Looks like the peak oil moment may be upon us. And while recent weeks has seen an endless chain of talking heads spouting theories of market speculators being the driving force behind the rapid and steep increase in oil prices, people might finally start to see the writing on the wall.
[U.S. energy secretary] Samuel Bodman, attending two days of meetings in northern Japan among energy chiefs from Group of Eight industrialized countries and other top economies, said the surge in world oil prices was largely a simple problem of supply and demand.
Production has stalled since 2005 at 85 million barrels a day, while economic growth — particularly in China and India — has pushed demand ever higher, Bodman said before a meeting of ministers from the U.S., Japan, South Korea, India and China.
“We’re in a difficult position where we have a lid on production and we have increasing demand in the world,” he told a small group of reporters, dismissing the effects of speculation and unclear inventory levels and other factors on oil prices.
Oil prices made their biggest single-day surge on Friday, soaring $11 to $138.54 on the New York Mercantile Exchange, an 8 percent increase. That followed a $5.50 increase the day before, taking oil futures more than 13 percent higher in just two days.
Bodman said he would likely urge China and other countries at the Japan meeting to slash fuel subsidies, which make gasoline cheaper for consumers — thereby giving them no reason to reduce consumption and allow prices to level off or drop. The International Energy Agency has estimated that oil subsidies in China, India and the Middle East in 2007 totaled some $55 billion.
At the same time, he urged nations to pay heed to an IEA report that the world needs $22 trillion investment in energy supply infrastructure by 2030 to meet rising demand, while developing alternative energy sources.
Um, ok. So our energy secretary is putting pressure on foreign governments to reduce subsidies. Meanwhile this administration and their lackeys in Congress are blocking every effort to shift government investment and tax breaks from the fossil fuel industry to renewables? That’s rich.