The coming oil shock
Friday, April 1st, 2005The Financial Times for Friday, April 1 2005 reports in the article Bank warns of ‘1970s’ oil prices that Goldman Sachs has forecast oil prices reaching $105 a barrel. They believe that the world has entered into a period of “super spikes†because of increased demand for oil and a lack of excess supply.
With the lack of investment in oil infrastructure, the rapid modernization of countries such as China and India, the terror/war premiums now included in every barrel of oil, and reluctance of Americans to reduce demand, there is little reason to expect the price of oil to fall in the near future.
With a rough doubling of oil prices we could expect to see gas go up to $4, or even $5, per gallon. At those prices it would cost me nearly $50 to fill up my small, old car with gas. For the nation it could mean serious economic and political damage, while at the same time providing impetuous for change.
In the same Financial Times, the article IEA to call for an emergency oil plan stresses the need to reduce demand for oil, and proposes these energy saving recommendations: carpooling, driving bans, lowering speed limits, expanded use of public transportation, telecommuting, and introducing a compressed work week.