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Backseat Driver: Taking some days off

I will be taking off a few days so this blog will be inactive from now until Wednesday, October 24.

Posted by Peter C. T. Elsworth  at 4:43 PM to commentary | Permalink | Comments 0

Backseat Driver: Last whale theory applies to oil

Seen the latest prices for crude oil? Over $88 a barrel!

I cut my professional teeth in the early 1980s as an oil reporter in New York City for Energy Intelligence, Platts Oilgram and Reuters, so I always follow the basic price of crude oil which to me is a key economic indicators.

Back then, $39 a barrel was the highest price that crude oil had ever reached - in early 1981. But that was before the spot market let alone the oil futures markets of today.

And as the price closes in on $90 a barrel, prices will soon be the highest they have ever been - even adjusting for inflation.

What's driving them? Simple supply and demand.

The supply pressure comes from uncertainty. The Middle East remains by far the biggest source of crude but also the most politically volatile region in the world. We've made a hash of Iraq which is now in chaos, Iran cocks a snook at the world with its nuclear plans and genocidal declarations about Israel and Osama bin Laden pursues his ultimate goal - the takeover of Saudi Arabia.

Consquently any blip in that region reverbrates through the market sending oil prices up.

Meanwhile, demand keeps going up. The industrializing third world, especially the mega-economies of China and India, have put pressure on oil supplies in recent years. And here in the U.S., we continue to wallow in low energy prices.

Europe has already cut into demand by taxing energy to the point that a gallon of gasoline is now the equivalent of $8 a gallon. You don't see many SUVs in Europe!

But as prices continue to go up, research into alternatives is bound to increase. It's simply a matter of economics. It's one thing to do R&D into alternative energy because of CO2 emissions and the ozone layer; it's another to do it because the price of oil is becoming exorbitant. The former is driven by enlightened self-interest; the latter by simple self-interest.

And that's where the analogy of the last whale comes in. For while we came close, we would never have killed off all the whales. It would have been too expensive to chase down the last one.

And so it is with oil. At a certain point, it becomes too expensive and we are forced to look for an alternative. To be sure, that time is a long way off but when crude prices are over $88 a barrel, it may not be that far off.

- Peter C.T. Elsworth

Posted by Peter C. T. Elsworth  at 3:39 PM to Crude oil market , Gas prices , commentary | Permalink | Comments 0

Supply Concerns Propel Oil to New Record

NEW YORK (AP) -- Oil futures rallied to a new record over $88 a barrel Tuesday on concerns about disruptions to Middle Eastern crude supplies and a growing view that domestic supplies aren't sufficient to meet fourth-quarter demand, according to the Associated Press.

Traders are concerned that a Turkish incursion into Iraq in search of Kurdish rebels could disrupt crude supplies from northern Iraq.

Posted by Peter C. T. Elsworth  at 3:34 PM to Crude oil market | Permalink | Comments 0

Chrysler deal meets some sharp resistance

In a sign that the proposed Chrysler-UAW labor agreement might not be ratified as easily as the deal with General Motors Corp., the council of local union leaders that gathered Monday in Detroit did not vote unanimously to recommend ratification, according to the Detroit Free Press.

Unhappy local leaders voiced displeasure with the apparent lack of specific future product guarantees and the failure to move temporary workers into permanent positions, both of which are features of the GM contract.

Posted by Peter C. T. Elsworth  at 10:54 AM to Chrysler , Unions | Permalink | Comments 0

Tricycles for adults target safety-conscious

COVINA, Calif. — A motorcycle that grew an extra wheel. Or a car that somehow lost one. It's possible to make the case for either when it comes to the Can-Am Spyder, a head-turning, motorized means of transportation that will start showing up on American highways this month, according to USA Today.

The Spyder is licensed as a three-wheel motorcycle, has cycle-style handlebars, engine and seat. It shifts like one, too.

But how many motorcycles have power steering, stability and traction control, anti-lock brakes — even a reverse gear?

Posted by Peter C. T. Elsworth  at 10:46 AM to Motorcycling , Safety | Permalink | Comments 0

Oil surges to record; gas prices don't follow suit

The price of oil was higher Monday than it's ever been, presaging increases for gasoline and other fuels — though not for long if oil speculators get cold feet and additional supplies hit the market as expected, according to USA Today's James R. Healey.

The closing price of $86.13 per barrel eclipsed the previous record of $83.69, set Friday. West Texas Intermediate — light, sweet crude — for delivery next month traded as high as $86.22 a barrel during the day, also a record.

Adjusted for inflation, the highest price recorded by the U.S. Energy Information Administration is $93.09, in January 1981.

The retail price of gasoline "would be about $3 this time of year if $86 oil is sustained," says Stephen Brown, director of energy economics at the Dallas Federal Reserve. Instead, the nationwide average for regular is $2.762, the EIA reported Monday. That was 0.8 of a cent less than last week, but 53.6 cents more than a year ago. A separate survey by AAA showed the average at $2.757 Monday, down 0.4 of a penny overnight.

Posted by Peter C. T. Elsworth  at 10:37 AM to Crude oil market , Gas prices , commentary | Permalink | Comments 0

GM: Eight-Speeds on the Way

General Motors isn't giving away any of the specifics just yet, but it does have a seven- and even an eight-speed automatic transmission tucked away in its product development cycle, according to thecarconnection.com

Jim Lanzon, executive director of GM Powertrain's Transmission Engineering, acknowledged last week GM is looking at the transmissions that have begun showing up on luxury models such as the BMW M5.

"I can't give away any new product news but we're looking at everything," he said.

One of the issues GM is wrestling with now is whether a seven- or eight-speed transmission will produce the kind of gains in fuel economy that would justify the cost of engineering them into a vehicle, Lanzon said.

Posted by Peter C. T. Elsworth  at 10:28 AM to Design , GM , Technology | Permalink | Comments 0

Oil sprints towards $88

LONDON - Oil thundered towards $88 a barrel on Tuesday, hitting a new record and extending a rally that has added eight dollars in a week on tight supplies, strong demand and tension in northern Iraq, according to Reuters News Agency.

Oil is closing in on the inflation-adjusted high of $90.46 seen in 1980, the year after the Iranian revolution and at the start of the Iran-Iraq war. Prices this year have averaged $67.

Posted by Peter C. T. Elsworth  at 10:26 AM to Crude oil market | Permalink | Comments 0