Gashostage.com

Oil prices settled above the psychologically important $70 a barrel mark on Friday for the first time since August 2006 on worries about gasoline supplies in the heart of the summer driving season.
 
Light, sweet crude for August delivery rose $1.11 to settle at $70.68 a barrel on the New York Mercantile Exchange after rising as high as $71.06 earlier in the session. Oil last closed above $70 a barrel on Aug. 31.

At the pump, gas prices continued to defy analyst expectations by falling 0.4 cent overnight to a national average price of $2.971 a gallon, according to AAA and the Oil Price Information Service. Retail gas prices, which typically lag futures markets, peaked at $3.227 a gallon on May 24.

Analysts have predicted for weeks that retail gas prices are bound to stop falling, and could even rise again, as demand picks up during the summer driving season. Demand is especially strong between the July 4 and Labor Day holidays.

Crude futures had fallen as low as $67.77 on Tuesday, the day before a government report showed gasoline fell when analysts had been expecting a big build. That Wednesday report fueled the late week rally into $70 territory.

The discovery of an unexploded car bomb in west London also boosted prices, analysts said.

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Scientists have criticised a major review of the world’s remaining oil reserves, warning that the end of oil is coming sooner than governments and oil companies are prepared to admit.

BP’s Statistical Review of World Energy, published yesterday, appears to show that the world still has enough “proven” reserves to provide 40 years of consumption at current rates. The assessment, based on officially reported figures, has once again pushed back the estimate of when the world will run dry.

However, scientists led by the London-based Oil Depletion Analysis Centre, say that global production of oil is set to peak in the next four years before entering a steepening decline which will have massive consequences for the world economy and the way that we live our lives.

According to “peak oil” theory our consumption of oil will catch, then outstrip our discovery of new reserves and we will begin to deplete known reserves.

Colin Campbell, the head of the depletion centre, said: “It’s quite a simple theory and one that any beer drinker understands. The glass starts full and ends empty and the faster you drink it the quicker it’s gone.”

Dr Campbell, is a former chief geologist and vice-president at a string of oil majors including BP, Shell, Fina, Exxon and ChevronTexaco. He explains that the peak of regular oil - the cheap and easy to extract stuff - has already come and gone in 2005. Even when you factor in the more difficult to extract heavy oil, deep sea reserves, polar regions and liquid taken from gas, the peak will come as soon as 2011, he says.

This scenario is flatly denied by BP, whose chief economist Peter Davies has dismissed the arguments of “peak oil” theorists.

“We don’t believe there is an absolute resource constraint. When peak oil comes, it is just as likely to come from consumption peaking, perhaps because of climate change policies as from production peaking.”

In recent years the once-considerable gap between demand and supply has narrowed. Last year that gap all but disappeared. The consequences of a shortfall would be immense. If consumption begins to exceed production by even the smallest amount, the price of oil could soar above $100 a barrel. A global recession would follow.

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In energy on Monday June 11th

Crude oil prices bounced back from Friday’s drop as light, sweet crude picked up 77 cents to $65.53 a barrel on the New York Mercantile Exchange. Gasoline futures ticked higher, as well.

I am actually surprised that oil prices have actually fallen this summer, it is not so surprising that fuel prices have not followed the same course.  Gas prices have not risen as dramatically as we all may have suspected it would, but it is still early and if the crisis in the Middle East continues to heat up, we might just get that oil price increase as well.