NEWS: China's Growing Demand, Reserve Shortages Raise Gas Prices To Record Levels

external imageThe Energy Information Administration (EIA) predicts average gasoline prices will continue to rise past last August’s record of $1.74 per gallon to over $1.83 per gallon this spring. Higher crude oil prices due to world demand, and lower than average gasoline stocks are pushing gallon prices closer to the $2 mark. West coast states and Hawaii are already seeing prices over $2 a gallon.

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Energy Information Administration
For those people who want to peer into the future to try and ascertain an answer, EIA has just released its latest Short-Term Energy Outlook. This monthly forecast, which was released yesterday (March 10, 2004), forecasts a monthly average peak price of $1.83 in April (and $1.82 in May), which implies that we could see weekly prices even higher.

The price of a barrel of crude oil has risen steadily this year due to increasing demand. Thursday (March 11, 2004), the International Energy Association (IEA) raised their projections for oil demand growth by 220, 000 barrels a day (b/d) to 1.65 million b/d for the year 2004. This is mainly due to China’s surging demand for more energy as the nation develops into a more modern country. While demand has risen, OPEC is staying firm on its decision to cut oil production by 1 million b/d in April.

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Low oil stocks and high demand, due to a recovering economy, are keeping the price at the pump in a steady climb. Gasoline stocks are at their lowest level since the 70’s. So even if refineries had the extra capacity to increase supply, the reserve levels would be too low to sustain increased production. Since the situation has gained so much public attention, the Senate has passed an amendment to the 2005 budget to cancel delivery of 53 million barrels of crude oil, which was to be used to refill the Strategic Petroleum Reserves. Diverting the crude oil deliveries to the public market could help lower the price at the pump slightly, but it is unclear if Congress will pass the Senate’s amendment .

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Additional Sources:
International Energy Association
msnbc.msn.com..." target="_blank" class="postlink" rel="nofollow">MSNBC

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[Edited on 25-3-2004 by dbates]

Current reserves in the US are full, the oil companies are getting in one last screw job before Bush is voted out of office as they know it's coming their ability to pump the average citizen is coming to an end. Did anyone ever notice how the price of gas was low during the Clinton years when everyone had money and how they suddenly went through the roof with Bush/Cheney and when nobody has any money.

Where are you getting this information? The EIA (The authority on reserve levels) stated that the levels were low, as you can see in the above chart.

$2 a gallon?

Here in the UK we pay $1.40 for a litre!!!
Sorry. I can't cry for you.

I thought everyone in the UK rode the train or one of those double decker bus thingies...



I can't wait for it to go up more so that those NASCAR/wanna-be-cowboys driving huge trucks and SUVs end up going bankrupt paying for gas (I swear half the guys I see anymore have goatees, wear a NASCAR hat and a shirt about Montana).

I don't have a problem paying more for gas, I just get sick of how you can never budget ahead of time because of the sudden jump in prices.

I would like to throw something in here that comes from a personal/professional level instead of media.

I work in the oil industry. Here is how the oil industry has historically operated:

Prices go up - exploration goes balls to the wall; production enhancement (i.e. doing crap to an existing well so that it will produce more) goes balls to the wall. Abandoned wells can actually be brought back on line and remedial work done to bring up the production.

Prices go down - exploration drops to nothing; only the most necessary remedial things are done to producing wells. If a well isn't producing enough, it gets plugged and abandoned.

Here's how it is going this time: Price for oil/barrel is at record levels. Nobody is doing a damned thing. Instead of investing big cash flow into exploration or remedial work for when times go "lean" they are just taking in the money.

It is a VERY weird deal. Yeah, I bet prices keep going up with what is going on right now. It doesn't seem they are attempting to "fill the gap".

[Edited on 12-3-2004 by Valhall]

No I dont remember these rock bottom gas prices but I do remember some serious spikes back in the summers of 94 and 96, once again you cant blame all of your problems on bush.

So whats your take on peak oil?
I've heard people in the oil trade ridicule the idea but then they only rely on second hand reports from economists and analysts of dubious expertise anyhow.

Seems to me if we were about to hit peak and this was known to the elites, having an occupying force looking after Iraqs oil fields would be a very advantageous situation.

I must be missing something? does the title of this thread imply that our higher energy costs and reserve shortages are due to China's growing demand on oil?

I don't find that in any of the "news" links provided...

Look at the link to the International Energy Association
Surging oil demand in China and other non-OECD Asian economies has raised the assessment of global oil demand growth....
Its the second paragraph on the page. Its the law of supply and demand. The price is staying high partially due to increasing demand from China. China passed Japan and is now the 2nd largest consumer of oil after the U.S.

I'm a victim of my own news. I filled up this morning. $1.81 a gallon. Yipee!

[Edited on 13-3-2004 by dbates]

UPDATE:
It looks like the Senate's ammendment to halt the filling of the oil reserves will not be accepted. The measure has considerable opposition from the House and the defense department stated that the reserves should be used for emergencies, not to manage the price of oil.

Watch those pump prices rise......

OEPC is going ahead with the oil production cuts despite the fact that crude oil has reached an all time high this week. Some of the OPEC members are a little concerned that this would cause instability in the market, but claim that they are going ahead with the cuts.
1.81 is a normal price in DFW now. Gas prices like superman......Up, up and away...

And just as confirmation of the rising oil prices, North Sea oil prices recnetly hit a three year high.

www.norwaypost.no...

If all goes as planned you'll see a large article on this in the near future. Stay tuned.