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  • Monday, October 31, 2005

    Got Gas?: Waiting for Winter

    Peak oil is something that I've only ever talked about in comments. It's past the time that it should be a regular news item on the main page. That said, most of our readers live in the temperate climates where up to 20% of the economy is devoted to staying warm. The following story from Energy Bulletin looks at how peak oil may affect the north and how Katrina will give us an early taste of that this winter. The Peak Oil Crisis: Waiting for Winter

    In the fourth quarter, worldwide demand for oil goes up by 2.5 million barrels per day over summer demand to keep the northern latitudes warm during the winter months. Given that we might have an unusually cold winter this year, the demand increase might be conservative.


    [Oil] prices have dropped some 15 percent since the Katrina peak of over $70 dollars. Wall Street oil traders and analysts are starting to tell financial reporters that the hurricane dislocations are over for a while and the good times may roll for a while longer. Indeed earlier this week the Dow flew up 170 points on the idea that our oil problems no longer look as bad as they did a few weeks ago.

    Where did all this optimism come from? Is it justified? The root cause, of course, is that the securities industry is based on eternal optimism and growth. Few have grasped, or are willing to admit, how close we are to the final oil crisis of all time.


    [I]t seems our domestic refineries are still deferring maintenance and are still cranking out gasoline rather than switching over to more heating oil production at the end of the summer driving season. It is this combination that has kept us going.

    The IEA, however, has already voted to stop letting us have world reserves beyond what was voted immediately after Katrina and the advent of colder weather will quickly force a choice between driving and staying warm.


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