Posted by Midnightblue on June 30, 2008, at 12:50:39 [reposted on July 6, 2008, at 13:09:21 | original URL]
In reply to Anyone Else Starting To Fear The Economy?, posted by Phillipa on June 29, 2008, at 12:33:07
Phillipa was talking about there being no doctors or hospitals. I'm sorry, but I don't see that happening in my lifetime. That is what I'm not going to be anxious about.
Concerning the cost of oil. That is driven by:
1. Increased demand--China, India and other developing nations now want and need more fuel.
2. Increased cost to find and recover oil--all the "easy" oil has been tapped. Most rigs are drilling more than a mile down. And just because you drill doesn't mean you will actually recover something from a hole. It can cost a fortune to drill a dry hole. Renting a rig can cost $500,000 to $1,000,000 a day.
3. Not all oil is sweet--which is the easier to process type. Some is trapped in tar sands. Some is heavy sour. It is the sweet everyone wants that costs so much.
4. There aren't enough rigs or people to run them. Many rigs were scrapped, and the oil industry has not always been kind to the people they hire. There are just so many times a person will tolerate being laid off and go back to work for you.
5. Much of the world resources of oil are in politically unstable countries.
6. It costs more to drill/produce/refine in an environmentally responsible way. This is not a bad thing, this is GOOD, but it does cost more.
7. Weather--ever notice how the costs of oil goes up when there is a hurricane? That is because all the rigs must be evacuated and all refineries much be shut down. It can take weeks or months to get them back on line and up to full speed.
8. Speculation--yes there is some. Think about the run on Wii and Wii Fit right now. Both are hard to get. People are buying them up and selling them for more on Ebay. If they would produce more, or if people suddenly decided they didn't want one, the price would go down.
9. The weak dollar. I understand this, but honestly don't know how to fix it. Oil is priced in dollars.