Production cuts by OPEC could case gasoline prices to spike this summer, reaching $2 or more in Colorado, $3 in places like LA and Chicago.
My predictions:
- The Bush administration will use this as “proof positive” that the US needs to drill in ANWR.
- Administration opponents will use this as “proof positive” that fleet fuel efficiency standards need to be increased and alternative fuel sources considered.
- Administration opponents will use this as “proof positive” that we are paying the price for our efforts in Iraq. Nobody will remember that Iraq was supposed to be “all about the oil.”
- If the Bush administration attempts to buy oil in bulk from Iraq for less than the OPEC level, even if administration opponents have accused OPEC of price gouging, those same opponents will point to it as “proof positive” that Iraq was “all about the oil.” Ditto if there are any renewed efforts, given the changing market, do do that long-rumored-but-never-cost-effective Afghanistan pipeline.
- If the Bush administration cuts a deal with key OPEC providers to increase production or lower prices, adminstration opponents will accuse him of being in bed with the oil countries. If the Bush administration fails to to cut such a deal, administration opponents will accuse him of having alienated our allies in the region.
- The Bush adminisration will blame the fuel cost spike for any sluggishness in the economy. Administration opponents will ignore that rationale.
- Administration opponents will accuse the Bush administration of being in bed with oil companies, and the oil companies of gouging the American public with higher prices. Administration opponents will also accuse Bush of playing with oil for politics if there’s any effort to tap into the Strategic Petroleum Reserve to lower prices.
- High prices would likely hurt Bush, politically, unless he can spin it to blame environmentalists for keeping the US from developing further oil resources.
- People will actually buy fewer SUVs.
No, wait, scratch that last one. That’s crazy talk …
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We’re already over $2/gallon in So Cal, and that includes places like “Fred’s Gas.” Man, I wish I could’ve gotten that Prius!
I’m afraid things are much worse than protrayed by the Rocky. A geologist friend of mine who has over the last year been telling us that world oil production has already peaked pointed me here.
It is not the Saudis won’t produce enough but because the Ghawar oil fields are slowing down they can’t. This not only has bad implications concerning gas prices but also even more dire consequences concerning the war on terror. The Saudi Royal Family has convinced their people not to side with the Islamists through oil money. If this dries up, the spectre of future bin Ladens may be in the cards.