Fuel Prices

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Fuel Prices: Myths and Reality Surrounding the Price of Gas. Part I.

"Price of Gas Myth Number 1": Our fuel price crisis is all about "Supply Shortfalls"
No doubt. The price of gas seems always poised to go up. It?s almost a knee-jerk reaction to assume there?s nothing but bad news in the price of gas ahead of us.
There is. But not for the reasons most of us think.
The supply side of the fuel price equation is as robust as ever. Conventional wisdom, reported in the media and driven by fears that Hurricane Katrina was the beginning of our current "fuel price dilemma", says the world is running out of fuel. Consequently, there must be fuel price hikes. So, the price of gas will climb, media mania says.
Actually, Katrina didn?t damage the Gulf States? oil infrastructure. For all of its destructive power, Katrina only temporarily disrupted production. The media hype did far more to convince Americans the catastrophe bid up fuel prices and ? more specifically ? the price of gas, to levels believed to be permanent.
Actually, the world is awash in its supply of fuel, despite higher gas prices. In 2002, the CIA World Factbook stated the world?s proved reserves were 1.025 trillion barrels. In 2003, British Petroleum?s Statistical Review of World Energy gave a much higher figure, 1.15 trillion barrels. Either is enough to meet current demand ? while stabilizing fuel prices (and its concomitant price of gas) ? for the next 40 years.
Even in the United States, fuel prices should not be rising given the increase in recent discoveries. The Thunder Horse Oil field alone has an estimated untapped 1.5 billion barrels.
According to the Energy Information Administration (U.S. Department of Energy), as of 2003, the U.S. alone had over 30,000 oil fields, reflecting large domestic oil capacity. Fuel prices should not be continually rising, given the amount of proved resources.
In May of 2005 Aramco chief Abdallah Jum?ah noted the demand for 23 million barrels per day of Saudi oil production "?was not a problem" for the Saudi?s, who sit atop 260 billion barrels of proved reserves. Further, the country estimated another 200 billion barrels in probable reserves.