prediction for Christmas 2008

[Malcolm]

The other day I pulled into my local BP fuel station and was miffed to see Ultimate Diesel at £1.18.9 per litre. BP always seem to be the most expensive in my view.

Discussing this with a contact today who said he had been told by traders that fuel will be £1.35 per litre for gas and £1.50 per litre for diesel by Christmas 2008. Only time will tell but anyone else want to predict?

[Dave Peterman]

So I should buy BP stock or set up a still in the hills around here?

[Ian Anderson]

Hey Malcom - thats really clever especially as the government insists the inflation will be 2% at the end of the year

Even takig 2% of your scary price does not come close

And then most goods are moved by road so I expect inflation to hit 15% this year - at least then Scrooge Mc Brown will get kicked out!

Ian

[David Morton]

Malcolm,
Thats just about the same info I've been told. Looking through my VAT returns in January last year I was paying around 82p per litre and one year later it's £1.07. Motoring for fun might not be an option much longer.
Soon the only people who will be able to afford to drive will be the hoodies/deprived youngsters and the police chasing them.

[Malcolm]

Damn it! I was expecting to be told I was over egging it with this post and yet you seem to think it might be happening as predicted!

Do you think this is just tax or is it also the cost of oil rising and fed through the system and now hitting pump prices?

I heard from TV the other day that Dubai is planning for their oil to run dry in 2016. Hence their high end tourism developments, the Palm and the World. How far behind Dubai are other major oil suppliers? Isn't the North Sea running dry now'ish? Not that it was a world supplier....

[CraigB]

Hi Malcolm,
I work in the North Sea Oil and Gas trade offshore (no it's not my wages causing the prices rises ) Apparently the North Sea has had 20 years left to it for the last 20 years and still does?!

New technology keeps coming online to enable us to use deposits in deeper and deeper water (Schielhallion and Clare both West of Shetlands are good examples). We are also tapping more and more wells that were drilled in the past but were uneconomic to produce from until oil prices rose to current levels. There are also possibilities of deeper wells to reach possible deeper deposits but I don't know if any of these are being looked into. (Coupled with Gas Hydrates there should enough to go around for while yet

A lot of the latest prices rises as you know are due to instability in some of the major oil producing regions (Nigeria and the Arabian Gulf to name two), but also because of a huge demand from Chinese and other developing industrial nations industry and power generation as they don't have nearly enough of their own.

Well that's my somewhat simplified view anyway

[srf#42]

I actually tried to educate myself on the worlds oil supply at one time in an effort to get smart.

One thing that cropped up very frequently was that the supply of available oil in the world varies directly with the price. Theres a lot less oil available at $50/bbl than there is at $100/bbl.

Only makes sense...

[David Marx]

Oil will never cost more than what people can afford/are willing to pay for it. There is just too much of it. As long as competing interests are looking to make money in the marketplace (it is a traded commodity), the price will reflect what people are willing to pay. Most of the people complaining about prices at the pump still are paying $1 a song to load onto their iPod. I know you guys in the UK have a tougher tax situation than we do, so they may tax you out of being able to afford it, but as a form of energy oil is cheap and plentiful. Too bad the reserves aren't sitting under the US or Britain (actually they are sitting under the US in Alaska, but I digress), as it would be even cheaper still. Don't dismay!

[CraigB]

Just to take the different units out of it. If Malcolm's predictions come true (and I can see any reason why they will not )

£1.35 / liter =

£6.13 / gallon =

£5.11 / US gallon =

$10 / US gallon (normal kind of exchange rate at the moment)

I believe that means you lucky guys in the USA are paying about $3 per US gallon Comments??

If it makes ant Brits feel better I think fuel is even more expensive in Holland!

[Malcolm]

But very few hills in Holland to drive up fuel consumption.....

[frank beuker]

We pay here at the cheapest about 90 p a liter euro 95 most expensive 1 pound
and 66 p a liter diesel/ 80p

And yes no hills just rubb it in
Frank

[David Marx]

The US economy will not function on $10/gal gasoline (at least not today -- at some point in the future -- sure, but not this Christmas). If the US economy wont function, neither will the rest of the world's for all the same reasons. People who can't drive to Walmart, can't buy Chinese products. A back log of goods in containers, drives the Chinese economy down. World automakers can't sell current technology, but wont be able to afford theR&D to offer otherwise (it ain't like somebody has a fission vehicle waiting in the wings to introduce on a whim). Since this is a nice public record of my musings, I will go out on a limb and say that US gas wont average more than $4.00 gal. anytime in '08. This forum is a bunch of car guys worried about how this impacts our driving habbits. The real issues would arise from the costs of foodstuffs that have to be transported. If the associated freight charge for a can of Spam increases 100%, a lot of people will starve. It sounds like a joke, but my point is that so much of the world imports its' food that the real issue wont be if you can afford to drive to the store and buy flour in the Ukraine, but will there be flour to buy.

In 1990 a gallon of gas was $1.19 in the US. In Dec. '06 gas was $230, Dec. '07 brought $3.02, but today it's $2.95. Over the past 8 years we had 911, the Iraq war, and unlimited saber-rattling, Enron, and oil for food. Short of nuclear holocaust in the middle east, what would drive prices up 350%?

There is plenty of oil and the market will price it fairly. Governments will tax it unfairly.

[kiwi ka]

And we grizzle here in New Zealand that its expensive at $1.70 odd per litre compared with milk at $2.50 a litre. If you did the cost comparison not via the exchange rate it would look like this ... can of coke $1 nz v 1 pound UK.
Burger $4 or $5 or the same in UK pounds. Roughly speak a dollar or a pound buys the same thing, its our conversion rates that make it look sick.
Cheers from NZ

[Rick S.]

In California we are paying $3.20 for regular, $3.40 for 91 octane gas. It has been as high as $3.80. My guess is that we will be paying $4.50 to $5/gallon by the end of the year.

I agree that there is more oil available now due to $100/barrel oil. More competition for that fuel from China will keep these oil prices high. This, in my humble opinion, is not a bad thing...the oil companies are spending huge amounts of money on technology to find new reserves and extend the life of existing fields. The North Sea is a great example of this. Five years ago (and at $15 to $20/barrel) the North Sea region was uneconomical to operate. But now at $70 -100 / barrel the North Sea has a new life.