Oil prices "unrealistically high" - Saudi adviser

[vdoh182]

http://cnn.netscape.cnn.com/ns/news/...&w=RTR&coview=

Its over $50 a barel now, and i cant remember why it was raised, guess some people just tried to make a ton of money of us.

[Tone]

Supply and demand. Demand from growing economies like China and India, combined with an inability to easily increase supply (by pumping out more crude) caused prices to rise.

Traditionally, the Saudis -- who have the largest supply of cheap (I believe their cost of pumping a barrel of crude is somewhere around $2) oil -- had the ability to quickly ramp up their production to effect prices. The fact that they haven't had enough execss production capacity to move prices downward has been seen as significant. It also may be an indication that the Saudis have inflated their reported reserves as reserve size within OPEC determines what you supply quotas are.

A slowing of western economies (or China's or Indias) could put downward pressure on demand and thus price. But, the longterm trend in price seems to be upward as demand increases and the supply of inexpensive, easy-to-get oil dries up.

That's not to say there isn't anymore oil -- Canada's tar sands have potentially as much oil as the Saudi reserves. The difference is that getting it takes closer to $10 a barrel or five times the cost. Other exploitable reserves will likely become more difficult (and more expensive) to exploit, which will put further pressures on price.

[Globalist]

Add to that, weak dollar, uncertainty premium and speculation. Inflation-adjusted peak oil price of the 70s oil crisis would be $90/barrel today.

[tom3]

Need only take a look at any highway or big city street. Jammed with gas guzzlers, monster SUVs and trucks with one person in them, going nowhere important. Interstates look like railroads, semi trucks lined up as far as you can see, using 20% of the fuel to move the freight, wasting the other 80% polluting the air. We are a nation of idiots. OK, rant over.