Oil prices: driven by fear, not reality
Editorial appeared in Fort McMurray Today August 9, 2006
With the oil pipeline that carries hundreds of thousands of barrels a day of crude oil from Alaska south to markets in the lower 48 out of commission, it's likely more eyes are being cast on this region.
We're a lot closer than Alaska. Our country, no matter what you hear from politicians in Ottawa, is stable.
And there are multiple pipelines to take the product to market in the continental U.S., so customers aren't held hostage by metal fatigue or corrosion.
As a result of this and other world events, the price of oil is crazy.
At almost $80 a barrel, it's more expensive than it needs to be.
While the free-market system is usually adept at balancing supply and demand with rising and falling costs, the supply of oil -- specifically gasoline, doesn't seem to follow natural trends.
Much of the world supply is kept artificially propped up by OPEC, the Organization of the Petroleum Exporting Countries. Other producers like Canada and Russia aren't OPEC members, but they cash in on the windfalls from the price swings.
The price of oil is set by commodity markets, but the dollar figure is driven more by fear -- that conflict or political instability will dry the supply up.
It's a good system for Albertans and oil companies. There are lots of profits and lots of high-paying, solid jobs.
Sure, we have to pay more to fill up our tanks, but no one's complaining too much.
Well, not oil companies or contract workers, anyway.
Where will it end?
More development in Wood Buffalo as the insatiable American thirst for oil, unquenched by the high price, rises.
Any tactics that government or industry can come up with to deal with the ever-accelerating growth are welcome.
They should be implemented tomorrow.
When were they needed? Yesterday.
© Copyright 2006, Fort McMurray Today.
With the oil pipeline that carries hundreds of thousands of barrels a day of crude oil from Alaska south to markets in the lower 48 out of commission, it's likely more eyes are being cast on this region.
We're a lot closer than Alaska. Our country, no matter what you hear from politicians in Ottawa, is stable.
And there are multiple pipelines to take the product to market in the continental U.S., so customers aren't held hostage by metal fatigue or corrosion.
As a result of this and other world events, the price of oil is crazy.
At almost $80 a barrel, it's more expensive than it needs to be.
While the free-market system is usually adept at balancing supply and demand with rising and falling costs, the supply of oil -- specifically gasoline, doesn't seem to follow natural trends.
Much of the world supply is kept artificially propped up by OPEC, the Organization of the Petroleum Exporting Countries. Other producers like Canada and Russia aren't OPEC members, but they cash in on the windfalls from the price swings.
The price of oil is set by commodity markets, but the dollar figure is driven more by fear -- that conflict or political instability will dry the supply up.
It's a good system for Albertans and oil companies. There are lots of profits and lots of high-paying, solid jobs.
Sure, we have to pay more to fill up our tanks, but no one's complaining too much.
Well, not oil companies or contract workers, anyway.
Where will it end?
More development in Wood Buffalo as the insatiable American thirst for oil, unquenched by the high price, rises.
Any tactics that government or industry can come up with to deal with the ever-accelerating growth are welcome.
They should be implemented tomorrow.
When were they needed? Yesterday.
© Copyright 2006, Fort McMurray Today.
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