When Will Gas Prices Go Down?

Source: The New York Times: The Oil Crunch, by Paul Krugman

Oil is a resource in finite supply; no major oil fields have been found since 1976, and experts suspect that there are no more to find. Some analysts argue that world production is already at or near its peak, although most say that technological progress, which allows the further exploitation of known sources like the Canadian tar sands, will allow output to rise for another decade or two. But the date of the physical peak in production isn’t the really crucial question.

The question, instead, is when the trend in oil prices will turn decisively upward. That upward turn is inevitable as a growing world economy confronts a resource in limited supply. But when will it happen? Maybe it already has.

…Lately we’ve been hearing a lot about competition from Chinese manufacturing and Indian call centers. But a different kind of competition — the scramble for oil and other resources — poses a much bigger threat to our prosperity.

So what should we be doing? Here’s a hint: We can neither drill nor conquer our way out of the problem. Whatever we do, oil prices are going up. What we have to do is adapt.

4 thoughts on “When Will Gas Prices Go Down?”

  1. I live in Lawrence, Kansas and I was just woundering if gas price are going to go down and How much they are going to go down?

  2. I am a service member, and have been deployed to serve this great land, and I ask myself, If our men and women are out here risking their necks defending a country other than the US, and an oil rich country at that…then why in the hell are we as Americans paying almost $3.00 a gallon?

  3. One reason is we have seen the price of oil more than double from $60 to $135 is just over two years without major supply disruptions. We have also been plagued by manipulation in other energy markets.

    Enron and others manipulated the Western electricity markets in 2000 and 2001 and cost consumers over $40 billion. In light of that, Congress gave the Federal Energy Regulatory Commission new authority in the Energy Policy Act of 2005.

    Specifically, Congress made it “unlawful for any person … to use or employ … any manipulative or deceptive device or contrivance,” in connection with the wholesale electricity and natural gas markets. We’re going to hear today from FERC’s Deputy Director of Investigation and Enforcement on how FERC has used its new authority to root out manipulation in physical electricity and natural gas markets.
    To date, FERC has used its new authority to conduct 64 investigations resulting in 14 settlements totaling over $48 million in civil penalties. We have seen the very same energy traders move from Enron to Amaranth, and American families and business alike have the same concerns about potential manipulation in our oil markets.

    Last December 2007, Congress granted the FTC anti-manipulation authority in the Energy Bill. Specifically, Congress made it “unlawful for any person … to use or employ … any manipulative or deceptive device or contrivance,” in connection with the purchase or sale of crude oil, gasoline, or petroleum distillates at wholesale.
    During the hearing is was reported Michael Greenburger (the former speculation committe chairman) reported that gas could drop 25 to fifty percent. If spectulation could proprerly regulated would get prices back under control would drop the almost right away. These controls were removed in 2000.

    One reason is we have seen the price of oil more than double from $60 to $135 is just over two years without major supply disruptions. We have also been plagued by manipulation in other energy markets.

    Enron and others manipulated the Western electricity markets in 2000 and 2001 and cost consumers over $40 billion. In light of that, Congress gave the Federal Energy Regulatory Commission new authority in the Energy Policy Act of 2005.

    Specifically, Congress made it “unlawful for any person … to use or employ … any manipulative or deceptive device or contrivance,” in connection with the wholesale electricity and natural gas markets. We’re going to hear today from FERC’s Deputy Director of Investigation and Enforcement on how FERC has used its new authority to root out manipulation in physical electricity and natural gas markets.
    To date, FERC has used its new authority to conduct 64 investigations resulting in 14 settlements totaling over $48 million in civil penalties. We have seen the very same energy traders move from Enron to Amaranth, and American families and business alike have the same concerns about potential manipulation in our oil markets.

    Last December 2007, Congress granted the FTC anti-manipulation authority in the Energy Bill. Specifically, Congress made it “unlawful for any person … to use or employ … any manipulative or deceptive device or contrivance,” in connection with the purchase or sale of crude oil, gasoline, or petroleum distillates at wholesale.

    Americans may be surprised to learn that our oil futures markets were substantially deregulated by CFTC staff decisions that were made behind closed doors. This “London-Loophole” and now the “Dubai-Loophole” is keeping important U.S. energy trading in the dark. And without proper light manipulators have free reign.

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