Future dire

Price of petrol…

Why did it go so low? I’ve heard and read a few explanations:

  1. There was an oversupply of petrol (also called petroleum or gasoline by many, but I’ll call it petrol) because of refineries being reconfigured to supply diesel to the Eurpean market
  2. Crude went lower in price and that affected pump prices
  3. Speculators stopped fiddling the petrol prices because the crude prices dropped
  4. It was artificially lowered to produce a sense of calm for the financial market crash and planned depression

Now it is rising in price again. Still about 20% lower in price than when the price-fall commenced. Pump price for my locale was $1.68/litre. It fell to $0.96/litre and now it is at $1.11/litre (a litre is about a quarter of a gallon for those people still using those old imperial type measurements). So how can an energy source lose 43% of its market value when nothing else in the market lost its value by a remotely similar amount?

Fact is that I don’t really know and haven’t come across a satisfactory explanation. I put it to the reader that worldwide the crude price is controlled by a cartel, OPEC, so why can’t the pump price be controlled by a cartel, too? The market was beginning to contract away from the high prices – people were starting to use public transport, car-pooling became much more popular and large-engine vehicle sales were dropping rapidly.

What I do know is that people at large are not as wealthy or secure as they were when the price initially dropped. Therefore when it reaches $1.68 again more trouble will be had. More people will car-pool, more will use public transport, more will look for employment closer to home and more will have their kids get to school without a lift in the family car. The trouble is that food will start increasing in price before we make it all the way to $1.68 and that it will continue to increase in price after $1.68 until the distribution system begins to break at the ~$2.80/litre mark.

My prognositcation is we will see $1.68 before November 2009. We will see $2.00/litre my April 2010 and we will see $2.80/litre by November 2010. There will be no commensurate increase of income during those price increases – maybe a token increase but not enough to cover energy costs. My locale is lucky enough to not to need heating oil to survive winter. It is nice but not a necessity. Winter rarely sees a night reach freezing (zero degrees Celsius).

The other concern is the power of the cold fronts that have been coming through my region. Some of them have dropped the air temperature 26 degrees Celsius in three hours. I dread to think what a cold front like that could do in winter – one of that magnitude could give snow where there usually is none.

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Future dire

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