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The Price of Oil Increases to $100 A Barrel For The First Time

By Erik Folgate

I was reading this article on Yahoo Finance, and I started thinking to myself, “Will the price of gas ever stop rising?” I have not written much about the price of oil and the ever increasing gas prices until now, because it’s getting so absurd. No one knows why it’s REALLY increasing so much. I always hear people say that there is a shortage or refineries are down or up for maintenance, but is that really the reason why it keeps rising so much? Is it those futures investor nerds that keep driving the price up? Is it the fact that we are so dependent upon Middle Eastern oil? Is it because we’re just too dependent on oil in general? Whatever your take is on this debate, it doesn’t stop the fact that we keep paying whatever price the gasoline company spits out at us.

It makes me wonder just how elastic gasoline will be. What will be the consumer’s threshold when it comes to changing their habits of driving. Will it be four, five, six, seven dollars a gallon? My opinion is that the only solution is to change the technology in our transportation. Show the Middle East that we don’t need their oil as much as they think we do. The technology is there, it’s just not being researched, because the people with the deep pockets are the oil companies. I’m not going to say that we need to stop driving SUV’s, because I like them. I’m 6’4”, so there’s no way you’re going to get me into one of those smart cars, but we put a man on the moon, so we should be able to figure out how to create mid-size cars that get 50 to 75 miles per gallon.

What’s your opinion? What’s your solution to the potential energy crisis?

Erik Folgate
Erik and his wife, Lindzee, live in Orlando, Florida with a baby boy on the way. Erik works as an account manager for a marketing company, and considers counseling friends, family and the readers of Money Crashers his personal ministry to others. Erik became passionate about personal finance and helping others make wise financial decisions after racking up over $20k in credit card and student loan debt within the first two years of college.

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Comments

  • Eric

    I believe the old saying about death and taxes should now include the price of oil going up.

  • Karkus

    Yes, the technology exists, but Americans keep wanting more power and size. If we made 100 hp cars with 0-60 in 10s respectable again (like it was 20 years ago), we could probably meet the new CAFE rules right now.

    The other problem is the cheap gas – yes, $3 is way cheap compared to Europe. US gasoline is heavily subsidized (i.e. not taxed nearly enough to pay for all the roads and environmental damage), so we have nothing to complain about even if it goes to $4-5 this year. Get used to it, and dump your SUV now while it’s still worth something.

    The price of oil will keep going up (and be volatile). It’s supply/demand now, instead of Cartel controlled. If you look at what SaudiArabia has said and done (or not done) in 2007, you’ll realize they are no longer able to effectively control the price like they used to.

    And yes, so some tall/big people have trouble in some small cars, but I’ve heard from tall people that the Prius (midsize) actually works pretty well (as long as you sit in the front). I believe that Danes are now the tallest people on earth, yet they still buy the typically small European style cars. Try it sometime. Some won’t work, but others will.

  • Alfred

    The price of of is NOT going up. The value of the dollar in international markets is going DOWN, so it simply takes more devalued bucks to buy a barrel of hydrocarbons.

  • Karkus

    The price of oil is not going up ? Very funny. Haha.

    Since 2003 oil has tripled from ~$30 to >$90 now.
    In that same 5 year period, the dollar vs Euro has gone from .96 to .68. That’s a 29% decrease (a lot, but nowhere close to a 67 % decrease like Alfred would suggest). Even if you include inflation (~3% a year), you’re still nowhere close.

    I’ve seen graphs of oil vs various other currencies. They all go UP.

    You can deny peak oil to yourself all you want, but that doesn’t change the reality.

  • Paul

    Karkus, you sir are a fool. Why are you using the Euro to determine this. Another piece of paper. Use the same logic, except figure in the value of gold. Alfred is correct.

  • Paul

    Oh by the way, in 2001 you could buy gold for about 250 US dollars and ounce, today it would take over 860 US dollars to buy that same amount of gold. That is pretty equivelent to oil using your calcs. So in golds eyes, the price of oil hasn’t changesd at all. MMM..curious, but the paper money is affected, I wonder why Karkus. Maybe you could tell us?

    “The price of oil is not going up ? Very funny. Haha.” -KarKus

    Next time do a little research and stop laughing at the truth. It’s people like you that stay in the dark that cause these problems because you lack theknowledge and therefore cannot form an intelligent analysis, and there are millions of you…pretty scary, let’s hope that you are the only one named Karkus. Happy spending.

  • Paul

    Last thing Karkus, you mentioned inflation. Remember the 3% thing you figured? Can you define inflation in your own words? I wonder if this inflation thing has anything to do with all this…mmm? Remember folks, the US dollar used to be backed by gold. Not anymore. Gold will always be worth something, that is a historical fact. Gold does not go up and down. This is an illusion, just like oil. It’s the value of the US dollar or any other dollar that determines the gold price. Gold prices historically goes up when the faith in the paper currency goes down….mmm just like oil vs paper currency.

  • Paul

    And what is used to buy barrels of oil? US paper currency.

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