Peak oil what?

Oil and other commodities have been the subject of a lot of speculative investment of late. An article in The Economist earlier this summer reported estimates that the price of crude was inflated by speculative pressures by as much as 50%. It's got to be a combination of reasons. As for the whole idea of Peak Oil. I think it's a flawed theory. Cheap oil is a fungible commodity. If it gets too expensive, there are substitutes. With prices high, there are lots of potential substitutes. The biggest substitute for cheap oil right now is expensive oil. As prices go up, previously useless reserves become economical to exploit. Examples include canadian tar sands, and that deep water discovery in the Gulf of Mexico. And, of course, there is ethanol & butanol from renewable sources, etc, etc.

Blueshammer, OPEC has been trying to keep oil prices low enough to discourage substitutes since the late 70s when they saw how consuming nations reacted to high oil prices. OPEC manipulates prices by controlling supply, but these days, demand is high enough that their ability to swing prices is limited. BTW, you've quoted me out of context. My main point is that we've seen very clearly that people will buy expensive oil if cheap oil isn't available. And when oil is going for $50+ a barrel, it becomes profitable to extract oil from all sorts of reserves that would be unprofitable at the historical average of ~$25/barrel (in todays dollars).

I would not put it past OPEC to sell oil at a loss for a few years to cause alternative fuel developers to go belly-up. A government-guaranteed floor to prices at the pump (enforced by sliding-scale taxation up to that level) would eliminate OPEC's power to kill competitors with price-dumping.

Cheap oil is a fungible commodity. If it gets too expensive, there are substitutes. Sort of. There are substitutes, but they are mostly immature, which huge strides having been made with high oil prices. I would not put it past OPEC to sell oil at a loss for a few years to cause alternative fuel developers to go belly-up.

Bill Cara has two excellent posts today relevant to this question. Presidential http://www.billcara.com/archives/2006/09/presidential_po_1.html looks to be closely related to US gasoline prices lately. And the http://www.billcara.com/archives/2006/09/energy_refinery.html thing has obviously had some effect.

... a closer look at the data shows that it really requires more analysis than I gave it above. I won't bore you with the details. But if you consider that data enough to decide whether there are some correlations between elections and gas prices, which I don't, then there are some big ones.

pyramid termite: there does not seem to be a correlation between gas prices and elections Really? What method did you use to look for one? I took the http://www.randomuseless.info/gasprice/gasprice.txt from that chart and added them up: Average yearly price increase: 5.8 cents Average in years divisible by four: 3.5 cents Years not divisible by four: 6.6 cents Even-numbered years: 3.9 cents Odd-numbered years: 7.8 cents Admittedly that is not much like a real statistical analysis, but it does suggest that there might be something there. the price in today's dollars is STILL pretty high ... and the price in inflation-adjusted dollars is also pretty high. It's not like 1980 was normal.

this is what one guy says he's paid for gas in texas since 1979 ... (the light gray line next to this is nationwide, though) there does not seem to be a correlation between gas prices and elections the price in today's dollars is STILL pretty high however the price in constant dollars isn't more than it was in 1980

ah well i heard on the radio that the price of crude is down $20/bbl since the middle of the summer. and that's like 25%. still, how conveeeeeeenient, as the church lady would say.