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Gold/Mining/Energy : Big Dog's Boom Boom Room
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From: axial3/4/2009 4:11:12 AM
1 Recommendation   of 206173
 
Excellent review of crude's history and future. Widely applicable, but viewed from the perspective of airlines. Download pdf.

globalpublicmedia.org

The Oil Price Spike of 2008: The Result of Speculation or an Early Indicator of a Major and Growing Future Challenge to the Airline Industry?

In July 2008, the price of crude oil reached an historical high level of US$147 per barrel. However, as a consequence of falling demand over the following six months, the price declined by well over 60%. This article examines the causes behind the oil price spike, which has become a serious commercial threat to many airlines. While speculative forces may have been the primary driver, increased demand by emerging markets, decreasing inventories, as well as tight production played a significant role in this development.

The article subsequently expands its scope, and evaluates two of the possible future challenges in global oil production. The first concerns a peak in production due to inadequate past investments in upstream infrastructure. The second, a peak in global supply, is based on the fact that most oil producing countries have already reached their peak output and are in a permanent decline. Both scenarios would undoubtedly lead to very high fuel prices and they present a major risk to an industry in which there are presently no substitutes for fossil fuel based energy.

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Jim
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