Dale Allen Pfeiffer]] claims that the coming decades could see spiraling [[Food#Prices|food prices]] and massive [[starvation]] on a global level such as [[Olduvai theory|never experienced before]].<ref>[http://globalpublicmedia.com/transcripts/455 A Conversation with geologist Dale Alan Pfeiffer; Part 2 transcript]</ref><ref>[http://www.soilassociation.org/peakoil Peak Oil: the threat to our food security]</ref>
==Possible mitigations==
{{further|[[Mitigation of peak oil]]}}
Attempts to mitigate the impacts of oil price increases include:
* Increasing the supply of petroleum
* Finding substitutes for petroleum
* Decreasing the demand for petroleum
* Attempting to reduce the impact of rising prices on petroleum consumers
In mainstream economic theory, a [[free market]] rations an [[scarcity|increasingly scarce commodity]] by increasing its price. A higher price should [[Price elasticity of supply|stimulate producers to produce more]], and [[Price elasticity of demand|consumers to consume less]], while possibly shifting to [[substitute good|substitutes]]. The first three mitigation strategies in the above list are, therefore, in keeping with mainstream economic theory, as government policies can affect the supply and demand for petroleum as well as the availability of substitutes. In contrast, the last type of strategy in the list (attempting to shield consumers from rising prices) would seem to work against classical economic theory, by encouraging consumers to overconsume the scarce quantity, thus making it even scarcer. To avoid creating outright [[shortage]]s, attempts at [[price control]] may require some sort of [[rationing]] scheme.
===Alternative fuels===
{{Main|Biofuel}}
Economists say that the [[substitution effect]] will spur demand for [[alternative fuel|alternate fossil fuel]]s, such as [[coal]] or [[liquefied natural gas]] and for renewable energies, such as [[solar power]], [[wind power]] and [[advanced biofuel]]s.
For example, China and India are currently heavily investing in [[natural gas]] and [[coal liquefaction]] facilities. Nigeria is working on burning natural gas to produce electricity instead of simply flaring the gas, where all non-emergency gas flaring will be forbidden after 2008.<ref> http://www.tribune.com.ng/20062006/eog.html </ref><ref> http://www.climatelaw.org/media/gas.flaring/report/section5 </ref> Outside the U.S., more than 50% of oil is consumed for stationary, non-transportation purposes such as electricity production where it is relatively easy to substitute natural gas for oil.<ref>[http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/oil_market_basics/demand_text.htm Demand<!-- Bot generated title -->]</ref>
Ironically, oil companies including the [[supermajors]] have begun to fund research into alternative fuel. [[BP]] has invested [[Energy Biosciences Institute|half a billion dollars for research]] over the next several years. The motivations behind such moves are to acquire the patent rights as well as understanding the technology so [[vertical integration]] of the future industry could be achieved.
===Bioplastics and bioasphalt ===
{{main|Bioplastics}}
Another major factor in petroleum demand is the widespread use of petroleum products such as [[plastic]]. These could be partially replaced by bioplastics, which are derived from renewable plant feedstocks such as vegetable oil, [[corn starch]], pea starch<ref>[http://cordis.europa.eu/search/index.cfm?fuseaction=proj.document&CFTOKEN=19120617&PJ_RCN=7901178&CFID=6808047 Development of a pea starch film with trigger biodegradation properties for agricultural applications]</ref> or [[microbiota]].<ref>[http://www.springerlink.com/content/g38w61535m5841nx/ Accumulation of biopolymers in activated sludge biomass]</ref> They are used either as a direct replacement for traditional plastics or as blends with traditional plastics. The most common end use market is for packaging materials. Japan has also been a pioneer in bioplastics, incorporating them into electronics and automobiles.
Also [[bioasphalt]] can be used as a replacement of petroleum asphalt.
