Crude Hits All-Time High

September 12, 2007: Source – CNN Money

Oil at $80 a barrel

Despite OPEC’s promise Tuesday to increase production by 500,000 barrels a day, supply worries briefly pushed the price of light, sweet crude for October delivery over $80 a barrel Wednesday.

Weather in the Gulf of Mexico has traders worried, as does a slowdown in production on Alaska’s North Slope, where BP has reported several fires over the past month.

Oil contracts for delivery later in the year are cheaper than October prices, so speculators have a hand in the current price run-up. Investors who buy now hope to end up with more oil contracts later, when October prices are supposed to give way to less expensive contracts. As reported by CNN Money:

The tight supply and demand picture is the main reason cited for oil’s price surge since 2002, when it traded at just $20 a barrel.

It has also attracted lots of money from investors betting on crude prices, which one recent study said is adding at least $10 a barrel to the price.

Memories of the 2001 energy crisis set in motion by Enron may resurface if prices remain high and oil companies keep refineries shuttered for maintenance. Refinery capacity is currently at 90.5%, lower than the 92% analysts had predicted—and shutdowns are one way an oil-refining outfit can increase profits when crude prices rise.

Of course, this isn’t a record price when it’s adjusted for inflation. But the average working person’s salary isn’t exactly at record highs when adjusted for inflation, either—and these days, more of our take-home pay must be spent on things like health care and energy.

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  • Daniel

    Well lets see if it was 20.00 a barrel in 2002 and it’s 80.00 a barrel in 2007 does that mean in 2012 it will be 280.00 a barrel? Wow I hope not but hay maybe I’ll have that all electric by then.

  • Bicycle rider

    This is great news! I’m looking forward to $5 per gallon gas here in the U.S. Maybe then people will start thinking about conserving it a little.

  • Spawn

    yeah b/c those ev’s are right around the corner.

    It’s going to get you on a different end. Ie milk, heating, taxes. We’re going to pay for someone’s gas.

  • Angelo

    Spawn… EVs were here from 1997-2003, then crushed out of existence. Why? Remember the Saturn EV1? 100-200 mile range on full electric, no emissions, no problems! I was ready to buy one (or lease as the case was) but I had to give my firstborn to get one! Why don’t they bring them back? Why doesn’t Toyota or Honda perfect them again and sell them to the US. Actually I’d prefer a Honda Civic EV1 over a GM vehicle anyway! I’m all for “Buy American” if American meant a reliable automobile!

  • David M

    They THE BIG 3 and their CRIME partner(oil company)
    will not be fully satisfy. Until they can get $150.00 a barrel . The American oil companies will make the banking investor bankrupt if it drops below $68.00 a barrel it does not pay to pump oil in the united states for less. Texas and Oklahoma will go bust …again like in the 70′s…….they love it…. next is bottled oxygen, wie will pay