Oil

Last month I posted an entry on the rising price of gas, and it's only gotten more expensive since then. I paid $2.86 on Monday, and I noticed it's up to $2.98 at the same gas station today.

I was discussing this with a coworker as we were driving back to the office from lunch. First he says the big oil companies are gouging us while making record profits. I say, record profits, yes, but they sell petroleum products for what the market will bear; if they sold it for less, the oil wells and refineries, now operating at capacity, wouldn't be able to keep up with increased demand, and we'd have a shortage.

But, says my friend, the oil companies can increase their capacity by drilling more wells or building more refineries. Not fast enough, I counter -- it takes time to bring additional capacity on line. And anyway, where should they drill? Oil fields that have been depleted beyond their peak extraction rate won't do us much good.

Then we should explore for new sources of oil, says my friend. But, I say, there has been a lot of exploration done since U.S. production peaked more than three decades ago, and if there's another Saudi Arabia out there to be discovered, wouldn't we have found it already?

Mr. Fusion? my friend asks, jokingly.

There are some who think that $65 per barrel oil is nothing, and $300 per barrel oil is just around the corner. I hope they're wrong, because it would be a disaster unlike anything I've seen in my lifetime.