===United States Strategic Fuel Reserve===
The United States [[Strategic Petroleum Reserve]] could, on its own, supply current U.S. demand for about a month in the event of an emergency, unless it were also destroyed or inaccessible in the emergency. This could potentially be the case if a major storm were to hit the [[Gulf of Mexico]], where the reserve is located. While total consumption has increased,<ref> {{cite web | url=http://www.eia.doe.gov/emeu/aer/pdf/pages/sec11_21.pdf | title=Demand | publisher = [[Energy Information Administration]]}}</ref> the western economies are less reliant on oil than they were twenty-five years ago, due both to substantial growth in productivity and the growth of sectors of the economy with little oil dependence such as finance and banking, retail, etc. The decline of heavy industry and manufacturing in most developed countries has reduced the amount of oil per unit GDP; however, since these items are imported anyway, there is less change in the oil dependence of industrialized countries than the direct consumption statistics indicate.
===Fuel taxes===
{{main|Fuel tax}}
One recourse used and discussed in the past to avoid the negative impacts of oil shocks in the many developed countries which have high fuel taxes has been to temporarily or permanently suspend these taxes as fuel costs rise.
France, Italy, and the Netherlands lowered taxes in 2000 in response to protests over high prices, but other European nations resisted this option because public service financiation is partly based on energy taxes.<ref name=james092000>{{cite web
|url=http://www.iht.com/articles/2000/09/12/belg.2.t.php
|title=Amid Protests, Europe's Leaders Resist Oil-Tax Cut
|author=Barry James
|publisher=International Herald Tribune
|date=September 12, 2000
|language=English
}}</ref> The issue came up again in 2004, when oil reached $40 a barrel causing a meeting of 25 EU finance ministers to lower economic growth forecasts for that year. Because of budget deficits in several countries, they decided to pressure [[OPEC]] to lower prices instead of lowering taxes.<ref name=meller062004>{{cite web
|url=http://www.iht.com/articles/2004/06/03/euoil_ed3_.php
|title=EU states to avoid unilateral oil tax cuts
|author=Paul Meller
|publisher=''[[International Herald Tribune]]''
|date=[[June 3]], [[2004]]
|language=English
}}</ref> In 2007, European [[trucker]]s, [[farmer]]s, and [[fishermen]] again raised concerns over record oil prices cutting into their earnings, hoping to have taxes lowered. In England, where fuel taxes were raised in October and are scheduled to rise again in April 2008, there was talk of protests and [[roadblock]]s if the tax issue was not addressed.<ref name=kanter112007>{{cite web
|url=http://www.iht.com/articles/2007/11/09/business/fuel.php
|title=European politicians wrestle with high gasoline prices
|author=James Kanter
|publisher=International Herald Tribune
|date=November 9, 2007
|language=English
}}</ref> On April 1, 2008, a 25 Yen per liter fuel tax in Japan was allowed to lapse temporarily.<ref>{{cite news
|url=http://www.theaustralian.news.com.au/story/0,25197,23468940-2703,00.html
|title=Japanese motorists reap fuel windfall
|author=Peter Alford
|publisher=[[The Australian]]
|date=April 02, 2008
}}</ref>
This method of softening price shocks is even less viable to countries with much lower gas taxes, such as the United States.
