What do these numbers mean to you? 122/22 000/200. Right now the oil price is at an all time record of $122 and to say that it sneaked up to this level is a con. The oil price has been setting records and then smashing through its own ceiling not even $1 at a time, sometimes by $2 and even $3. This demonstrates how powerful the pricing pressure (and concerns over supply) actually are.
22 000 is the latest estimate for the number of people to have died in the latest super-storm - once again the most powerful storm in living memory. Once again the weather has eroded an entire regions capacity to produce something - in this case rice.
Myanmar overnight goes from being an anticipated Asian region rice exporter, to a nett importer.
Are farmers busy harvesting rice in Myanmar? The images we see instead are 100 year old trees with 6 feet wide stems completely uprooted that have demolished small buildings.
We also see large supplies of food being loaded into large aircraft and sent to remedy the local storm-afflicted areas.
All of this costs even more energy. Any idea why we are seeing massive storms like this? Well, the sheer amounts of energy we pump into the atmosphere each day has started to manifest. And the emphasis should be made that we are only starting to see the effect of heating - it has taken a long time for the oceans and ecosystems to absorb and attempt to shed and produce a sort of heat exchange. Those systems have begun to degrade and there is no end in sight to man's daily culpability to this.
Today and tomorrow you will continue to drive your car to work, and it is this simple activity that causes massive systems apparently a world away.
200 is the figure being flauted as a possible level for oil prices this year. While we have heard endless talk about oil prices being too high, now some sanity (reality) has come into the picture. Oil is an incredibly precious resource. If you look at food prices, a lot of why they are so high is because fertlizer costs have virtually doubled. We need oil to keep our crops growing, to kill the pests that feed on them, to make medicines, for the plastics that we use and dispose of each day. Oil is the blood that pumps through suburbia. It is far more precious than we think it is, and even $200 is cheap. I believe we will hit $300 before we see really significant demand destruction. While really high prices will lock out most of the world's population early on, it will only begin to affect the real consumers of oil - car drivers and people living in suburbia - much later in the game. Hence, oil still has a long way to go, and while those numbers tick upward, have a look at the sky above your head.
Matt Simmons (Bloomberg): Peak Oil Now, Oil Perhaps to $300
March 29, 2007
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