===Demand management===
[[Transportation demand management]] has the potential to be an effective policy response to fuel shortages<ref>Gueret, Thomas [http://www.iea.org/textbase/work/2005/oil_demand/Oilintransportwkshp/pdffiles-day2/gueret.pdf Travel Demand Management Insights] IEA conference 2005</ref> or price increases and has a greater probability of long term benefits than other mitigation options.<ref>Litman, Todd [http://www.vtpi.org/fuelprice.pdf "Appropriate Response to Rising Fuel Prices"] Victoria Transport Policy Institute </ref>
There are major differences in energy consumption for private transport between cities; an average U.S. urban dweller uses 24 times more energy annually for private transport as a Chinese urban resident. These differences cannot be explained by wealth alone but are closely linked to the rates of walking, cycling and public transport use and to enduring features of the city including urban density and urban design.<ref>Kenworthy, J R [http://www.sustainability.dpc.wa.gov.au/conferences/refereed%20papers/Kenworthy,J%20-%20paper.pdf Transport Energy Use and Greenhouse Emissions in Urban Passenger Transport Systems : A Study of 84 Global Cities] Murdoch University</ref>
For individuals, [[Telecommuting]] provides alternatives to daily commuting and long-distance air travel for business, such as [[videoconferencing]], [[e-mail]], and [[corporate wiki]]s, continue to improve, in keeping with the overall improvement in information technologies ascribed to [[Moore's law]]. As the cost of moving information by moving human workers continues to rise, while the cost of moving information electronically continues to fall, presumably market forces should cause more people to substitute virtual travel for physical travel. [[Matthew Simmons]] explicitly calls for "liberating the workforce" by changing the corporate mindset from paying people to show up physically to work every day, to paying them instead for the work they do, from any location.<ref name="simmons_liberate_work_force">
{{cite web
|url=http://www.energybulletin.net/17555.html
|title=The maturation of Matt Simmons, energy-industry investment banker and peak oil guru
|publisher=www.energybulletin.net
|accessdate=2008-05-10
|last=Lundberg
|first=Jan
}}
</ref> This would allow many more [[information worker]]s to work from home either part-time or full-time, or from satellite offices near to where they live, freeing them from long daily commutes to central offices.
===Political action against market speculation===
The [[#Mid 2008 increases|price rises of mid-2008]] led to a variety of proposals to change the rules governing energy markets and energy futures markets, in order to prevent rises due to market speculation. On June 22, the [[Barack Obama presidential campaign, 2008|Barack Obama presidential campaign]] announced a plan "to crack down on excessive energy speculation".<ref>{{cite web
|url=http://my.barackobama.com/page/community/post/stateupdates/gG5Rzb
|title=Obama Announces Plan to Crack Down on Excessive Energy Speculation
|author=Christopher Hass
|publisher=Obama HQ Blogger
|date=June 22, 2008
}}</ref>
==See also==
*[[Consumer price index]]
*[[Hirsch report]]
*[[Oil consumption]]
*[[Oil crisis]]
*[[Olduvai theory]]
==Notes==
{{citation style}}
{{Reflist|2}}
== External links ==
*[http://www.eia.doe.gov/emeu/cabs/MEC_Past/index.html U.S. DOE EIA energy chronology and analysis]
*[http://www.ccc.nps.navy.mil/rsepResources/si/apr03/middleEast.asp Oil Prices and the Iraq War: Market Interpretations of Military Developments by U.S. Navy CCC]
* [http://www.wtrg.com/prices.htm Oil Price History and Analysis]
*[http://trendlines.ca/monthlyreport.htm#barrel TrendLines Research's "Barrel Meter" chart tracks oil price components: Geopolitical/Depletion Fear Premiums, Speculation, Currency Debasement, Extraction Costs & Lack of Surplus Capacity]
*[http://www.oxfordenergy.org/comment.php?0008 Explanation of pricing mechanism in oil markets]
*[http://www.atimes.com/atimes/Global_Economy/GE26Dj02.html The real problems with $50 oil], An analysis by Henry C.K. Liu in Asia Times Online, details the economic impact of high oil prices.
*[http://oilnergy.com/1combo.htm Oil Industry Combined Graph] Graph of oil prices in relation to other fossil fuel prices.
*[http://www.economist.com/finance/displaystory.cfm?story_id=11453090 Double, double, oil and trouble] May 29th 2008, From The Economist print edition, Is it “peak oil” or a speculative bubble? Neither, really.
*[http://www.economist.com/finance/displaystory.cfm?story_id=11453151 Fuel subsidies, Crude measures] May 29th 2008, From The Economist print edition, Not everybody is paying higher prices for oil.
* [http://www.brookings.edu/testimony/2008/0522_oil_sandalow.aspx Rising Oil Prices, Declining National Security], testimony of [[David B. Sandalow]] in the [[House Committee on Foreign Affairs]].
{{Peak oil}}
[[Category:2000s economic history]]
[[Category:Economic problems]]
[[Category:Energy crises]]
[[Category:History of the petroleum industry]]
[[Category:Peak oil]]
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